CSA-May/June 2023

May/June 2023

ICSC Las Vegas: Show Scoop Breakout Retailers SPECS Show Recap

STORE CONSTRUCTION:

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from the editor’s desk

On the Level: A real estate column

Contents VOL. 98 MAY/JUNE NO. 3

COVER STORY

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STORE CONSTRUCTION: UNCERTAINTY IS THE NEW NORMAL Developers, retailers continue to build even as they are challenged with material and labor shortages and high costs.

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Breakout Retailer Awards: The 2023 winning lineup of companies honored for their commitment to physical growth and innovation included: •Academy Sports & Outdoors; •Boot Barn; •Choice Market; •Condado Tacos; and •It’Sugar.

STORE SPACES

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Trending Stores: Nike flies high with World of Jordan, while Barbie is set to get her own “world.”

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SPECS 2023 Recap: Coverage of Chain Store Age’s 59th annual SPECS Show, the leading event for store planning/design, construction and facilities management includes the following: • SPECS 2023 kicks off on a high note with a motivating keynote address from businessman, investor, branding guru and television personality Daymond John.

•Session Spotlight: Artificial intelligence and machine learning tools are emerging as critical tools for facilities management professionals.

•Session Spotlight: Supply chain disruptions continue to impact building projects and equipment availability.

•Session Spotlight: A look top shopping center experiences that drive sales.

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Store Spaces Q&A: Construction Specialties’ Phil Harris discusses how retailers can create memorable spaces that also take into consideration the need for durability and safety.

CSA (USPS 054-410; ISSN 0193-1199), is published bimonthly by EnsembleIQ, 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631, on a controlled basis to qualified retailer titles and architects. Real estate and shopping center owners and developers $75 per year. All other non-qualified in the United States: $80 one year; $155 two year; $14 single issue copy; Canada and Mexico: $105 one year; $185 two year; $16 single issue copy; Foreign: $115 one year; $215 two year; $16 single issue copy. Digital edition subscription: $55 one year digital; $105 two year digital. Periodicals postage paid at Chicago, IL and additional mailing offices. P ­ OSTMASTER: Please send address changes to CSA, Circulation Fulfillment Director, 8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631. Subscription changes may also be emailed to contact@chainstoreage.com, or call 1-877-687-7321. Vol. 98, No. 2, March/April 2023. Copyright ©2023 by EnsembleIQ. All rights reserved.

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Contents VOL. 98 MAY/JUNE NO. 3

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Carmen Spinoso with Mark Wahlberg at a Wahlburgers opening at one of his centers

REAL ESTATE

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TECH • Centennial’s Steven Levin on the re-emergence of merchant-led retail

The ICSC Las Vegas SHOW SCOOP Eleven of America’s leading center developers write about how retail real estate’s changing for the better.

• Casto’s Eric Leibowitz on embracing change

• Spinoso Real Estate Group’s Carmen Spinoso on how private ownership will revive malls

• Trademark Property Group’s Terry Montesi on being a service provider, not a developer

• Tuscan Village’s Michael Powers on “new-urbanistic” development

• Phillips Edison & Company’s Jeff Edison on why we call our tenants “Neighbors”

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Toshiba Global Commerce Solutions’ Fredrik Carlegren discusses how frictionless shopping technologies — when leveraged correctly — can benefit retailers and customers alike.

• Pacific Retail Capital Partners’ Annmarie Plenge on the in-house architectural team

• DLC Management’s Adam Ifshin on the essential imperative of teamwork

• North American Properties’ Adam Schwegman on food-and-beverage’s critical role

• PREIT’s Joseph F. Coradino on the mall’s new proposition

• Cullinan Properties’ Matthew Beverly on why it takes time to build timeless centers

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FROM THE EDITOR’S DESK

Challenges Aside, Retailers Still Expanding Don’t let recent events (and bankruptcies) fool you: There’s still plenty of expansion going on in physical retailing.

In fact, retailers’ commitment to brickand-mortar is probably stronger than it has been for some time as more chains continue to move to a hybrid approach that blends physical and digital channels, and adopt a strategy that gives stores a critical fulfillment role that lowers the cost of delivering online orders.

That is not to say these are easy times for physical retail expansion. Far from it.

As our cover story (page 9) makes clear, retailers and developers are currently contending with a number of challenges when it comes to physical growth, from still-high building costs to permitting delays to material shortages.

“Retailers are having to adapt to the reality that short-term construction costs are up by 10, 15, 20 percent,” said Naveen Jaggi, president, America, retail services at JLL. “It takes more time to get a deal done.”

And while cargo ships may no longer be lined up waiting to unload, supply chain disruption is still very real.

“It’s a different world than it was,” Aaron Harris, VP of development for the fast-growing coffee chain Dutch Bros., said in remarks at Chain Store Age’s annual SPECS Show in March. “Products are simply not available. There is a long backup. And the quality of products in the last three years has been terrible.”

Rising interest rates are another challenge for retailers, especially those still in more of a start-up mode.

“The capital that’s available is obviously more expensive,” said Mike Fogarty, founder and CEO of Choice Market. “Everybody is taking a more

CHAIN STORE AGE

measured approach to growth. That can be a challenge.”

But if the past several years have proved anything about retailers, it’s how resilient they are, be it amid pandemic lockdowns, supply chain disruptions and/or economic uncertainty.

As of press time, a number of retailers were proceeding full speed ahead with ambitious new store plans as well as renovation programs. The continuing aggressive growth of deep discounters and off-pricers such as Dollar General, Dollar Tree, Ross Stores and Five Below seems to attract the most attention, with good reason in some cases: Five Below’s planned expansion for 2023 is the most aggressive in its history.)

But other sectors are also seeing growth.

Tractor Supply, Boot Barn, Batteries Plus, Torrid, Nordstrom Rack, REI and Love’s Travel Stops are just a few of the retailers in expansion mode this year. Sam’s Club is set to embark on its most aggressive expansion in years in 2024. Regional convenience store chains such as Wawa and Sheetz are also on the move.

Meanwhile, global retailers Zara, Mango and Uniqlo are all increasing their U.S. footprints. Ikea will spend than $2.2 billion during the next three years in its U.S. omnichannel growth strategy, with the first phase of the initiative including the addition of 900 pick-up locations and eight new stores.

Smart retailers are investing in their existing locations even as they open new ones. Love’s Travel Stops will invest more than $1 billion in updating 200 locations during the next five years.

Subway plans to remodel some 3,600 locations across North America this year.

The truth is, there is plenty of growth going on — and with good reason: The advantage of brick-and-mortar is clearer than it has been for some time.

Uncertain times aren’t going to stop retailers from expanding their physical assets.

CHANNELS > COMMERCE > CUSTOMERS

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EDITORIAL Editor Marianne Wilson mwilson@ensembleiq.com Technology Editor Dan Berthiaume dberthiaume@ensembleiq.com Real Estate Editor Al Urbanski aurbanski@ensembleiq.com Online Editor Jennifer Mosscrop-Setteducato jmosscrop@ensembleiq.com

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CORPORATE OFFICERS Chief Executive Officer Jennifer Litterick Chief Financial Officer Jane Volland Chief People Officer Ann Jadown Chief Strategy Officer Joe Territo Executive Vice President, Operations Derek Estey

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COVER STORY

STORE CONSTRUCTION: UNCERTAINTY IS THE NEW NORMAL

Construction workers are still hard to find, as are HVAC units. Costs are up by as much as 20%. Still, ardent developers and retailers build on.

By Debra Hazel

R

ising material prices, record low levels of shopping center construction, a shortage of skilled construction labor and equipment, and rising rents — all are creating a feeling of uncertainty for retailers, their advisors and their construction teams.

Yet, somehow, retailers, restaurants and medical facilities are rising above the challenges and continuing to expand, albeit likely on a longer timeline with a higher bill than in the past.

What once took six months now takes nine; what took a year now takes 18 months.

“Retailers are having to adapt to the reality that short-term construction costs are up by 10, 15, 20 percent. It takes more time to get a deal done,” said Naveen Jaggi, president, America, retail services at JLL. “They’re not changing, they’re adapting.

This is not business as usual.”

The COVID-19 pandemic, which sent consumers fleeing to e-commerce during lockdowns, also closed downtown office

CHAINSTOREAGE.COM

buildings and ports, resulting in a rethinking of locations — and challenges in finding the materials and equipment needed to build and renovate stores.

The end of pandemic restrictions brought shoppers back to stores, restaurants and service providers, and many companies are continuing to expand into new locations and formats. But permitting and construction remain challenging.

“It’s a very strange time,” said Peter Morandi, CEO of New York City-based general contractor Eastman Cooke & Associates, which builds for a variety of retailers. “Projects I didn’t think were moving forward are doing so, and the opposite is true — not because of labor shortages, but because of the owners themselves.”

Demographics also plays a role. Health care provider DaVita, Denver, is reducing the number of its in-center dialysis facilities in favor of at home hemodialysis in response to current lower demand, reported Monica Munoz, senior director, capital programs at DaVita’s Team Genesis. Tragically, the early months of the pandemic hit the most critically ill hard, and demand for in-center treatment has decreased in the short term.

“We anticipate that the need will come back in a few years,” Munoz said.

Even so, DaVita is struggling with the availability of switch gear and HVAC units, though with the reduction in locations, it’s on track for 2023 goals, she said.

MAY/JUNE 2023

9

COVER STORY

Convenience Stores Convenience retail, however, is seeing strong demand. Choice Market will open at least four more locations in its small-sized mini-mart format this year, mostly in urban areas near its Denver home base, reported Mike Fogarty, founder and CEO. Founded in 2017, Choice Market was named as one of Chain Store Age’s Breakout Retailers of 2023.

“It’s been pretty steady growth for this new concept,” Fogarty said. “We’re being measured and methodical, not growing too fast. One upcoming store will be about 5,000 sq. ft., with the rest slightly smaller.

Expansion has been somewhat hamstrung, he noted, because of labor shortage and higher interest rates, which raises the cost of capital.

“The capital that’s available is obviously more expensive,” Fogarty observed. “Everybody is taking a more measured approach to growth. That can be a challenge.”

Size Adjustments Some companies are adjusting the sizes of their locations as the pandemic altered consumer behavior. A restaurant holding company that is a master franchisor of Burger King, Popeyes and Firehouse Subs in Puerto Rico is making the dining areas of its new restaurants smaller as shoppers still prefer takeout, noted Herminio Pereira, director of construction.

Prior to the pandemic, 40% of sales took place in-store, with 60% coming from drive-throughs. During the pandemic, just 8% of sales were in store. Now, the balance is 20% in store, 80% drive-through, and the company is building double car lanes to accommodate the change.

“We’re trying to do everything we can to get through permitting and construction.”

Jonathan Schwartz, VP of real estate and business development for It’Sugar

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“In more certain times, I’m more certain about a schedule, cost, or lead times. Now, we’re surprised by things.”

Peter Morandi, CEO of general contractor Eastman Cooke & Associates

The company operates 160 Burger King and 15 Firehouse Subs locations and is now looking to build 70 Popeyes during the next six or seven years. As the company renovates existing units, it is downsizing.

“We’re making them smaller, going down from 100 seats to 60 to 70 seats,” Pereira said. “It’s the same with Popeyes. We’re planning on 1,800 sq. ft., with 28 to 30 seats.”

In contrast, It’Sugar is going big, at least some of the time, said Jonathan Schwartz, vice president of construction. With 100 stores, the company just opened its fifth “candy department store” in March, a 30,000-sq.-ft. space on Fisherman’s Wharf in San Francisco.

The company is looking to open a total of 15 to 20 stores this year. Most locations, Schwartz noted, will be in the 3,000- to 5,000-sq.-ft. range.

