Growth And Change
Upward-inching rents, low vacancies, and the evolution in experience-driven retail
According to NCREIF (National Council of Real Estate Investment Fiduciaries), 2017 was a good year for U.S. Shopping centers in terms of rents and net operating income (NOI); taking together all types of centers, both base rents and NOIC rose by 2.1%.
While store closures made headlines, the story of retail’s supposed “demise” was grossly exaggerated. “Retail real estate continued to perform robustly last year as it successfully embraces change and evolution in the marketplace,” said Jean Lambert, vice president of ICSC Research. As reported by JLL, retail vacancies are at their lowest point for this economic cycle, and retailers are opening more stores than they are closing. While the old way of selling and operating stores is dying, experience and entertainment will be huge draws for shoppers.
Landlords will opt to fill anchor space with non-traditional uses such as hotels and VR/immersive experience tenants. Retailers like Muji, Shinola, West Elm, and Restoration Hardware have announced plans to open hotels. Meanwhile, immersive experience concept stores like Dreamscape Immersive, Nomadic, and KidZania are looking to open new locations.