Traditional Retailers Continue 'Lean and Mean' Approach

Ben Terry, senior leasing and sales associate at Coreland Cos.

ORANGE COUNTY, CA—In advance of the upcoming ICSC Western Division conference and just before tonight’s big ACRE Shaker Annual Summer Party at the Huntington Beach Hyatt Regency, we chatted with ACRE president Ben Terry , senior leasing and sales associate at Coreland Cos. , on all things retail. Year-to-date in 2016, vacancy rates among retail real estate in Southern California continue to decline across the region, highlighted by significant net absorption throughout Los Angeles, Orange County and the Inland Empire, Terry tells GlobeSt.com. “Within the last 12 months, there has been a significant amount of activity in the region’s grocery- and retail-anchored subsectors, resulting in a more competitive market.” He explains that companies like Smart & Final, Aldi and Grocery Outlet have been aggressive in leasing new space. Aldi alone is opening 45 stores by year-end in its first wave of Southern California space, he says. “This has industry players paying close attention.” And while Sport Chalet and Sports Authority are going out of business, he says, different retail segments, like gyms and entertainment businesses, are quickly absorbing the vacancy left behind. “Quick-service restaurants, service-oriented businesses and medical services (sometimes referred to as medi-retail) are also leading the way and aggressively expanding throughout California.” For the first time in a while, Terry explains, less traditional big box retailers are entering Southern California, but that has been expected, he says. “As costs continue to grow in California (increasing wages, employee benefits and utilities, for example), coupled with competitive online shopping with companies like Amazon, we will see traditional retailers continue to downsize into “the lean and mean approach” and utilize their floor space more efficiently.” For example, he points out that Staples now seeks 15,000 square feet of space, instead of 24,000 – 25,000 square feet of space. And Best Buy, which had problems at the beginning of the great recession, he says, has done this very successfully. Keep checking back with GlobeSt.com for all things retail as we prepare for the upcoming ICSC Western Division deal making conference.