Richard Crenian: Learning to Grow in 2018 Retail
While 2018 is projected to be a challenge for those in the commercial real estate, experts in the industry, such as ReDev CEO and founder Richard Crenian note that there is still some sunshine over the horizon. As data collection becomes easier and easier, Crenian and other experts emphasize the importance of comprehensive understanding of likely trend and potential tipping points when it comes to successful long term strategy.
It’s a Lovely Day in the Neighbourhood
If you’re looking to not only survive, but thrive, this year, it’s crucial that you keep up to date with emerging trends.
According to Crenian and other experts, the most notable trend this year is set to the re-emergence of neighbourhood specific retail outlets. These niche outlets only work when the demographics around the plaza are matched to the appropriate service., so what is highly successful in one area could be a hard sell in another.
“This could be an ethnic restaurant, games cafe, breakfast-focused restaurant or cybercafé,” said Crenian. “These will only thrive when the tenant and landlord have done their homework and have a comprehensive understanding of the immediate community – success will often be based on word-of-mouth recommendations.”
The Cannabis Question
As the federal government moves closer towards legalizing cannabis, it’s important that the real estate industry accounts for the coming changes and issues that this brings. The cannabis industry is expected to be popular, however, it does not yet have a retail track record despite support some reputable names.
“Landlords will have to balance the concerns of existing tenants with the needs of a new industry,” said Richard Crenian, “There are some rules governing the location of the cannabis stores but each province is still trying to work how to incorporate the outlets and how the business model will work. Will the stores be merely retailers or will they be connected to a grower?”
With such a controversial product, landlords cannot develop a strategy on a trial-and-error basis, instead we will need to remain cautious and vigilant.
Retail is Changing; and Mall Aren’t Keeping Up
One area of risk, notes Crenian, are covered malls. With the rise of online shopping, traditional covered malls face serious challenges to entice shoppers to leave the comfort of home to shop in physical stores.
As Crenian explains, this means major retailers have to be willing to change their business models to survive. There is no holy grail waiting to be discovered but being innovative is a starting point.
“Don’t be surprised if we see more consolidation in the Amazon–Whole Foods mould,” said Crenian, “For those of us involved in community plazas, it is paramount to focus on retailers and services that cannot be offered online and require walk-up traffic. ”
Until recent years, that included banks as a key anchor tenant but that may be changing. As lease renewals come up, banks are now considering smaller premises or stand-alone pads as they become less about bank tellers and more about online services. It is likely the traditional 15-year tenancy agreement will be shortened as the banks try to figure out their future in each community landscape.
Filling Gaps
As the banks try to reposition themselves, we are seeing new companies emerge as principal players in local communities – the most notable has been those offering child care services.
The key to success is becoming more than a single-service outlet. Instead, they are facilitating evening and weekend courses, such as English as a Second Language and cultural awareness nights.
These outlets are operating more like old-fashioned community centres. As a result, they increase foot traffic in the plaza, which in turn boosts potential sales opportunities for other outlets.
Markets are the Future
Some say we will look back on 2018 as a year of slow-and-steady growth as we deal with interest rates inching higher.
For some tenants, this could be the best time to lock in a lease as it will provide cost certainty. For landlords, having plazas near to capacity, or full, is the best advertisement to attract new tenants.
This year will be great for those who pay attention to details and are prepared for the next upturn. What we are experiencing is a “New Normal” that remains cyclical, but with fewer extremes.
As always, the best measure of your decisions and hunches will be hindsight. On that, some things never change.
About ReDev Properties Ltd.
The asset management company, ReDev Properties, was founded by Richard Crenian in 2001. Its expertise is in carefully and diligently locating existing commercial real estate properties and providing the necessary stability and future growth to ensure the assets increase their value.
The company works to closely partner with high net worth individuals, family offices and institutions for joint venture opportunities, and is always looking for future projects to assist with developers and acquisitions on equity, financing and business expertise.
To learn more about Richard please visit redevgroup.ca