CHICAGO—What is the state of retail today, and what should we expect going forward? Jeff Berta, senior director of real estate for the locally-based Structured Development, has a seasoned perspective on where the fast-evolving sector is heading. Now in its second decade, Structured has completed projects spanning retail, residential, mixed-use, office and industrial, including ground-up developments and the adaptive reuse of historic structures. Projects include NEWCITY, a 1-million-square-foot mixed-used development in Chicago's Lincoln Park neighborhood, and the recently completed District Brew Yards, a partnership with Burnt City Brewing that converted a former warehouse in Chicago's West Town neighborhood into the country's first brewery collective with a pour-your-own beer hall. This spring, Structured broke ground on the first phase of The Shops at Big Deahl, a mixed-use development on a 2-acre site near NEWCITY whose first phase will feature a rock-climbing gym operated by Planet Granite. On the heels of the International Council of Shopping Centers (ICSC) RECon show in Las Vegas last month, Berta answered six questions about the retail sector and what developers and investors must do to succeed.

What did you hear at RECon—is the market as challenging as some headlines suggest, or are developers still finding opportunity in today's fast-changing landscape?

Retail is definitely not dying, but retail is evolving—and only the strong are going to survive. Bankruptcies are up, and major retailers are going out of business. There are significant vacancies in malls, and the industry is trying to figure out the best method for disposition. Given the current evolution, shopping malls are going to look different over the next 20 years—likely with smaller anchor stores (small-box rather than big-box), more entertainment concepts and restaurants, more experiences for shoppers, and daily service providers such as gyms, grocers, medical offices and even day care providers. Forward-looking retailers like Nordstrom, which has carved out space in its brick-and-mortar stores for online order pickup, and other brands that read the market well are going to survive. As traditional retailers like Walmart and Target adjust their models to better compete with Amazon and other online startups, e-tailers are moving in the opposite direction by establishing physical storefronts where consumers can test out and pick up goods. Amazon has done this through its acquisition of Whole Foods, a deal that gave the company an immediate network of urban distribution centers to facilitate same-day grocery deliveries, as well as newly launched concepts like Amazon Go and Amazon Books.

What are the keys to success for new retail developments or, in some cases, redevelopments?

People are always going to want to go to stores. But their preferences are changing, and new developments/redevelopments need to reflect that. Millennials, for example, want more experiences and less stuff. In response, shopping center owners are integrating more technology into common areas. Some landlords are implementing proximity geofencing or beacons to customize their shoppers' experience and simultaneously capitalizing on any possible advertising revenue. In addition to this, landlords are upgrading the physical space within their common areas to create more "Instagrammable" moments that support their social media marketing efforts while enhancing their customers' shopping trip. Retailers also recognize this and are looking to landlords for more activation spaces within the common areas to provide short-term experiential product launches and promotions. Landlords should focus on creating the most flexible space for such activations, taking into account technology, visibility and location (e.g., the glass cube at Old Orchard Shopping Center in Skokie, Ill.). Such features will be critical in maximizing the partnership marketing inventory and increasing nontraditional income sources (i.e., media, sponsorship and advertising revenues). Amenities and convenience continue to be important for consumers across the demographic spectrum, taking the form of everything from designated rideshare pickups to enhanced children's play area (e.g., Northbrook Court Shopping Center in Northbrook, Ill.) and child care while shopping. Perhaps the biggest challenge facing landlords is that it's not as easy to get retailers to take as much space as they had even five years ago. In light of record closures, they are much more cautious now and you're seeing that reflected in their smaller footprints. Many are looking at what tenants are coming into a center and, more importantly, thriving there. They also want to see evident strengths in terms of location, traffic, transit orientation, co-location with residential and strong municipal support.

Will we ever run out of retail development opportunities?

The retail landscape is constantly shifting; developers, like the brands that fill their centers, will always have the opportunity to innovate and launch new concepts in step with the public's changing tastes. The key is to make sure you understand what consumers' priorities are. Some markets are more saturated than others, but hopefully sensible and creative developers will repurpose failed retail centers to include varying uses and break from the traditional retail mold.

You recently broke ground on The Shops at Big Deahl, whose first phase is anchored by a Planet Granite climbing gym. Why were they a fit for the project?

Planet Granite is a great example of an experiential attraction that will draw foot traffic. There are obviously no mountains in Chicago, so a concept like this becomes the next best thing. It's also an appropriate fit for this site, which is located in the heart of the Halsted Triangle, a corner of Lincoln Park that is fast becoming a destination for experiential and recreational retail. Our development is across from a newly opened REI flagship store with direct access to the Chicago River—on a stretch that is being converted into a floating eco-park known as the "Wild Mile"—allowing for kayak and paddleboard rentals, among other water-related activities. iFly Skydiving is just a couple blocks to the south, while several supporting retailers are nearby. These include DICK's Sporting Goods, located within our NEWCITY mixed-use development, and Lululemon, which is opening a first-of-its-kind flagship store this summer.

District Brew Yards is a project of firsts—for that concept, and also for your company, which had not previously developed a brewpub. What was the strategy, and do you plan to do more?

A: Chicago's restaurant and bar scene is the hottest it's been, and Chicago has established itself as one of the top markets for this in the nation. As such, restaurants and bars are an area of retail that's growing in this market, so that was an obvious first reason to pursue this project. This concept is also very hands-on—rather than sitting at a table and being waited on, guests can walk around the space to various taps and pour their own craft beers, which are brewed on-site. So far, District Brew Yards has been highly successful – so much so that we're considering expanding to similar markets within the Midwest.

What's next for Structured?

We are enjoying this time in the market because it represents new frontiers and opportunities we haven't seen before. It's challenging, but we like complex, challenging situations. We continue to expand our portfolio of urban projects, but have been working with suburban municipalities such as North Chicago and Orland Park. We remain optimistic and believe the best companies will make the most of the changing environment.