Retail is Still Thriving: These Brands are Opening Stores

Retail isn’t all doom and gloom—there are plenty of retailers that are opening stores instead of closing them. Moreover, many are planning to expand beyond this year. However, there is a fundamental change that is happening causing this weird paradigm where there are brand named box store closings everywhere while simultaneously brand named stores are opening and expanding.

The need for enormous department stores and outlet buildings has passed. These days retail is getting smaller as the industry overall is diversifying. 

News of thousands of closures has led many to believe that retail is dead, but there are many retail store brands that are thriving.

Online Retail Giants Opening Brick-and-Mortar Stores: A big part of this phenomenon is the emergence of online retailers in the physical retail space. Amazon isn’t the only online retail giant getting into brick-and-mortar. The now famous Warby Parker is on pace to nearly double its total number of stores to 100.

Bonobos, Untuck, and Everlane are just a few brands that have built their reputations online and are now looking to expand into the retail space, buying up some of the 3K+ stores going up for sale this year. There are an estimated 1,700 new stores slated to open in 2018 but contrary to popular belief, many of those stores are well known brands like Zales, Best Buy, and Autozone.

Traditional Stores are Buying Up Space and Opening New Stores: Toys R Us closed all of their U.S. stores this year. That is after a long trend of named brand store closures including JCPenney, Sears, and Kohl’s. This year, we’ll see twice as many stores close as open, but there are many traditional retailers that will be in the latter group.

Grocery: Aldi’s has been expanding its presence in the U.S. for the last several years. This year, the German grocer will add approximately 180 new stores. Ultimately Aldi’s plans to operate at least 2,500 stores in the U.S. within the next 5 years. 

Perhaps it’s a sign of the times but the biggest expansion happening this year is with discount giant Dollar General. While not necessarily a grocery store, it combines both retail and grocery at discounted rates. They plan to open 900 new stores in 2018.

Sam’s Club’s rival Costco is also planning to expand this year. The big box warehouse discount store will add relatively fewer stores but the footprint is massive. Between last year and this year, Costco has opened 18 new warehouses and plans to open another 5 this year.

Retail: As traditional powerhouses like JCPenney and Sears close stores, other retailers are stepping in including TJ Maxx Companies (HomeGoods, Marshalls, and TJ Maxx Stores), Ross Stores, Target, and Gap brands. TJ Maxx will add the most stores, with plans to open more than 700 new HomeGoods stores and close to 700 new Marshall’s and TJ Maxx Stores.

Ross will open 100 new stores this year and Target plans to open 35 new smaller stores, adding to the 32 it opened last year. Gap is one of those rare birds seeing closings (200 over the next two years) but reopening even more stores (270) under their new banner brands: Old Navy and Athleta.

Restaurant: Even in the restaurant space, we are seeing resurgent name brands expanding. In 2018, the Chipotle plans to open up at least 130 new stores. Starbucks, which some say has become a bit oversaturated in the market, is finding new ways to expand its footprint. Over 340 new Starbucks stores opened last year in places like Target and on campuses with plans set to add 416 more.

What Does the Smart City Mean for Our Future?

Smart City

The Smart city market is projected to reach $400 billion by 2020. The type of data analysis that is made possible through Smart cities will become invaluable for identifying prospective investments, new or re-development, attracting tenants, and building better infrastructure.

One tech leader, Cisco, is pouring hundreds of millions of dollars into Smart city projects all over the world including in San Jose and Chicago. Electricity giant GE (General Electric) has joined with city governments in San Diego, CA and Jacksonville, FL to test pilot Smart cities there. Will this trend continue and what do these Smart city projects mean for our future?

Expect the Smart City Trend to Continue to Grow

Experts predict that Smart cities will become a nearly half a trillion dollar industry in less than two years. There are plans to unveil about 600 Smart cities globally over these next two years. In less than a decade Smart cities are estimated to account for 60% of the global GDP from these 600 cities alone.

Reasons Smart Cities are a Win-Win-Win

Our future is going to be vastly more tech enhanced than it is right now – amazing when you consider how tech enhanced everything already is. But what Smart cities are expected to do is go beyond providing more convenience to citizens and consumers. They are going to be more efficient, use less energy, and control everything from street lights to the city’s Smart electrical grid.

