April 4, 2020

2020 Economic Outlook

Southeast Florida - Workforce, environment, infrastructure

Mike Vogel | 12/26/2019

Statewide Perspective

What’s Ahead in Retail

Nick Banks, Gainesville-based leader of commercial real estate firm Avison Young’s retail affinity group for Florida and the nation, identified six trends for FLORIDA TREND driving retail real estate statewide:

  • The Store As Warehouse: The cost of delivery dwarfs the cost of rent. The answer: Take over retail space or strike a deal with retailers to turn excess space into online support. Kohl’s now handles Amazon returns. Amazon acquired Whole Foods in part to get more local distribution. It also converted two failed Midwest malls into distribution centers. “Delivery across all sectors is becoming increasingly important. Companies are looking to compress whatever costs are associated with delivery to the greatest extent possible. So they’re moving warehouses and distribution closer to the consumer.”
  • Adaptive Re-Use: Avison Young represented Sears in the sale of a 140,000-sq.-ft. shuttered Sears at Oaks Mall in Gainesville and its conversion into a UF Health clinical and surgery center.
  • Online Order Challenges: Food and beverage operators struggle to balance rapid growth in online orders with caring for in-store customers. “Some consumers feel the in-store experience has suffered. You walk into your favorite coffee shop and there are only one or two people in line, but it takes 20 minutes to get your drink. There are 50 online orders in front of you that you can’t see.” Response: Some operators are going to two lines, one to handle in-store customers and one out of view solely for online orders. Other new food and beverage concepts skip the in-store experience entirely in favor of online orders and delivery and pickup only.
  • More Mixed Use: Office and apartment developers want a retail component to their projects. “Some of it is market driven. Some of it is regulatory driven. I think a lot of municipalities are pushing for mixed use. Sometimes they push that envelope a little bit too far.”
  • Online Opening Brick-and-Mortar: Online-only retailers continue opening brick-and-mortar stores. The physical stores feed online sales, and the online operation feeds the physical stores. “It’s a brand exposure opportunity for them.”
  • Cancel the Retail Apocalypse: “I heard a great quote. ‘Retail is not dead. It is not overbuilt. It’s under demolished.’ Well-located high-quality retail is doing great. It’s doing better than it’s ever done. Food and beverage is doing great. Anything experience-related is doing great. There is a lot that has to be put to another use. There are certain sectors that are facing more challenges.”

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