“We’ll open a few of the large stores,” Schwartz said. “We think of them as flagship locations, and they are not appropriate in every market.”

But challenges in scheduling and permitting remain, and rents are fluctuating around the country. People simply don’t know how much a project is going to cost right now, Eastman Cooke & Associates’ Morandi observed, citing a lack of reliable data.

Equipment ordered months in advance could be delayed for weeks, lengthening a timeline — or it could show up early.

“In more certain times, I’m more certain about a schedule, cost, or lead times,” he said. “Now, we’re surprised by things.”

Fortunately for retail owners and developers, the challenges come at a time of very little new construction, keeping suburban rents stable. Cities are another issue as many workers continue to stay home or are maintaining a hybrid schedule.

“We’re making our Burger Kings smaller, going down from 100 seats to 60 to 70 seats.”

Herminio Pereira, director of construction for a master Burger King franchisor in Puerto Rico

“They’re not changing, they’re adapting. This is not business as usual.”

Naveen Jaggi, JLL’s president of retail services for America

MAY/JUNE 2023

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“Certainly, rents have come down,” said Choice Market’s Fogarty, largely reflecting the struggle of central business districts. “It’s certainly less competitive. CBDs have been decimated. We pivoted pretty quickly. People are still living in Denver.”

Permits, on the other hand, can be challenging. Pereira notes that he has multiple leases signed across Puerto Rico, but getting approvals is slow both for his restaurants and for friendly competitors.

That can affect where retailers locate going forward, observed Jaggi of JLL. “If it takes us two years to get a deal done, people will say, ‘Let’s shift our focus to markets where permitting can get done,’” he said.

“Companies that promised certain growth numbers to investors or to Wall Street will move to accommodate that commitment.”

That has been helped by discipline in new construction over the last few years. Ironically, recent bankruptcies, such as Bed Bath & Beyond, Tuesday Morning, David’s Bridal and others will free up space for those that continue to expand, solving a near-term problem.

“We have 4.2% vacancy,” Jaggi said. “There’s a race for space.”

Growth Areas Look for continued growth in the Sunbelt, from the Mid-Atlantic stretching west to Denver, which is seeing the largest volume of deals — and the lowest vacancies.

It’Sugar is ready and waiting to grab some of those larger boxes, Schwartz said. Landlords are already in touch about big boxes.

“We’ll take some of the larger vacancies that have opened,” he said.

“Our large format concept is filling a need in the urban markets with large vacancies.”

It’Sugar is actively seeking locations around the U.S. and is adapting to all situations as they arise, Schwartz reported.

“In South Florida, we have great relationships, but it takes a long time to get building permits,” he said. “In other markets, where you have historic buildings or a high-population urban setting, we see problems with labor that is available.”

Meanwhile, the company is being proactive about construction delays, even to starting architectural drawings before it signs a lease.

“We’re trying to do everything we can to get through permitting and construction,” Schwartz said.

And nationally, across all real estate sectors, construction woes are improving. The industry trade group Associated Builders and Contractors reported that its Construction Backlog Indicator declined month-over-month to 8.7 months in March 2023, according to a member survey conducted from March 20 to April 3. However, the reading is 0.4 months higher than in March 2022.

When will expansion and construction go back to “normal”? It depends on the definition of normal. Jaggi said he remains optimistic that the major problems of inflation and supply will work themselves out in the next 12 months, with more stability by summer 2024.

On the other hand, Morandi said that he believes that uncertainty might be the new normal for some time to come.

“I wish I knew,” he said. “We’d said we were going to see some easing in the next year or 18 months or go back to normal in a two-year period. There’s just conflicting data. I’m in the camp that thinks this may be this is the way it’s going to be.”

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Filling the Labor Shortage Another major problem is that, even with permits and plans in place, many builders simply don’t have the skilled craftsmen available to perform the construction.

When construction shut down for a time because of COVID-19, many experienced contractors opted to retire. Their children, who might have been expected to carry on the family business, had chosen other fields.

The result? According to trade group Associated Builders and Contractors, construction businesses need to hire 546,00 workers on top of the normal pace of hiring this year to meet demand. Then add in regional issues.

“In Puerto Rico, it’s even more difficult,” said Herminio Pereira, director of construction for a master franchisee for Burger King, Popeyes and Firehouse Subs on the island. As U.S. citizens, construction workers from Puerto Rico can easily move to the U.S. and pursue higher wages. “In New York, you can find workers.”

But it’s not that easy in New York, either. In 2021, New York City-based general contractor Eastman Cooke & Associates teamed with LaGuardia Community College in Queens, New York, to create a training program for building professionals.

The college is home to a workshop that allows students to practice various trades including plumbing, electrical, refrigeration and safety, and a curriculum taught by industry professionals, including the CEO of general contractor Eastman Cooke & Associates, Peter Morandi.

Eastman Cooke has hired some graduates of the program, but Morandi is continuing to learn as well.

The largely immigrant student body at LaGuardia (due to a strong English as a Second Language program) is still feeling their way into a new environment.

“Construction is an intimidating thing to get into,” he said. “They want to be in a trade, but there is still a hesitation about putting oneself out there. It’s not something a professor can teach you. Someone like me needs to sit with a student or a group, and say, ‘Yes you can get out there. You’re going to be part of this team.’”

Another source is women. According to the U.S. Bureau of Labor Statistics, out of 10.786 million total construction workers, women comprised 1.173 million in 2020. But that is an increase from 807,000 in 2010.

“I’m definitely seeing more women on jobsites in trades I didn’t expect,” Morandi said. “I saw women on a masonry crew outworking the men on the crew.

You can have the same efficiency. It doesn’t matter what gender you are. A lot of the misconceptions are flying out the window and that’s really great for the industry.”

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BREAKOUT RETAILERS

Breakout Retailers 2023

CSA’s annual awards program honors growth, innovation in brick-and-mortar

By Marianne Wilson

Five growing brands were honored with Chain Store Age’s 2023 Breakout Retailer Awards, which recognizes companies that are investing in growth and innovation in physical retail.

The winning lineup for 2023 included Academy Sports + Outdoors, Boot Barn, Choice Market, Condado Tacos and It’Sugar. At first glance the honored companies appear to have little in common — one, for example, operates candy wonderlands filled with thousands of sweets and colorful imagery while another is looking to disrupt the traditional convenience store model.

But while this year’s Breakout Retailers represent a variety of experiences, they not only share a commitment to brickand-mortar, but understand the critical role physical retail plays in today’s omnichannel world.

The Breakout Retailer Awards, sponsored by architecture and design engineering firm Stantec, were presented at Chain Store Age’s 59th annual SPECS Show, March 19-21, in Grapevine, Texas.

Here is a look at this year’s winners.

Academy Sports + Outdoors A longtime Texas favorite, Academy Sports + Outdoors has been around for a while. The company’s roots go back to 1938, but in many ways, it’s just getting started.

A little over a year ago, Academy, which launched a successful IPO in 2020, embarked on its most ambitious expansion to date, with a goal of opening 80 to 100 stores by the end of 2026. The retailer — which currently has 268 locations across 18 states — kicked off its 2023 growth with the opening of its fourth store in Indiana.

Academy is opening stores in existing markets and adjacent ones. It’s also venturing into new states, such as Virginia

Academy Sports + Outdoors

and West Virginia, both of which it entered last year.

With an average size of 63,000 sq. ft., Academy stores are designed to appeal to a very broad range of sports and outdoor enthusiasts, with a merchandise assortment that includes national brands as well as Academy’s nearly 20 private brands. The stores also offer a full suite of free services that include bike and grill assembly, scope mounting, bore sighting and line winding/spooling. Customers can also buy hunting and fishing licenses in the stores.

Academy’s success has lot to do with its local appeal. A localized merchandising strategy ensures that products are targeted to the needs of specific markets.

The retailer also engages communities with strong outreach efforts, donations and partnerships that benefit children and youth team sports, field and stream organizations and more. Through its annual “Traveling Santa” initiative, Academy surprises customers by helping pay for their holiday gifts. In-store

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shopping sprees and bike donations are also part of its community holiday gifting program.

Boot Barn Boot Barn’s success is proof positive of the enduring appeal of the Western lifestyle. From its legacy Western boots, cowboy hats and work wear to its growing offerings of cowboy-chic fashions, which even includes wedding dresses, the retailer keeps roping in new customers — customers who keep returning to buy more.

Tagged as one of the top 10 retail brands to watch in 2023 by foot traffic analytics firm Placer.ai., the Boot Barn brand has skyrocketed in recent years as the retailer has expanded its appeal — and marketing — beyond rodeo-going folks, ranch workers and the like to consumers nationwide.

While Boot Barn’s assortment still includes plenty of boots and other signature items, it also offers things such as hiking boots, baseball hats and casual wear as MAY/JUNE 2023

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scan products as they shop and then use the app to pay, bypassing the traditional checkout experience.

Choice Market is also upending the traditional C-store model by opening in unconventional settings. The company unveiled its fully autonomous mini-mart format last year, at The University of Colorado Anschutz Medical Campus in Denver. Designed for health care workers, students, faculty and staff, the 400-sq.-ft. store is open round the clock, 365 days a year.

On the heels of new funding, Choice plans to rapidly scale up the small format, which is designed for non-traditional retail spaces such as hospitals, airports and campuses.

Boot Barn

well as a limited selection of home goods.

Exclusive brands make up a significant — and growing — portion of its mix — including one headlined by popular country star Miranda Lambert.

As the company has broadened its appeal, its stores, which average about 12,000 sq. ft., have gotten a revamp also, with a more contemporary look and an improved customer experience.

With approximately 345 locations and 86% of its sales coming from brick-andmortar, Boot Barn sees a long runway for physical growth. Last May, the retailer upped its long-term store target to 900 locations. It’s on track to open 43 new stores in its current fiscal year.

As it expands its footprint, Boot Barn is entering new markets. It recently opened its first stores in the states of Connecticut and New York, further expanding its growing Northeast presence.

trained chefs — made from fresh, local and sustainable products.

Choice Market’s vision of the reimagined c-store is reflected in its Denver flagship, which houses products from more than 60 Colorado suppliers. The 5,000-sq.-ft. store offers online ordering, click-and-collect options, and delivery in 45 minutes or less — either from their in-house team that uses a fleet of electric bikes and cars or thirdparty service providers.

The store also deploys AI-powered ceiling camera technology that lets shoppers use the Choice Market mobile app to

Condado Tacos Hitting the sweet spot between fullservice and fast casual, Condado Tacos combines good times and great food in a colorful, high-energy environment.

Founded in 2014, the casual-dining chain is celebrated not only for its signature margaritas, tequilas and create-your-own tacos, but also for its strong company culture and festive environment. The walls of each of its restaurants are covered with custom, floor-to-ceiling, graffiti-style murals painted by local artists.

A strong sense of individual expression and inclusivity permeates the culture at Condado Tacos. The company’s tagline

Choice Market

Choice Market Choice Market has set itself an ambitious goal: to reinvent the traditional convenience store model. The Denverbased retailer combines convenience, service and advanced technology with fresh, healthy food and other items from local vendors.

The curated, better-for-you product selection also includes everyday basic necessities. A full-service, scratch kitchen offers seasonal meals — prepared by CHAINSTOREAGE.COM

MAY/JUNE 2023

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BREAKOUT RETAILERS

Condado Tacos

of “Come as you are” extends to its employees, who are encouraged to dress in a way that is authentic to them. There are no employee uniforms.

Company executives have said that Condado’s focus on its employees is as much of a a differentiator as is its emphasis on quality and convenience.

Above-average industry wages, open lines of communication, employee appreciation and recognition honors, and added benefits all make for a loyal workforce in an industry known for rapid turnover.