Imagine a bus stop that tells you when the next bus is coming in real-time and will re-route you automatically without you interacting at all. Your mobile device will announce it like the weather when you pass a bus stop’s beacons and sensors.

No longer will pedestrians have to stand and wait for five minutes to cross a busy street. Sensors will detect pedestrians and will change traffic lights in real-time for optimal traffic flow. Uber apps will send driverless cars when you step into an Uber pickup zone with your mobile device – all because of beacons and sensors in street lights, traffic lights, crosswalks, and city cameras.

What Smart Cities Mean for the Future of CRE

Predictive analysis today is child’s play compared to what we expect in the future. Imagine how much useful data will be collected when Smart cities are also filled with Smart buildings that can communicate with city assets as well as consumers, employees, and citizens.

When it comes to site planning, the types of real-time and historic data that can be collected based on actual foot traffic over long periods of time will be insanely invaluable in the future. Seattle is already a Smart city and is experimenting with and testing new ways of interacting with its citizens through Smart technology to make life better.

Mobile Devices Will Connect People, Buildings, and Cities Together

In the future, All CRE properties will have to be built to connect with both people and the city itself. Real-time data will be essential in site planning, development, investment, and leasing. Being able to connect to a wide range of devices and technologies that are continuing to evolve and change will be an ongoing challenge for everyone in CRE.

How to Choose the Best Location for Your Industrial Property Investment

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Everyone knows that in real estate, it’s ‘location, location, location’, but what else? When it comes to commercial property investments, there are a lot of other factors that go into play that makes one location better than another. Should you choose to purchase industrial property, you have to decide whether or not to locate in your headquarter city or to move your operations to amore economically attractive city.

The Best Location Depends on the Industry

Generally speaking, industrial real estate is located in what are considered bad locations: heavily industrialized areas, often rundown areas, high traffic areas (or too far away in no man’s land), and noisy locations.

Homeowners do not want to be situated near airports, freeways, or railroad tracks. But for industrial property, those railroad tracks could become part of your multimodal distribution network. Flight paths mean you are closer to a hub that can make last minute shipments easier.

Clearly “the best location” depends on the type of property you are investing in. Though industrial property investors aren’t turned off by high traffic, zoning issues are the biggest problem, especially when searching for industrial property to be revamped for mixed-use – being next to a railway is one thing, being located near a power plant is another.

What to Look for when Locating Industrial Property for Investment

Industrial is a hot ticket item these days, particularly warehouses and distribution centers. The first step in choosing the best location for your industrial property investment is to know what your motivation is – as actors say. Are you going to use this property for industrial use or are you thinking outside of the box.

As stated before, zoning laws will either help or hinder that decision. From there, there are other factors that can be applied to choosing the best location for industrial properties across the board.

#1: For Retailers, Look to the Cities. E-commerce will continue here and abroad for the foreseeable future. More and more that means keeping industrial assets located within city limits for easier local distribution and delivery.

#2: Remember to Choose Properties with Low Operating and Investment Costs. Industrial properties, though often large, are actually cheaper than commercial properties of comparable size. You can find excellent industrial for very little costs to upgrade and maintain which increases ROIs.

#3: Consider Choosing Industrial Properties for Tenants Needing Long Term Leases. Long term leases are evaporating in the office sector. In industrial, it is a major goal to invest in the type of industrial properties that will attract tenants that require long term leases like e-commerce distributors.

#4: Look for Flexible Industrial Space. Industrial space is going through ongoing changes in design and layout from size to shape. Today’s investor should look for industrial space that can be rezoned and reused for multiple purposes, staying as flexible as possible to be ready when new changes hit the industry.

#5: Industrial Markets with Low Vacancy Rates Are Best. The economy is slowing but we are still seeing industrial vacancy rates at historic lows, hovering around 5%. Locations with low vacancy rates (typically port cities) are ideal locations for industrial property investment. California has one of the lowest vacancy rates (just over 1% in LA) and so do New Jersey, Seattle, and Atlanta.