This blog’s headline also served as the title of one of the concurrent sessions at IREM’s recent Fall Conference in San Diego (and if you missed it, why?). I had the pleasure of moderating the panel, which featured Nick Hernandez, Managing Director of Retail for Transwestern; Anjee Solanki, National Director of US Retail Services for Colliers International; and Benjamin Underwood, CPM, Vice President of Residential at Saul Centers.
Happy to report that there was a lot of rich detail shared during the session, but I’d like to share some insights on three specific areas:
- Does retail play nicely with other tenants?
- What do managers need to know about optimized retail? and
- How do you measure success beyond ROI?
Q: Are retailers more difficult to deal with than typical commercial or residential tenants?
Anjee Solanki: Retailers are very focused on customer experience. They’ll walk into a space and ask about the ceiling height, the level of the floor, the column spacing and what’s my co-tenancy look like. But their number one concern in mixed use is who’s going to be above me? And the reason why is because any loss of sales can set them back. Some people don’t understand why they ask for certain clauses, but there are often good reasons behind it.
Benjamin Underwood: But you also have to be conscious of the tenants that live above these retailers. As a resident you want to live close to those retailers you want to frequent, but it comes with challenges, a smell or the noise of the bar. Certainly the retailers need to get what they need, but we need to keep the others happy as well.
Nick Hernandez: We dealt with the traffic issues. One restaurant we leased to is doing 70% more volume than the highest-volume restaurant in the city of Houston. Things like that that you can’t see in advance and you have to work it out on the fly.
Q: So how do you deal with those issues?
Solanki: Communication is key and making sure everyone is well connected. Make sure people understand there are nuances to each group. There are always challenges, but if you can be proactive, sharing information upfront and being transparent, you’ll eliminate some of that risk.
Q: What do managers need to know about optimized mixed-use retail?
Underwood: That it’s about getting the place right, it’s looking at demographics and the comps in the neighborhood, and making sure that what you’re putting there is something people will want to use.
Q: How do you measure success? Or is it all and only about ROI?
Underwood: We’re all in the business of ROI. Beyond that, it’s a matter of putting together a mix of uses that creates buzz, that makes people want to shop there, to live there. If you can make these uses co-exist appropriately, you will find residents who stay longer and retailers who do better. It’s a matter of getting the details right.
Hernandez: If you get that right, the ROI takes care of itself.
About the Author
John Salustri is editor-in-chief of Salustri Content Solutions, Inc., a consultancy focused on enhancing the web and print content of clients around the nation. He is a regular contributor to JPM Magazine and a frequent blogger for IREM’s website. Prior to launching SCS, John was founding editor of GlobeSt.com, the industry’s premier real estate news website, where he managed the daily output of 25 international reporters, and prior to that, he was editor of Real Estate Forum Magazine. John is a four-time winner of the National Association of Real Estate Editors’ Award for Excellence in Journalism.