The company keeps its food offerings limited — tacos and dips — and its kitchens well- organized and streamlined, allowing it to prepare food with a speed and efficiency unusual for a full-service restaurant. Technology helps — the chain was one of the first in its category to have wait staff use handheld devices to enter orders directly from the table and settle up checks as well.

With some 40 locations, Condado has been ramping up its expansion, fueled by an investment partnership with privateequity firm The Beekman Group. The chain is looking to open 90 to 100 restaurants by 2026. It will enter eight new markets this year.

into one of the largest specialty candy retailers in the world, with more than 100 locations in the United States and, most recently, Canada.

But It’Sugar is much more than a place to buy candy — it’s an experience, a celebration of all things sweet.

With some stores well over 10, 000 sq. ft. — the company refers to its supersized locations as candy department stores — It’Sugar combines thousands of varieties of confections and novelty

gifts with over-the-top displays and immersive experiences. The candy selection ranges from familiar best sellers to international candies to retro items.

Favorite candy brands are brought to life with shop-in-shops and giant branded candy characters, which can be found throughout the space. Candy stations offer hundreds of different candies by the pound.

It’Sugar’s expansion has evolved to include three different store types, ranging from 3,000 sq. ft. to more than 10,000 sq.ft. The real estate strategy includes permanent stores as well as pop-ups whose lease terms average from 13 to 36 months. For example, It’Sugar opened an 11,400-sq.-ft. popup on Chicago’s Michigan Avenue on a site that formerly housed a Disney Store flagship.

The company, which is owned by BBX Capital, recently brought its unique store concept to one of the busiest locations in the world — Times Square in New York City. The 20,000-sq.-ft.-plus store features such Instagram-worthy attractions as a lollipop garden with more than 1,000 lollipops and a New York skyline made entirely of jellybeans.

Coming soon: a supersized It’Sugar on San Francisco’s famed Fisherman’s Wharf.

It’Sugar

It’Sugar Buying candy has never been more fun than it is at It’Sugar, which has grown 14

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World of Flight

Nike’s Jordan Brand has opened its second World of Flight location, in Tokyo’s Shibuya district. A celebration of basketball culture and the identity and heritage of Michael Jordan, the ultra-modern 9,200-sq.-ft. store has an entry portal that mimics entering the court in an NBA arena. On the interior, artwork, photos and memorabilia items in the exclusive “Members Lounge” showcase the brand’s bonds to the sports icon and the local community. The store features best-in-class Jordan Brand footwear and apparel products

across men’s, women’s and kids, a customization station, a content-creation studio for shoppers and a SNKRS pick-up service for Nike Members. … BTS, the iconic South Korean boyband whose seven members are global pop icons, will open a pop-up at The Shops & Restaurants at Hudson Yards, on the West Side of Manhattan. The “BTS POP-UP: Space of BTS” will debut in late April, and remain open for three months. Billed as the first “official” BTS store in the United States, it will carry a wide variety of BTS merchandise, from stationery to apparel, and promises numerous interactive photo opportunities. … French lingerie giant Etam will open its first U.S. store, at Dadeland Mall, Miami, this summer. Founded in 1916, the storied — and affordable — French brand has more than 850 stores around the world. The Dadeland outpost will feature connected fitting rooms, mobile checkout system and a pink and nude color scheme for a feminine, intimate atmosphere. … Esprit’s U.S. comeback includes the opening of a Los Angeles flagship and a “global” flagship in New York City this year. Additional stores in the U.S. and Canada are planned. The brand has also signed for space in New York City to open a new global creative headquarters. … World of Barbie is getting ready to make its U.S. debut at Santa Monica Place, a Macerich Property, in Santa Monica, Calif. The ticketed attraction

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will include an array of interactive and immersive experiences, along with a store where customers can shop and build a customized Barbie set from scratch. The attraction’s highlights include a life-size Barbie Dreamhouse that visitors can explore. Guests can sit behind the wheel of a full-size Barbie Camper Van, grab the mic and record in Barbie’s music studio, and take a look back at Barbie dolls and accessories from the past 60 years. The space will also be available for private events and corporate parties. … A new immersive destination in New York City celebrates all things marijuana — but it doesn’t sell actually sell weed on site. The House of Cannabis is billed as the first-ever, permanent home celebrating “high culture” and its impact on music, art, fashion, social reform and agriculture.

Housed in a 30,000-sq.-ft. foot, historic cast iron building in the SoHo section of downtown Manhattan, the destination features 10 immersive experiences along with a retail store. The ground floor is home to the retail space which includes a café and a full-size corner store. The retail shop features “artful “cannabis lifestyle and design products, streetwear and a dedicated well-being apothecary. The immersive experiences are located on the upper three floors and, unlike the ground floor, have a ticketed admission fee. … Dick’s Sporting Goods will open its experiential concept,

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Dick’s House of Sport, at the Prudential Center in Boston, in spring 2024.

The 100,000-sq.-ft. store will be located close to the finish of the famed Boston Marathon. The in-store experiences will include a climbing wall, high-tech batting cages and golf bays with TrackMan simulators. … Claire’s new store in Claire’s Paris was created in collaboration with JapaneseItalian designer Nicola Formichetti, who last year was appointed the company’s creative director. Described as a space for consumers to experience the future of the brand, the space includes two dedicated ear piercing studios and a content creation studio that invites customers “to have fun with creativity.” An ear-shaped “chandel-ear” designed

by Formichetti celebrates the brand’s multichannel “Get Pierced” initiative promoting its ear piercing service. Fast Company recently named Claire’s as one of the 10 most innovative companies in retail.

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17

Spotlight on Brick-and-Mortar

CSA’s SPECS Show puts spotlight on store development, maintenance

Businessman, investor and “Shark Tank” TV personality Daymond John wowed the SPECS crowd with an inspiring and high-energy keynote.

The country’s top retailers and suppliers involved in the planning, design, construction and maintenance of stores, restaurants and non-traditional concepts came together at Chain Store Age’s 59th annual SPECS Show.

The event, held March 19-21 at the Gaylord Texan Resort & Convention Center in Grapevine, Texas, attracted attendees across all sectors of the industry, from discounters, specialty stores and supermarkets to convenience stores, home-improvement centers and more. Restaurants and non-traditional specialty concepts, including financial and health care, were also in attendance.

“We are meeting at a unique time,” said Gary Esposito, SPECS chairman, VP, Chain Store Age, in opening remarks at SPECS. “As many consumers are balancing economic conditions, they are becoming more selective about the brands they engage with and the store experiences they demand. SPECS is here to provide the critical solutions and services needed to compete in this ever-changing landscape.”

The show included approximately 30 targeted educational sessions focused on the latest trends and technologies transforming the design, construction and maintenance of physical stores and restaurants in today’s evolving retail landscape. There was also a track dedicated to the challenges and opportunities facing 18

retail real estate professionals that included sessions on tenant/ landlord relationships and top shopping center experiences.

This year’s opening keynote was given by businessman, investor and “Shark Tank” TV personality Daymond John, who wowed the crowd with an inspiring, passionate and highenergy address. John, who began working at age 10, outlined his rise to success, from humble beginnings in Queens, New York, to the founder and CEO of the billion-dollar-plus apparel brand FUBU. “Responsibility is something that can’t be given,” John said. “It must be taken.”

The SPECS day-two keynoter was NFL legend and entrepreneur Emmitt Smith, who had the SPECS crowd on its feet as he spoke about the importance of setting goals and the value of teamwork.

“Success is there to be shared — sharing success is how we become the best versions of ourselves,” Smith said.

SPECS also provided plenty of business partnering, collaboration and networking opportunities — in sessions, at meal functions and on the exhibit floor, which featured a diverse array of solutions and services designed to provide a better in-store experience for customers and maximize operational efficiencies.

Breakout Retailers The show also included the presentation of CSA’s 2023 Breakout Retailer Awards, with the winning lineup made up of Academy Sports + Outdoors, Boot Barn, Choice Market, Condado Tacos and It’Sugar (see page TC.) The annual awards were sponsored by architectural and design engineering firm Stantec.

Executives from the four winning brands were at SPECS to accept the awards and share insights into their companies during a panel discussion.

Representing their companies at the event were: Jim Conroy, president and CEO, Boot Barn; Mike Fogarty, founder and CEO, Choice Market; Sumeet Mittal, Academy Sports + Outdoors, VP of construction and design; Jeff Rubin, founder and CEO, It’Sugar; and Jason Siegler, chief development officer, Condado Tacos.

SPECS will return to the Gaylord Texan Resort & Convention Center next year, with SPECS Show 2024 scheduled for March 10 – 12.

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Gary Esposito, SPECS chairman and VP of Chain Store Age, welcomed attendees to the 59th annual SPECS Show.

Representing their companies at the Breakout Retailer Awards were (L to R) were Sumeet Mittal, Academy Sports + Outdoors; Jeff Rubin, It’Sugar; Jim Conroy, Boot Barn; Mike Fogarty, Choice Market; and Jason Siegler, Condado Tacos.

NFL legend Emmit Smith energized the SPECS audience with his keynote about the importance of setting goals and the value of teamwork.

Attendees networked at the breakfast and other event funtions.

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SESSION SPOTLIGHT:

AI Comes to Facilities Management

By Dan Berthiaume Artificial intelligence (AI) is becoming an increasingly important technology solution for retail facilities management professionals.

Panelists at the SPECS session, “Facilities: Using Technology to Improve Maintenance Operations,” examined different areas of facilities management where AI and machine learning (ML) solutions are emerging as critical tools.

Moderated by John Pozzetta, regional commissioning manager, Henderson Building Solutions, the session highlighted three ways that AI and ML technology can be used in facilities management.

Data analysis Panelist Miguel Pajares, principal, consulting services, Hatun Mayu Solutions LLC, kicked off the session by explaining how AI and ML engines can help retailers in organizing, analyzing and understanding the large quantities of data associated with their facilities management activities.

“You can make decisions better and quicker,” said Pajares.

“You have site data, work-order data, and transactional sales data. Typically, this data is siloed among different departments and not shared in any type of central depot.”

In addition, Pajares said retailers can leverage AI technology to move from reactive to proactive decision-making.

“Decisions become better and quicker relying on AI data you have stored, which improves asset life,” he said. “People can turn that data into insights.”

Panelist Joshua Witte, director, energy and sustainability, real estate – property management, Dollar Tree & Family Dollar Stores, expounded on Pajares’ sentiments as to the value of AI in unifying disparate streams of facilities management data.

“AI is going to become table stakes in the next generation of facilities management solutions,” said Witte. “It will create an open portal for communication among different stakeholders.”

And retailers do not have to reserve AI analysis for complex data review, according to Witte.

“Data sets can be simple,” he stated. “They can consist of information like work order data or transactional sales data.

Siloed departments need a centralized depot to store and analyze their data.”

Predictive replacement/repair Another area of facilities management where AI and ML technology can play a role is predictive monitoring of assets to

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MAY/JUNE 2023

determine when replacement or repair is needed, before any issues actually arise.

“Predictive analytics is the future of facilities management,” explained Adam Oryszczak, director, facilities services, Ulta Beauty. “You can be certain that you’ll need to replace a specific number of units of a particular asset in a given year. You can go to the original equipment manufacturer ahead of time and place an order. It’s great for budgeting.”

In addition, Witte said that retailers can leverage AI solutions to predictively monitor the condition of major physical assets, such as roofing, fire suppression systems, parking lots and backup power generators.

“You can determine repair and replacement priorities and proactively identify and catch problems before they get too far along,” he said. “Centralized response can provide a significant lift.”

According to Witte, retailers can also take advantage of AI capabilities to monitor facilities to ensure their utilities are producing usage metrics that align with corporate sustainability targets.

“You can automatically monitor energy usage and output and help meet sustainability goals,” he said.

ChatGPT Hatun Mayu Solutions’ Pajares discussed possible applications for the burgeoning ChatGPT AI model, which interacts with users in a conversational style that mimics human interaction and uses ML to continually refine and improve its responses.

“ChatGPT is a very smart tool that will ultimately have the greatest impact on facilities management,” he said. “There are a lot of facilities management use cases where AI and automation can manage tasks that are repetitive, time-consuming, or require little human oversight.”

As examples, Pajares cited providing facilities management updates to customers (for providers) and scope and picture reviews. Utilizing the technology in more repetitive and less abstract thought-intensive workflows also frees up human capital, according to Pajares.

“You can create tremendous bandwidth for your teams,” he stated. “ChatGPT lets them focus on things AI can’t help them with right now, like vendor management and team development. Things on the human side of the facilities management equation that are irreplaceable with a high intellectual demand.”

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SESSION SPOTLIGHT:

Dealing With Supply Chain Disruption

By Dan Berthiaume

Retailers need to plan for new realities impacting the supply chain in areas such as building projects and managing materials.

At the SPECS session “Supply Chain Planning: Best Practices Looking Ahead,” retailers discussed how the retail supply chain has changed in the wake of external events such as the COVID-19 pandemic and climate change.

Moderator Monica Munoz, senior director, capital programs, facilities & asset management, DaVita, led panelists Joshua Witte, director, energy and sustainability, real estate – property management, Dollar Tree & Family Dollar Stores; and Aaron Harris, VP, development, Dutch Bros, in a frank discussion about best practices retailers must follow in today’s business environment.

Disruption and Delays “It’s a different world than it was,” said Harris. “Products are simply not available. There is a long backup. And the quality of products in the last three years has been terrible. You often get the minimum viable goods.”

This issue with obtaining quality products in a timely manner directly conflicts with Dutch Bros’ aggressive growth strategy of opening 150 new stores per year. The Oregon-based, publicly traded coffee chain hopes to operate 800 stores nationally by the end of 2023.

“It’s a struggle to get any quality materials that last,” said Harris. “Our facilities budget is going up as a result. We can’t find backups to our suppliers. The supply chain crisis is putting us 10 years behind.”

Witte agreed that continuing disruption in the supply chain which began during the pandemic is making it difficult to obtain materials needed for physical construction and maintenance projects.

“Getting HVAC equipment has been a big challenge to staying on track with store opening schedules,” said Witte. “Dollar Tree & Family Dollar is re-evaluating our supplier strategy. We used to rely on single sourcing. Now we are dealing with multiple suppliers to get the equipment we need.”

In addition to a planned 150 new store openings this year, Dutch Bros also intends to remodel about 40 stores. Typically, the retailer commits to purchasing the necessary equipment for these types of projects about four to five years in advance, which Harris said provides an edge in this difficult supply chain environment.

“The ability to prepay and make a commitment is huge for negotiations,” said Harris.

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L to R: Joshua Witte, Dollar Tree & Family Dollar Stores; Monica Munoz, DaVita; Aaron Harris, Dutch Bros

Climate Change Witte and Harris agreed that intensifying climate change is having a definitive impact on supply chain operations.

“Severe weather is increasing in frequency year over year,” said Witte. “It’s having an impact, especially in China and Southeast Asia. Weather is disrupting global shipping and third-party logistics, and impacting our ability to get merchandise.”

In response, Witte said that Dollar Tree & Family Dollar Stores is trying to source more globally and diversify its supply chain.

According to Harris, Dutch Bros tries to keep stores open and serve their local community during weather calamities, citing events such as wildfires in Oregon and hurricanes in Florida.

However, he said these efforts still depend on maintaining a secure supply chain.

“We want to be good to our neighbors, but we need to have products available,” said Harris.

Labor shortage Witte discussed how an ongoing shortage of workers in key positions is negatively affecting the supply chain.

“There is a significant shortage of truck drivers,” stated Witte.

“It’s the Great Retirement. And Amazon is poaching all of our drivers. We are also challenged in finding loading dock workers.”

Meanwhile, Harris touched on how labor issues are impacting Dutch Bros’ growth plans.

“The labor situation is not too good in the trades,” Harris said.

“The workforce is aging. It makes us unable to keep up with our construction schedule. It used to take 75 days to build a new store. Now it takes 128 days. It’s all due to a shortage of labor.”

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SESSION SPOTLIGHT:

Experiences That Drive Sales

By Al Urbanski More than two decades into a new century, it’s become clear that retailers in this fast-moving age must strive to become experience providers as well as merchandise vendors. The good news they received from panelists at the SPECS “Top Retail Center Experiences” session is that center operators are prepared and eager to help them attain that designation in countless ways.

Some of them almost unbelievable.

Every summer at Atlantic Station in Atlanta, Starr Cumming, the retail director of specialty leasing at global real estate company Hines, helps the property host the Atlanta Open, a men’s ATP professional tennis event. Come fall, Cirque du Soleil appears at the at the downtown mixed-use center for a two-month run.

When winter arrives, serious basketball fans flock to the site to watch the nation’s top high school hoopsters display their talents in a 103,000-sq.-ft. temporary arena in an Atlantic Station parking lot rented by the NBA-approved league Overtime Elite.

Together, the three events draw nearly 300,000 attendees, plus scads of media attention. They also draw heavily on the talents of nearly every department of the center.

“The property management, engineering, and specialty leasing departments at Atlantic Station are all involved in creating a top-level experience,” Cumming told attendees during the SPECS session.

“Thirty days before any event we have an all-hands- on-deck logistics meeting with the event’s team and our team to review all the components of an events, then another meeting seven days out from the event to triple-check everything,” Cumming added. “We create a run-of-show plan for the team to operate efficiently and ensure a successful event.”

Easton Town Center Expanded luxury shopping is the latest addition to the experiential aura at Easton Town Center in Columbus, Ohio, according to panelist Spencer Jordan, the senior VP of leasing at Easton’s operator, Steiner + Associates. (Easton top the top spot in Chain Store Age’s annual Top Retail Center Experiences report.)

Tiffany & Co. opened a flagship at the massive 1,300-acre center 15 years ago and the luxury jeweler has since been joined by the likes of Louis Vuitton, Gucci, and RH Gallery. Easton has now undertaken a luxury corridor transformation with the addition of a complementary district that it hopes will make it the Rodeo Drive of the Midwest.

“A key factor that defines the luxury shopping experience is relationship-building,” Jordan said. ”In a space where a comparatively small number of shoppers can support most of a store’s sales, building strong relationships between sales associates and repeat shoppers is critical.”

CHAINSTOREAGE.COM

Left to right: Najla Kayyem, Pacific Capital Retail Partners; Starr Cumming, Hines; Spencer Jordan, Steiner + Associates

To give itself room for such retail expansions, Easton intentionally “overbuilds” its parking garages out to typical store dimensions so that they can be converted into retail space when the need arises.

“As Easton’s walkability expands with new development, and the center slowly becomes a community hub in and of itself, we may not require as many parking spaces as we do today,” Jordan commented.

PCRP Pacific Capital Retail Partners is aggressively expanding its mall and shopping center portfolio using demographic research and community involvement to renovate properties and re-install tenants and events that connect with their markets.

“We delve into consumer behavior and community interests to see voids we have and then try to develop a perfect recipe of events and programs that engage and excite our audiences,” said panelist Najla Kayyem, senior VP of marketing at PRCP. At six of its centers, PRCP produced an event with a twopronged purpose of generating community excitement and discovering what the developer hoped could be a local chef-driven restaurant tenant.

At each venue, “Taste for the Space” welcomed as many as a dozen restaurants scouted by PRCP staff. The community is invited to attend the food festival and vote for their favorite dishes.

The winner of the competition gets a turn-key dining space with six months of free rent and a $50,000 investment stake.

PRCP staff, it should be noted, vet top vote-getters to ensure the winner is ready to make the leap to a center.

Last fall, PRCP’s Paseo Nuevo center in Santa Barbara invited returning college students to “College Night Out” for free food and refreshments, games, giveaways, and silent disco. The more than 1,200 students who showed up did some shopping, as well.

Sephora topped its usual daily sales by $8,000.

MAY/JUNE 2023

23

STORE SPACES Q & A

Creating An Experience: A Single-Source Solution Philip Harris is sales director, national accounts, at Construction Specialties.

Make an impression. More than ever, retailers are looking to create memorable spaces, resulting in experiences that are remembered — and revisited. Construction Specialties’ Philip Harris spoke with Chain Store Age about how retailers can create environments that also take into consideration the need for durability and safety.

By Marianne Wilson

In terms of materials, what are some of the most popular elements for retail environments?

All retail sectors are looking to create unique and upscale spaces. Offering costeffective materials in a variety of coordinated design options lets retailers create memorable brand experiences.

Retailers are supporting the customer’s inclination to connect with others. One way is to provide relevance to the local community. Products with the ability to be customized through color, texture and imagery let a designer reflect local flavor and culture, making guests feel more at home.

In areas of high customer interactions, products designed for durability and cleanability are essential, but the products should not sacrifice style. Spaces that support wellness with safe finishes and infection-control practices allow people to feel at ease.

How can Construction Specialties help retailers create memorable store environments? What are the company’s main products?

We believe establishing brand identity and elevating the experience are pivotal.

CS provides a single-source solution for entrance systems, wall protection, wall covering and impact-resistant doors.

Do you recommend special materials for high-traffic retail stores, such as convenience stores and supermarkets?

The largest risk in many retail stores remains insurance claims from slips and falls, averaging $25,000 to $30,000 per claim. Entrance systems such as Pedimat Entrance Mats and Helix Modular Entrance Tiles trap dirt and water while

safeguarding customers.

Also, walls and doors in stores endure a lot of abuse. For that reason, we recommend impact-resistant PETG (polyethylene terephthalate glycol) materials such as Acrovyn wall covering and doors, which are proven solutions for these applications.

What are the most important things a retailer should consider when selecting materials for an entirely new space?

Specifying products designed for longevity is an all-around smart strategy.

Durable products help reflect a professional brand, reduce maintenance cost and are better for the environment.

CS targets design versatility, taking the guess work out of mixing and matching design elements. A curated palette of patterns, colors and textures that coordinate across products lets designers select finishes with consistent quality, color and durability.

Does the criteria differ for renovations and store refreshes?

In remodels, we recommend products and installation methods specific to existing site conditions. Surface-mounted entrance flooring solutions are ideal for asbestos “hot floors.” Our Acrovyn product can be installed over existing wall covering, provided the substrate has been properly prepped.

Can you help balance a retailer’s need for great aesthetics with the need for durability and safety?

CS offers products that meet both needs at once: impressive durability and memorable design. Without a strategy that anticipates wear and tear, even the most

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beautiful aesthetic is just a few shopping cart impacts away from communicating unwanted messages about the brand.

What advice do you have for retailers regarding fitting rooms?

Fitting rooms play a greater role in the customer experience than many realize think.

While the spaces offer privacy, they are still customer engagement points and should reflect front-of-house design as opposed to looking like an afterthought.

These smaller spaces get customers up close and personal with walls and doors, which means any disrepair, damage or uncleanliness is more noticeable. Products such as Acrovyn wall covering and Acrovyn impact-resistant doors support the overall design and also deflect wear and tear.

Does Construction Specialties also have products specifically made for restrooms and back-of-house?

Yes. We have a product range designed to protect back-of-house surfaces that includes corner guards, crash rails, handrails, impact-resistant double acting doors and impact-resistant walls.

Can you help meet a project’s sustainability goals?

Sustainability is a core value. A key attribute of our product offering is extreme durability, which means less frequent replacement and that, in turn, reduces the use of materials and construction waste.

Many of our products have attributes and certifications that help meet LEEDv4 and other sustainability standards, including recycled content, VOC emissions testing, cradle-to-cradle certification and Environmental Product Declarations.

MAY/JUNE 2023

CHAINSTOREAGE.COM

LAS VEGAS

SHOW SCOOP CARMEN SPINOSO on how private ownership will revive malls Other contributors:

MATTHEW BEVERLY on why it takes time to build timeless centers JOSEPH F. CORADINO on the mall’s new proposition JEFF EDISON on why we call our tenants “Neighbors”

CHAINSTOREAGE.COM

ADAM IFSHIN on the essential imperative of teamwork

ANNMARIE PLENGE on the in-house architectural team

ERIC LEIBOWITZ on embracing change

MICHAEL POWERS on “new-urbanistic” development

STEVEN LEVIN on the re-emergence of merchant-led retail

ADAM SCHWEGMAN on food-and-beverage’s critical role

TERRY MONTESI on being a service provider, not a developer

MAY/JUNE 2023

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CONTENTS SHOW SCOOP

LAS VEGAS

TOP DEVELOPERS

IMAGE CREDIT: GETTY

TACKLE KEY ISSUES

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40

30

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Spinoso Real Estate Group CEO Carmen Spinoso, a 35-year mall industry veteran, tells how the much-maligned retail real estate sector will survive and prosper by returning to an era of private ownership

Cullinan Properties CEO Matthew Beverly lays out the many-layered development plan for RockRun collection, one of the Midwest’s most ambitious new mixed-use projects

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North American Properties EVP Adam Schwegman tells why center owners and operators must invest major human and financial capital to bring the best food and beverage tenants to their properties

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Pacific Retail Capital Partners’ EVP of design Annmarie Plenge reveals the substantial time-and-money-saving benefits of a developer with an internal architectural and design team

36

Trademark Property Group CEO Terry Montesi says no two redevelopment projects are the same and intense involvement with the local community is the key to getting such renovation right

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Phillips Edison & Company CEO Jeff Edison on why he and his associates call the tenants in their neighborhood centers “Neighbors”

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Casto’s VP of development Eric Leibowitz weaves the unusual yet fortuitous tale of how Hamilton Quarter in New Albany, Ohio, was transformed from a power center into a mixed-use center practically overnight Centennial CEO Steven Levin, himself a former retailer, expresses his pleasure over the re-emergence of retail brands fixed on using their physical locations to intensify relationships with their omnichannel audiences

44

PREIT CEO Joseph Coradino explains why welllocated A-market regional and super-regional malls are still the best properties to help classic retail names and digitally native arrivals to build relationships with their customers

46

Tuscan Village Senior VP of retail leasing Michael Powers professes that retail-based centers in the 21st century must always be prepared to recalibrate and re-invent themselves to stay in tune with an ever-changing customer base

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DLC Management CEO Adam Ifshin tells why the thinks there’s one thing more important to success in retail real estate than market savvy, professional bearing, or good luck: Teamwork!

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CHAINSTOREAGE.COM

ON THE LEVEL

Retail’s datapowered transformation Raising Cane’s, the fast-growing chicken finger QSR, used to track customers in its market areas by asking them to push pins into a local map to identify their home locations when they entered their restaurants.

But today the chain, which has the second-highest average unit volume behind Chick-fil-A, gets fresh customer location data from PopStats and information on their cross-shopping behaviors from Placer.ai — both services that didn’t exist five or six years ago.

“We now are able to obtain much deeper information, not only on our restaurants, but our competitors’ locations as well,” said Raising Cane’s VP of real estate Dale Goss at Chain Store Age’s SPECS conference in March. “We use Placer data to do forecasting models and plan market strategies for every market in the country. It’s a relatively recent phenomenon.”

Raising Cane’s, whose current real estate expansion goal is 100 new locations a year, entered the Los Angeles market in 2015 with the intent to open 130 stores.

Eight years later, armed with such powerful new market information, the chain recalculated that L.A. could support 195 of its restaurants.

“The availability of good retail real estate is low and tenants need the tools to not only track how many people enter a location, but also obtain efficiency metrics.

A QSR can use our data to learn which chains in a certain area are the most efficient per business hour,” said Placer.ai’s head of analytical research R.J. Hottovy, CHAINSTOREAGE.COM

also on the panel at the Dallas conference.

“QSRs tend to take long leases. A couple of bad decisions can turn out to be disastrous 20 to 30 years down the road,” Hottovy added.

Panelist Kyle Day, executive VP of Synergos Technologies, the provider of PopStats, pointed out that the population data retailers had depended on for decades was far from fresh.

“Data from the 2020 census has still not all been released,” he said. “PopStats delivers quarterly estimates of current populations that retailers can use to capture population growth as it occurs in specific markets.”

Goss says such new data sources allows the Raising Cane’s real estate team to drill deep and unearth very specific information.

“One of the things we’re doing now is forecasting where we can expect new traffic to be generated,” he said. “We go in and look at all the retail nodes in a trade area and which QSRs perform the best.

With malls, we use this data to determine the longevity of specific properties. We take 15-year leases and want to be careful with our investments.”

Hottovy, who before joining Placer.ai was a QSR industry analyst for an investment firm, noted that restaurant chains have been slow to take advantage of new consumer data tools. That’s quickly changing, however.

“COVID hit and completely changed the game,” he said. “QSRs learned a lot about changes in consumer behavior.

They started shrinking the square footage of the interiors of their restaurants and started putting in 70,000-sq.-ft. drivethrus. And they built 10-to-15 percent more locations in smaller markets.”

Several of the contributors to this year’s ICSC Las Vegas Show Show Scoop write about how their centers have been remade due to greater knowledge of local consumer attitudes and behaviors. Be sure to turn the page and learn how new data is helping mold new retail centers.

Every Wednesday The only industry newsletter dedicated to store planning & design, construction, and facilities management.

Get the latest news on retailers’ expansion and remodeling programs, new store prototypes, green initiatives, facilities updates and more. Find out who’s opening stores and where.

CSA Store Spaces covers retail development and facilities management inside and out.

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Al Urbanski aurbanski@chainstoreage.com @AlUrbanski (Twitter)

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27 7/14/21 4:13 PM

LEADERS

CARMEN SPINOSO

on how private ownership will revive malls

B

efore us is a massive opportunity to transform and evolve shopping malls into more productive, vibrant, and desirable properties that reemerge as a popular centerpiece of the communities they exist in.

I have had the great fortune of spending my entire professional career – nearly 35 years - in the enclosed shopping mall industry.

And I have witnessed tremendous change.

When I started, there were approximately 1,500 malls in existence and, at that time, those malls were owned and operated by some 100 privately held, entrepreneurial, real estate development companies that were the original builders. Through the 1990s and into the 2000s, the industry was consolidated to a handful of large public companies (REITs) that came to own the majority of malls. Watching this transformation occur, it became obvious to me that, ultimately, there would be another period of transference of ownership, coming full circle back to private ownership as REITs would prune and right-size their portfolios.

I saw the critical need for a truly turnkey operating platform with specific mall “DNA”. Malls are a complicated and nuanced asset class, that require skill, experience, and specific expertise to best manage and evolve enclosed shopping malls and large-scale retail-based mixed-use projects. I founded Spinoso Real Estate Group to be that expert. Over the last 14 years, we built a highly effective operating platform that’s compiled an unparalleled track record of success. Our current portfolio includes more than 40 properties from coast to coast and we are aggressively growing.

We believe in the future of malls and as more properties transition to private ownership groups like SREG, the opportunity to unlock the potential of these locations will be realized. It is important to understand that every situation is unique and will require data-driven research and diligence to develop a specific, individualized vision. As we look at a mall property that we acquire or are engaged to transform, we start from a clean slate and a fresh perspective of evaluating what would best serve the community and remain viable in the future. Every project is different and, in that way, our industry is coming full circle.

One result of the mall industry consolidation is malls that became homogenized. Most malls had the same or similar mix of tenants with very little differentiation. Many malls became stale and uninviting. As our industry comes full circle, new private groups can reset the basis, bring fresh investment, and transform a property into a unique, fresh, inviting productive place for the community to visit, gather, live, work and play.

28

Each plan requires the ability to curate an exciting mix of stores, dining establishments, entertainment venues, service providers, and other components. At Spinoso Real Estate Group, our core competency is leasing and we excel at recruiting the best mix of tenants in our projects, each of which is uniquely designed.

“Our current portfolio includes more than 40 properties from coast to coast and we are aggressively growing.”

In Santa Fe, N.M., we acquired a mall that was well located, but in major disrepair, and more than 70% vacant. As we studied the market, we developed a vision for the property that included major renovation to the physical plant, re-purposing two vacant department stores, creating a productive Food Hall, adding new dining establishments and a boutique, state-of-the-art Regal Cinema. We completely re-leased the entire project. We also worked closely with the city of Santa Fe to establish new architectural standards, signage standards and obtained the approvals to develop a 150-key hotel and 200 residential units on the site. The transformation from a vacant, blighted property to a true centerpiece of the community is a rewarding endeavor and we have many projects active from coast-to-coast.

As we announce more acquisitions and third-party assignments in the near future, we are hard at work on another exciting project we recently acquired in the greater Cleveland market called SouthPark Mall. There we are opening local, hands-on restaurant concepts as a part of a new Dining and Entertainment District. We acquired a vacant department store where we are about to announce a new anchor tenant, the addition of a large-scale entertainment venue, and many new stores as we simultaneously create exciting events, festivals, and gathering opportunities that have reconnected SouthPark Mall to the community.

Our industry is certainly coming full circle, and we appreciate the opportunity to create fantastic places, projects, and prospects for new, emerging, and quality tenants to expand their brand and serve our communities.

Carmen Spinoso is the CEO of Syracuse, N.Y.-based Spinoso Real Estate Group.

MAY/JUNE 2023

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LEADERS

MATTHEW BEVERLY

on why it takes time to build timeless centers

T

he pandemic lit a fuse in the world of retail real estate.

Societal flows changed overnight, disrupting conventional traffic flows at centers. Redevelopment plans for B-and-C-market centers flourished. A-market malls turned themselves inside-out with outdoor entrances for key tenants and added green spaces and restaurant rows.

Quick makeovers, however, do not necessarily result in longlasting, commercially successful retail properties. At Cullinan Properties, we started developing mixed-use properties in the 1990s. Our Levee District in East Peoria, Ill., the former brownfield site of a Caterpillar tractor factory, has in time evolved into a new neighborhood packed with retail, grocery, restaurant, office, and civic uses.

We believe in working closely with municipalities to create projects that add dynamic new elements to their towns. That result can only be achieved with careful calculation and ongoing observation. We are an extremely patient company. A dedicated investment in time, we have learned, is what provides long-lasting value for both tenants and towns.

We are an extremely patient company. A dedicated investment in time is what provides long-lasting value for both tenants and towns.

In the southwest Chicago suburb of Joliet, Ill., we are currently building RockRun Collection, a 310-acre super-regional mixed-use development that will include 500,000 sq. ft. of retail and restaurants and 160,000 sq. ft. of entertainment along with office, hospitality, and multifamily. It will service a total trade area where numbers are expected to rise tremendously. The population of Will County, of which Joliet is the county seat, is expected to grow more than 75% by 2040.

Within the next two decades, this trade area is destined to morph into a region that can’t be succinctly imagined as yet. Our plan for RockRun, then, is not to build out a million square feet all at once.

We are now building Phase 1 with a focus on entertainment. Our 30

anchor will be Penn Entertainment, which has signed on to build a $185 million Hollywood Casino. Several other national entertainment brands and restaurant chains have shown interest, as well.

These will be the tent-pole tenants.

Traditional retail will come next, and we’ve been talking to bigbox retailers that are not currently part of the Joliet community.

Retailers today spend a lot of time cultivating their concepts and they are looking for developers that, likewise, spend time cultivating their center environments. When they find well-thought-out developments that fit their brands, they are eager to join the party.

The same is true with restaurant chains, though it is key for us to include top local restaurants in a development as massive as this one in order to make it part of the fabric of the community.

One of our goals is to build a center that locals will embrace as their own.

Learning what local communities want and what local municipalities need takes time. We’ve worked with the mayor of Joliet for eight years on RockRun. That long-term, focused community involvement resulted in the recent installation of an interchange that provides direct entry from I-55 into RockRun. Currently, projected traffic of 230,000 vehicles per day from Chicago, central Illinois, Iowa, and Indiana pass the site, and that volume is sure to increase once RockRun and Hollywood Casino open.

Municipalities that find themselves at the center of landscapechanging population growth are being very thoughtful about what their communities might become 20 or 30 years down the road.

When considering what they might do with the current RockRun site, the municipal leaders of Joliet decided not to take the quick and easy route and fill it with rows of new warehouses. They brought us in and asked us to be thoughtful, to be creative, to build a project that would unlock the potential of Joliet as the key draw in a rapidly expanding suburb of America’s third largest metropolitan area.

They asked us to take 310 acres of farmland and turn it into a retail, entertainment, and residential hub. Eight years later, the plan we crafted is on paper and looks great. Now it’s time to execute it.

But slowly and carefully.

Matthew Beverly is the CEO of East Peoria, Ill.-based Cullinan Properties.

MAY/JUNE 2023

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LEADERS

ADAM SCHWEGMAN

on food-and-beverage’s critical role in today’s centers”

E

very night in homes across the country, families are plagued by a recurring question: what’s for dinner? At North American Properties (NAP), we strive to create venues that simplify this decision by curating lively mixeduse destinations with substantial culinary collections.

While the main course usually drives the selection discussion, it’s not unusual for diners to make multiple stops during a single trip – drinks at the raw bar, tapas for appetizers, pasta from the osteria, and dessert from the ice cream shop. This year we’ll welcome more than 30 million guests across our portfolio, and as we have rapidly expanded our footprint, clear patterns and commonalities have emerged.

Assembling the right mix of food and beverage is critical to creating boomerang customers. Variety is the spice of life, right?

However, we don’t just lease to the highest bidder or most popular restaurant. First, an operator must be vetted, intensely. Since hospitality is a core component of our management approach, we like to make sure our restaurateurs have it in their blood, too.

Operators like Chef Ali Mesghali of Rumi’s Kitchen and Steve Palmer behind the Indigo Road Hospitality Group have a true passion for providing memorable guest experiences aligned with our values. Second, the concept must reflect the community it serves.

For example, at Colony Square in Midtown Atlanta, William Pitts launched Saints + Council, which is thriving after satisfying a distinct need in the neighborhood. Third, we evaluate a restaurant’s staying power. Of the 26 we have at Avalon in Alpharetta, Ga., only four have turned over in 10 years, a rarity.

“We try to maximize green space and patio dining--even in colder climates--to emulate the feeling of vacation or inspire escapism.”

Critical mass is key to attracting audiences looking for a onestop shop. This doesn’t just mean stitching a fixed number of restaurants together (although we believe 20+ really does the trick!).

A mix of uses such as office and multifamily is crucial to the health of both restaurants and retailers. These built-in customer bases reduce lag time between morning and evening rushes and bolster the bottom line. As the return-to-office push picks up steam, 32

we’re seeing record occupancy rates as employees want access to amenities they can’t get at home. Onsite residents can also be some of the greatest traffic boosters, as many are repeat patrons who become “locals” where everybody knows their name.

Environment is an essential part of producing a five-star experience. Strip malls and enclosed shopping centers support traditional commerce, but consumers don’t seek them out for a sense of place.

Scale, proportion, design, landscaping, and lighting are among the elements that must be precise for a spot to feel special. We try to maximize green space and patio dining, even in colder climates, to emulate the feeling of vacation or inspire escapism. Furthermore, gathering food and beverage offerings around a common area where events are hosted is a win-win. Our tenants feed off traffic generated by activations, providing our guests bites and sips before, during or after.

Parking and safety can be huge assets if frictionless for guests. At Newport on the Levee this year, three eateries and bars are opening alongside its newest restaurant, a honky-tonk called Shiner’s on the Levee. These include local brewery 16 Lots, Amador Cuban Restaurant and Rum Bar, and a micro food hall by Galley Group. The Levee boasts an extremely accessible parking deck with more than 2,000 spaces, so parking is not a deterrent. We’ve also implemented text-to-park solutions to expedite the payment process. We offer valet, too, and equip our staff with branded uniforms to weave this first-and-last interaction into the overall guest experience. Plus, most of our developments feature rideshare areas shielded from the weather and decked out with comfortable furniture. Finally, where there are masses, crime often follows. Our 24/7 security teams go through the same hospitality training we all do at NAP, so they double as safety stewards and property ambassadors.

When you provide a secure, authentic destination with real variety, the public will flock. This is especially difficult to implement in existing assets, and often takes major human and financial capital to achieve. Having partners that understand, be it tenants or financial institutions, is mandatory for success. Visiting one of our properties on a Friday night, you’ll see, the proof is in the pudding.

Adam Schwegman is an executive vice president of North American Properties

MAY/JUNE 2023

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LEADERS

ANNMARIE PLENGE

on the in-house architectural team

R

eal Estate development is a delicate process. Done correctly--with clear and concise master plans that show how a development ties into a local community and will serve its needs for years to come--it can build trust and goodwill with customers and city officials. Done incorrectly, with constantly changing designs and specifications, it can fly red flags in the community, build mistrust ,and jeopardize a project’s chances of making it past the conceptualization stage.

There is no in-between.

As the former co-leader of the mixed use and retail centers practice at Gensler, one of the world’s largest architectural firms, I saw many projects die on the vine. While their intentions were good, real estate developers were oftentimes forced into presenting master plans that needed more thought and input. Yet, because the design part of development often relies upon thirdparty architects and design professionals who work on their own timelines, the process is frustrating. Developers have to wait days, sometimes weeks, on updated design plans and renderings. Such delays are costly and can lead to developers making their plans public before they should.

“Our entire focus is on helping Pacific Retail move projects from conceptualization to construction more quickly.”

This is why I decided to leave Gensler and accept the opportunity to form an architectural design studio at Pacific Retail Capital Partners, one of the most innovative companies in retail development. I wanted to use the 27 years’ experience I gained working with developers such as GGP, Westfield, and Brookfield to help PCRP speed up their efforts to evolve real estate for the next generation. I felt that having the ability to operate under the same roof as all the decision-makers involved in the development process – design, finance, asset management, and leasing to name a few – would allow me to benefit from a stream of 34

efficiencies while designing master plans that will transform retail as we know it.

The studio’s entire focus is on helping PRCP move projects from conceptualization to construction more quickly. Our team works behind the scenes to ensure our master plans are thoughtfully designed and anticipates any potential obstacles before they happen. Our work allows those presenting our vision to public or city officials to be better informed and more prepared. That means fewer changes made in the initial design and quicker start times for construction.

An excellent example of our team’s impact played out at Yorktown Center, a 1.4 million-sq.-ft. mall that we own in the western suburbs of Chicago. With all the teams involved in the redevelopment process working out of the same office, we were able to work swiftly to come up with a master plan for the former Carson’s anchor box that incorporated the feedback of all parties. Our inclusion of 600 multifamily units and a public park addressed two of the biggest issues plaguing the Village of Lombard: the need for housing and green space. Approvals came quickly.

PRCP’s core values include pushing the envelope and trying something new. We design innovative and tailored master plans to meet the needs of a specific community or market. Our team has the creative freedom to be bold and visionary, and if what we conceive is too much or too little, we can easily consult with our development, asset management, and leasing counterparts – all located just down the hall from us.

Going in-house with PRCP has helped me see design from a different perspective and understand how I can use my knowledge as both a third-party and in-house design consultant to benefit the entire real estate industry. Our architectural design studio is a resource for all developers and retailers, and we encourage anyone in development to reach out to us to see how we can help expedite their projects while saving costs and delivering financially viable designs that meet their goals and objectives.

Annmarie Plenge is the executive VP of design at Pacific Retail Capital Partners, a Los Angeles-based owner-operator of more than 20 regional and super-regional centers nationwide.

MAY/JUNE 2023

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LEADERS

TERRY MONTESI

on being a service provider, not a developer

I

n the 1980s, much like today, inflation rates and interest rates rose dramatically. Homeowners’ mortgages tanked in value, causing the famed savings and loan crisis. Scads of properties became available for 10 or 20 cents on the dollar and it occurred to me to put some partnerships together to buy some of these properties. That’s when I stopped being a broker and became a developer.

In 1992, I founded Trademark Development Company. Real estate development is a business that’s all about transactions. But, having experienced the pain suffered by so many American families during the savings and loan crisis, I vowed that Trademark’s fortunes would not turn on transactions. We have survived and thrived for 30 years by listening to the needs and wants of communities and creating something for them that they will love.

That’s how we helped mold the plan for Market Street Woodlands in a master-planned community of more than 100,000 people north of Houston. The township wanted to take its Woodlands Town Center to the next level and hired us to get it done.

We did some interesting things there in the refresh we completed in 2019. No one at that time was mixing product types together. We may have been the first developer to put a specialty grocer like HEB together with specialty retail such as Chanel, Lululemon, and Warby Parker. The average sales per sq. ft. of $1,124 that Market Street Woodlands achieved in 2022 is precisely double what it was in 2017. Net operating income during the period rose 25% to $18.1 million.

Helping set the path for our renovation were town meetings with the community. We believe in the wisdom of crowds.

We tapped into the same intelligence source to help accomplish our $26 million remake of the Saddle Creek Center in Germantown, Tenn., just outside of my hometown of Memphis.

We demolished 20,000 sq. ft. of space of Class C retail space and added 40,000 sq. ft. of Class A space.

Trademark performed the center-wide upgrade by leasing more than 100,000 sq. ft of space to 33 new tenants that included Kendra Scott, Michael Kors, and Sephora. We relocated Apple to a 36

new and larger space. Three-quarters of Saddle Creek’s tenant mix is unique to the Memphis market, and it is now the metro’s No. 1 shopping destination.

More and more mixed-use projects will be developed in the United States in the decade ahead because multifamily housing is underserved in our country by about two million units. Many residential-focused mixed-use developers use a cookie-cutter approach, building the same center in Chicago that they do in San Diego. They don’t tap into the community to learn exactly what kinds of experiences are needed to make these developments great places to live. We have found that the formula is different in every location we’ve developed. You have to have tenants and events at each one that are meaningful and inspirational to the people who intend to live, work, and play there.

“Each center we develop must have tenants and events that are meaningful and inspirational to the locals who intend to live, work, and play there.”

We are an organization that is all about elevating people and places. And Trademark remains committed to being extraordinary stewards, enhancing the communities we do business in, and enriching the lives of the people we serve. And looking ahead, we’re excited to remain leaders in the property transformation business, helping outdated malls, offices and mixed-use centers get ready for their next act.

So when I look back 30 years to the time I stopped being a broker and became a developer, I realize that I’ve undergone a new occupational change. Trademark Property Group is now a service provider.

Terry Montesi is the founder and CEO of Fort Worth-based Trademark Property Group.

MAY/JUNE 2023

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LEADERS

JEFF EDISON

on why Phillips Edison calls its tenants “Neighbors”

P

hillips Edison & Company owns and manages nearly 300 grocery-anchored shopping centers in neighborhoods throughout the United States and-- in PECO’s case--the term “Neighbor” applies to its tenants as well as to its properties’ suburban locales. A few years ago, leaders at the company started calling its tenants “Neighbors” and it quickly became a part of the culture. We spoke with the company’s CEO and founder, Jeff Edison, to learn how the amicable appellation for its rent-payers came into being.

Why does PECO refer to its tenants as Neighbors?

It really reflects the value of our tenants and the communities that we serve—one shopping center at a time. Each of our Neighbors is more than just a tenant occupying a space. We have nearly 300 shopping centers and each of the communities we serve are different. Calling them Neighbors reminds our associates of the special roles they play in those communities. They have strong relationships with their customers, who decide every day that this is where they want to get their hair done, where they want to work out. Neighbor is a term that affirms that our tenants are important members of the community.

What about within the Phillips Edison community? Have you implemented any digital communications tools to unite them?

We have a platform for our Neighbors called DashComm which makes it easier for them to get questions answered about billing, invoicing, and more. We created this platform at the same time that we were implementing the Neighbor concept. We 100% lease our own space so, with any issues that our Neighbors have to address, they know they are dealing directly with a PECO associate. It creates a best-in-class service-level consistency and has significantly strengthened the relationships we have with them.

If our Neighbors have a roof leak or need their HVAC serviced, this is how they can get that fixed quickly. If we encounter a weather emergency—like a hurricane—it also gives us another way to communicate with our Neighbors and be made aware of their concerns in a timely manner.

Do you get any feedback about your Neighbors concept from national chains that have locations in several PECO centers?

Some 75% of our rents come from national and regional Neighbors.

We roll out our Neighbor Survey every two years where we ask all 38

of our Neighbors to score how we’re doing as a landlord. We continue to get extremely positive results. In our latest survey, we had a 94% overall satisfaction rate from our Neighbors.

Are you seeing any big changes in the types of new Neighbors moving into your centers? Medtail? Fitness?

New food and beverage brands?

Medtail—which was a very small part of our business maybe seven years ago—is coming on strong. And it’s not just urgent care and vision care, but things like chiropractic services and physical therapy. Our occupancy rate is at its highest level ever—over 97% in 2022—and we had a 90% rate of renewals.

“Calling our tenants ‘Neighbors’ reminds our associates of the special roles they play in their communities.”

Grocery-anchored centers did well in the early days of the pandemic with so many workers stranded at home. Has that had a permanent effect on traffic at your centers?

Our top grocers continue to drive strong recurring foot traffic to our centers. During the pandemic, grocery stores and the foot traffic to grocery-anchored centers recovered at a faster rate than that of other retail locations. Since then, the vacancy spread between grocery-anchored and non-grocery-anchored centers has widened.

Grocery-anchored centers are well-positioned to maintain these lower vacancies, which we are seeing in our portfolio.

Throughout 2022, our Neighbors demonstrated their resiliency and successfully managed many challenges including inflation, supply chain issues, and labor shortages. We continue to benefit from a number of positive macroeconomic trends that drive Neighbor demand and support our growth, including hybrid work, migration to the Sunbelt, and population shifts that favor suburban markets.

These demand factors are further amplified because limited new supply is being delivered to the market.

Jeff Edison is chairman and CEO of Phillips Edison & Company, which owns and operates more than 300 grocery-anchored centers nationwide.

MAY/JUNE 2023

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LEADERS

ERIC LEIBOWITZ on embracing change

M

ore than 40 years ago, Don Casto bought a large swath of undeveloped property about 10 miles northeast of Columbus, Ohio, near a milltown called New Albany. It was a sleepy village of less than 400 people at the time, but Don knew this was in the path of growth and that the Ohio Department of Transportation had plans to build an Interstate through there that would connect Columbus with John Glenn International Airport. He held the deed and waited.

I-670 wasn’t completed until 2003. In the intervening time, L Brands founder Les Wexner built a home in New Albany while The New Albany Company facilitated additional growth in this very attractive community. Now a suburb of 11,000 people with median household incomes topping $200,000, it was rated as the No. 1 suburb in America by Business Insider.

“Two weeks before we were going to break ground on Hamilton Quarter, our plan was altered by a game-changing new tenant.”

In 2018, following many years of planning, the partnership behind the development was ready to start construction on an initial 70-acre phase of the interchange-wide development that had since been named Hamilton Quarter. It was intended to be all retail. However, two weeks before we were going to break ground, our plan was altered immeasurably by a game-changing new tenant.

The Hamilton Quarter developers were approached by The Ohio State University about putting a medical center at the location, and very quickly this exciting potential addition became a reality.

Their initial phase would be the biggest space on the property— a 250,000-sq.-ft. building plus room that would allow them to double the size of the facility in the future. All at once, what was to be a 70-acre retail center turned into a mixed-use project with 40 acres of retail and a 30 acres of medical campus.

Target was our retail anchor, and we were very fortunate that 40

they worked hard to understand the symbiotic impact Ohio State could have on the project. Others headlining Phase I now include Hobby Lobby, Chick-fil-A, Bath & Body Works, Five Below, Starbucks, and Torchy’s Tacos.

The impact SU Wexner Medical Center would have on our retail contingent would grow to be extremely meaningful. The medical center’s first phase gets over 2,500 visits to daily. What’s more, the average annual salary of its plentiful staff topped $100,000.

Hamilton Quarter provides a convenient destination for employees and visitors of the medical center to meet all of their shopping and dining needs--truly a one-stop shopping experience.

We have learned that when developing a large interchange site, it’s wise to mold it over time in phases. It is critical to give the local market time to react and tell you what else it needs. We have found this practice lends itself to facilitating longstanding market value in a center.

Our other distinct focus is balancing functionality and convenience for the consumer in site and building design. Striking the balance of high-quality site design, architecture and visibility to maximize functionality ultimately provides the best opportunity for sustained success – regardless of use.

We have seen these qualities be carried through in Phase II of Hamilton Quarter with tenants that include BJ’s Wholesale Club and Sheetz. Med-tail plays a part there, too. OhioHealth has two freestanding community locations at the Hamilton Quarter interchange.

Hamilton Quarter was originally intended to be a very traditional power center, and I’m sure it would be doing exceptionally well right now in that capacity. However, what we ended up with on that interchange—thanks to thoughtful planning, lots of hard work and a measure of good timing and good luck—was a phenomenal case study for mixed-use. Retail real estate today is a rollercoaster ride that requires great creative thought and effort.

As the author Alan Watts once wrote, “The only way to make sense out of change is to plunge into it, move with it, and join the dance.”

Eric Leibowitz is vice president of development and leasing at Columbus-based Casto.

MAY/JUNE 2023

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LEADERS

STEVEN LEVIN

on the re-emergence of merchant-led retail

I

just finished reading The Kingdom of Prep, a book about how Arthur Cinader and his daughter Emily Cinader Scott built J.Crew into a legendary lifestyle brand by reinterpreting the traditional fashion archetypes of prep schools for a mass audience—and how the brand’s aggressive expansion eventually lead to the point of financial disaster for J.Crew.

Relevant and engaging new retail brands face a perplexing challenge when their businesses are exhibiting success.

Understandably, they want to reap the fruits of their success through expansion, which usually leads to sourcing outside capital.

But investors’ agendas are ruled by numbers and growth, not by consumer trends. Hundreds of new stores are quickly opened minus the necessary insight that will ensure their locations are matches for their customers. I believe that’s what’s gotten so many great brands like J.Crew in trouble.

Now the good news. Retail has experienced and survived a significant shift in consumer behavior. Department store anchors which malls were built upon have now become - in many cases—challenges to redevelopment opportunities. Entertainment brands, health and beauty retailers, and dynamic food and beverage concepts are the pillars of new retail developments. For developers and creators like us, it’s an exciting time to be a part of the business.

Merchant-led retail is back, and with a new cast of brands full of resonant national and local appeal. At MainPlace in Santa Ana, Calif., we opened the nation’s first American Ninja Warrior Adventure Park, which draws national and international visitors who flock to the area to visit Disneyland and Knott’s Berry Farm.

Another focus for Centennial is providing unique culinary experiences. The food and beverage scene continues to explode with new, exciting concepts catering to the growing popularity of Foodie Culture. Foodies are seeking chef-driven restaurants with distinct local vibes.

Another notable shift relates to e-commerce brands. Digitally native brands with national followings have abandoned the belief that they don’t need physical locations. They have embraced an omnichannel philosophy of allowing current customers to be able to research products online before making their in-store visits— and recruit new customers who discover their brands through a store visit then sign them up on their e-commerce channel.

The adoption of online shopping was expedited when COVID 42

burst upon the nation. As people stayed home, they began shopping for groceries online and taking advantage of home delivery and pick up options. They loved the convenience of it. Over time, however, a transformational moment occurred. People began to realize that they missed the social aspect of shopping.

The COVID lockdown caused brands to focus on meaningful customer engagement and connecting with customers when and where they wanted to connect--a much-needed change in the industry. This shift inspired Centennial’s early adoption of the virtual shopping platform, Shop Now, providing customers the ability to browse and search in stock inventory with delivery and pick-up options. In addition, brands and developers are adopting data-first strategies leading to right-sized, successful physical footprints.

“Digitally native brands with national followings have abandoned the belief that they don’t need physical locations.”

Jim Boscov, the CEO of Boscov’s, which operates 50 department stores in the Northeast, opens just one store a year. He picks his new locations armed with great local market knowledge, and he continually renovates older stores to keep them in tune with the times.

At Centennial, we are excited to be a part of the retail renaissance led by passionate merchants carefully selecting physical locations that align with their omnichannel strategies. The role that we as owners and operators must play is to focus on creating lasting partnerships by collaborating with merchants on developing marketing and activation strategies designed to drive traffic and create memorable experiences for our customers.

Helping make retailers successful is what, ultimately, makes us successful.

Steven Levin is the founder and CEO of Dallas-based Centennial, which operates 30 retail centers nationwide.

MAY/JUNE 2023

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LEADERS

JOSEPH F. CORADINO

on the mall’s new proposition

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s consumers learn how to manage increasing prices due to inflation, one thing is certain: Top-quality regional malls remain the best places for digitally native brands, local retailers, and new dining concepts to connect with new customers and strengthen relationships with existing ones. In-person shopping is an experience that cannot be replicated online.

It is a tactile experience that gives consumers the opportunity to touch, feel, and try on products before purchasing them.

It is a visual and social experience in which shoppers are enticed by store displays and can engage with knowledgeable associates.

It is a living platform upon which retailers and restaurateurs create holistic experiences that encourage loyalty.

“Physical presence is a marketing tool. It is a theater in which retailers can create a immersive experience for their customers.”

As we continue to experience consolidation among retail real estate venues and as weaker malls and shopping centers are repurposed, there is a new calling for the strongest brands to join the strongest centers and maximize foot traffic and sales. Among them are savvy, digitally native brands looking to build physical retail presences or expand their the ones they’ve forged, as well as local and regional merchants who see malls as the best way maximize exposure for their growing businesses.

Digitally native brands can benefit from opening brick-andmortar locations as it allows them to connect with their customers on a more personal level. Physical presence is a marketing tool. It is a theater in which retailers can create a immersive experience for their customers. As an alternative to managing inventory across a store network, digitally native brands can use their physical locations as showrooms where customers can see test products and sizes before purchasing them.

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Rather than using algorithms to control where their message is appearing and guessing who will be receptive to it, they can take advantage of passersby and use real-life engagement strategies to connect with customers. Some of the more well-known retailers increasing their offline presence include allbirds, Bonobos, AdoreMe, Casper, Purple, Glossier, Parachute, Untuckit,. and more. Typically choosing to locate in best-inmarket, dominant centers where they know their customers are, Warby Parker, Peloton and Purple are tenants in our Cherry Hill Mall outside of Philadelphia.

Local retailers looking for larger audiences, too, see their brands bunished when surrounded by qualityt co-tenants in top-tier destinations. These merchants not only introduce their products to new audiences, but gain cachet as neighbors of heralded brands. Many of PREIT’s properties have seen an increase in best-in-class local tenants when closures of competitive properties fully established them as the market-dominant properties.

National brands, in turn, benefit from a stream of new traffic made up of long and loyal customers of the local brands. One property that stands out with a significant presence of local retail is Moorestown Mall, which boasts unique local brands in addition to a broad range of traditional and off-price retail, dining, and entertainment destinations.

Good malls retain the power to attract customersby offering a distinctive mix of places to shop, great food options and fun things to do. In PREIT’s portfolio, even as customers pull back amid rising costs, sales through February were up nearly 2% over December results and traffic is up more than 7% compared to last year. Three of our properties yielded better results than they did in 2019.

The most successful malls will continue to adapt their model to satisfy modern consumers as their preferences shift. They are engaging them with expanded events and marketing strategies that shine a new light on them as the best option for restaurants, retail brands, and new entertainment that, likewise, are refashioning themselves for a new generation of customers.

Joseph F. Coradino is the chairman and CEO of Philadelphia-based PREIT

MAY/JUNE 2023

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LEADERS

MICHAEL POWERS

on “new-urbanistic” development

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s many of the malls that dominated physical retail for decades close or attempt to reinvent themselves, retail real estate developers are exploring and executing new ideas and designs for the brick-and-mortar centers that will define the marketplaces of the 21st Century.

One movement called “new urbanism” development harks back to the Euclidean Zoning established in the 1920s, a system influenced by a lawsuit in Euclid, Ohio, that separated residential zones from commercial zones. That’s one of the principles we used to design and program Tuscan Village, a 170-acre mixed-use project on the former site of the Rockingham Park Racetrack in Salem, N.H. that opened in 2021. Its retail tenants include Arhaus, Nike, Pottery Barn, Tuscan Market, The Container Store, Williams Sonoma, Sam Adams Beer Garden and nearly 1,000 residents— many of whom migrated to tax-free New Hampshire from Boston, just 32 miles away.

Developments like Tuscan Village, however, need time to fully define themselves. All too often, developers put blueprints together for a big new project and 10 years later realize they didn’t get the recipe right in terms of the programming. To create what we intend to be a long-term enduring property, we have to have the ability to develop the land in phases. And to do that, we don’t tell the market what it needs; we let the market drive the programming. It also helps to have a local government willing to work with you as the programming strategy changes due to twists and turns in market reaction and resulting demand.

One of those first twists affected us while we were still building phase one was the pandemic. It hit, and all of a sudden droves of Boston residents were looking to move out of the city and work from home. Our residential development partners quickly occupied the 600 apartments and town homes in our blueprint for the first phase. Right now, we are planning for many more residential units as a function of our success in phase one.

With so many potential customers living right on the property, our change in strategy altered the future character of the development and, in turn, made it more appealing to some retail, restaurant, and experiential tenants that might not have been considering space at Tuscan Village previously.

Arhaus furniture had some expansion demand bandwidth in the Boston market and we were fortunate to get on their list.

They made three or four visits to the market, not just exploring Tuscan Village, but driving from neighborhood to neighborhood in the area. With Lake Winnipesaukee, the White Mountains, 46

and the seacoast nearby, southern New Hampshire is a tremendously popular second-home market. Arhaus decided to open a 15,000-sq.-ft. store and exceeded their expectations-and ours, as well.

With projects this big and impactful, developers have to maintain flexibility in their strategic plans to maximize the productivity of their assets. You have to imagine your environment three-dimensionally. How will shoppers experience the space? And what about residents? Workers? Patients and families of people seeking medical attention from the first Mass General Brigham Medical Center in the state? What new demands will all these different guests bring to our space?

“Retail tenants and retail real estate developers have to maintain flexibility in their strategic plans if they want to maximize the productivity of their physical assets.”

How will each of those groups of residents and guests overlap each other? And how might that change? One has to blend those possibilities together and make synergistic decisions. What will wedding parties staying at our hotel want to do? What leads people to want to live at Tuscan Village? How do we make it pedestrian while also making parking convenient for our various categories of guests?

More and more mainstream retailers are starting to get an understanding of this evolution of retail center shopping behavior.

More open-minded omnichannel and digitally native retailers understand that there are certain brand connections in our environment that matter to them. Currently, retailers who think this way relative to site selection are few, but they are becoming a growing percentage of the total.

Retail tenants and retail real estate developers have to maintain flexibility in their strategic plans if they want to maximize the productivity of their physical assets. Neither of us can afford to draw up a plan, lay it on the table, and wonder why it didn’t work.

Michael Powers is senior vice president of retail leasing at Tuscan Village.

MAY/JUNE 2023

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LEADERS

ADAM IFSHIN

on the essential imperative of teamwork

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rospective DLC employees are often taken aback when they open the careers page on our website. The first thing they see is not a job title with a list of desired professional attributes. The first list they see asks them who they are before bothering to scroll down to the job description.

Are you self-confident, but devoid of an overbearing ego?

Are you unafraid to tell us what you don’t know and eager to learn new things?

When your teammates are knocked down, are you there to help them get back on track?

Do you refuse to back down when a situation appears bleak?

Do you value team wins over personal victories?

We find ourselves in a very unusual time in the real estate business. The perception of the business among investors is not good.

Deals are harder to do and take longer to close than they were just a few years ago. Cohesive teamwork and personal interaction is critical in helping us focus on the positive and not dwell on the negative. It’s the only way that ensures we will have our key players in the game in a given situation, and that the rest of the team will support them.

“Expertise can come from anywhere on our team, and we are designed to thrive in this way.”

We recently were presented with an opportunity to recapitalize an asset and introduce a multifamily component. It was the first time we would be dealing with non-retail development, and that meant our leasing and asset management teams had to have open minds and learn about that other discipline. The best knowledge we had on the subject within our team was a 23-year-old analyst.

We paired him with a senior person who taught him how to obtain the entitlements to go ahead with the construction.

Expertise can come from anywhere on our team, and we are designed to thrive in this way. The ability to leverage experience with specialized knowledge is part of how we can consistently get the job done – in whatever facet of real estate it might be. A successful center anchored by At Home and Hobby Lobby is now more valuable with residential in the mix, and we were able to increase the ratables for the municipality.

Dedicated teamwork proves extremely valuable in emergency 48

situations. After Hurricane Ian hit Southwestern Florida last November, one of our centers was hit hard. We had a Sprouts, a Starbucks, and a bank that needed to be rebuilt. Our construction team couldn’t reach anyone in the town’s building department to obtain the permits we needed.

Our locally based property manager knew the town’s building department chief was out looking at houses damaged from the storm and would not be committing time to being in the office taking on commercial issues. But she knew where he got coffee every morning and she was able to connect with him and we had permits in five days. It’s that kind of resourcefulness that is a driver of teamwork.

There are thousands of people qualified for the careers we list on our website, but there are few that have the personal makeup and team dedication that we are searching for in that first list of questions at the top. We often do six or seven interviews with candidates to make sure that they’re the team members that we want.

I may bring them into my office and have them tell me about their life stories. I want to know about their childhoods. Did you play any team sports? Did you have brothers and sisters and how did you interact with them? And maybe more important, were you and are you always there to help them if they need it?

By focusing on fit and personal attributes we have a more engaged team that works well together. This leads to our ongoing ability to remain successful through any cycle and hold a retention rate consistently better than the industry average.

We are invested in the training and development of our teammates and want them to build a successful career here. We encourage teammates get exposure to different areas of the business and many of our teammates have risen through organization in nonlinear ways.

On a recent Saturday morning, 13 of our employees got together for a charity bike ride. It was a cold, disgusting day, but all stayed and participated and helped in raising $40,000. Afterward, I offered to take them out for lunch and just about all of them came.

I believe people miss the connectivity they have in the office.

They miss the all-important personal interaction. We want to give them as much interaction as we can.

At DLC we believe life is too short to just have a job and, for DLC to thrive, we make sure our people thrive.

Adam Ifshin is the CEO of Elmsford, NY-based DLC Management.

MAY/JUNE 2023

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TECH Q & A

The Smart Approach to Frictionless Retailing

Leveraged properly, frictionless shopping is a valuable offering for retailers and consumers alike.

By Dan Berthiaume

Chain Store Age recently spoke with Fredrik Carlegren, VP, marketing & communications, Toshiba Global Commerce Solutions, about how, why and when retailers should implement frictionless technologies that enable shoppers to bypass manual checkout in their stores.

What are the advantages of frictionless retail for the retailer and shopper?

Frictionless presents shared advantages for retailers and shoppers. A recent study reported that 52% of shoppers said promotions and discounts would improve their loyalty to a store, supporting the crucial role of frictionless in enhancing loyalty and promotions through improved data collection.

Additional frictionless approaches, including self-checkout, mobile payments, biometrics, and one-click ordering and support, maintain efficiency when labor shortages occur by streamlining operations that eliminate manual processes and speed up transaction times. By supporting the overall experience, retailers will drive customer satisfaction, leading to repeat business.

Frictionless-enabled technologies deliver flexibility allowing shoppers to make purchases anytime and from anywhere while personalizing recommendations based on past purchases and preferences.

Overall, frictionless retail provides a seamless, convenient and personalized shopping experience for retailers and shoppers.

What is the right situation to offer frictionless shopping?

Moderation is key when integrating a frictionless strategy to maintain brand trust. Always consider the target audience and situation. Each generation shops

differently. For example, Gen Z has never known life without the Internet.

Retailers targeting this audience should consider experiences leveraging technologies like computer vision, biometrics and AI in delivering an interconnected experience. The situation is also important.

For example, in high-traffic locations where shoppers are on-the-go, speed and ease are essential. Also, contactless payment and checkout options became highly desirable during the pandemic because they minimize physical contact with surfaces. Ultimately, the use of frictionless experiences depends on their implementation and the consumer’s specific needs.

When is it better to offer a ‘traditional’ shopping experience?

The decision to offer a “traditional” shopping experience is a balance between technology and personal interaction to deliver a positive shopping experience that meets the needs of both the retailer and the consumer.

Retailers relying too heavily on frictionless technology can create a sense of impersonality, driving a disconnect between the consumer and the product and decreased loyalty. Today’s consumer seeks trust in the brands they choose, and retailers understanding the target audience is essential.

How do you see frictionless retail evolving in the next 12 months?

There is already increasing adoption of AI-powered technology. Our data shows that 60% of retailers have either already implemented or are scaling the use of AI in their stores, with 33% exploring the idea.

As the industry continues to refine frictionless capabilities, we will see increasing

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use of AI to automate product recognition for swifter self-checkout and loss prevention, inventory management, and loyalty and promotions programs. Coupled with computer vision, AI can improve loss prevention and shrink associated with item misidentification.

The lines between e-commerce and physical retail will continue to blur as consumers settle into their “new normal” postpandemic, shifting between frictionless for convenience or a buy online, pick-up in store approach for convenience plus instant gratification.

Ultimately, the use of microservices, IoT touchpoints, and data about consumer behavior will enable retailers to predict trends and make more organic recommendations to shoppers based on their purchase history to deliver memorable experiences for consumers.

How does Toshiba Global Commerce Solutions help retailers with their frictionless retail efforts?

We enables retailers to independently deploy smaller components or services to truly own their journey in a way that makes sense for their business and customers.

Our scalable solutions provide flexibility to support seamless, personalized shopping experiences that reduce friction, increase shopper engagement, and drive business success for retailers.

Retailers need to be able to craft different customer experiences for distinct shopper personas supporting a variety of shopping methods, including scan and go, buy-online-pickup-in-store and curbside delivery.

Our ELERA Commerce Platform and microservices power more personalized customer journeys to engage and delight generations of consumers.

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