Take-Aways from the ICSC Philadelphia Retail Deal-Making Conference. Perspective from Rookie Agents.
The ICSC Philadelphia Retail Deal-Making Conference was held at the Pennsylvania Convention Center on September 5th & 6th. Every year, Metro Commercial sends an army of retail real estate agents and staff to learn a few things, meet some people, talk retail and discuss deals! This year, Metro is introducing the world of ICSC to three (3) new “Rookie” agents who are being trained and mentored by seasoned Metro agents. Metro’s Rookies are trained for twelve (12) months and are assigned to a couple of agents to be trained in Tenant Representation and Agency Leasing. At the end of Metro’s training program, our Rookies graduate to Sales Associates and are ready to represent our tenants and landlords in structuring commercial lease and sale agreements. Here’s what our Rookies had to say about their experience at their first retail real estate conference.
Views on Owners & Landlords
Retail real estate owners continue to adapt to changing consumer habits and how they shop for goods and services. In reaction, there is a continued focus on leasing to experiential tenants such as fitness, office sharing, and entertainment to attract more consumers to fill vacant space and drive traffic to their shopping center. Owners are noticing the consumer mindset has also been evolving for Millennials and Gen Z, and how they prefer to pick up their goods, relative to time. Millennial’s and Generation Z want their retail purchases immediately, not wait 2 days for it.
In the news, we hear about the e-commerce world of shopping and how it is growing at an exponential rate, however, when you are gauging a small amount of people in a study such as this, you are going to see larger percentages as more people transition to e-commerce shopping. What they don’t account for is how small that piece really is in the grand scheme of total retail purchases.
E-commerce retailers today are doing something differently than ever before, which is opening brick and mortar stores. Why? They have realized that today’s consumer would like to be able to see and feel what they are purchasing. A few retailers that started as e-commerce retailers that now sell in physical stores include; bonobos, Away Travel, Allbirds, Amazon and Warby Parker. Selling to the consumer through multiple channels makes sense given that successful retailers have launched an omni-channel sales approach which connects them to the consumer wherever and however they shop! – Jonathan Spoerl
View on Retailers
The 2018 ICSC Philadelphia Retail-Deal Making Conference seemed to revolve around a central theme: the need for retailers to evolve with society in order to remain competitive and essentially, survive. An increasing number of tenants have departed from the big-box merchandising business model to provide unique services rather than physical goods. In traditional suburban malls, these tenants, such as colleges, fitness spaces, grocers and even trampoline parks, are capitalizing on the expansive, vacant spaces left behind from waning big-box retailers. This experiential retail is becoming more prevalent due to increased demands from Generation Z and Millennial consumers.
In the past, tenants solely operated via brick and mortar. To maximize market presence, tenants need to integrate alternative forms of consumer outlets for a more holistic shopping experience. Omni-channel commerce involves cohesively and simultaneously operating a brick and mortar store, maintaining an online internet presence and promoting brand awareness through social media platforms. Notable retail tenants that have found success through the use of omni-channel commerce include Disney, Bank of America, REI, Starbucks, and Chipotle, just to name a few. – Michelle Langborgh
View on CRE Technology
Since I joined the Metro team this past May, I have found ICSC’s research to be extremely valuable. ICSC’s detailed reports are packed with information that has helped bring me up to speed on the Retail Real Estate Industry as a whole. Fortunately, I was able to attend a presentation by ICSC’s Director of Research, Chris Gerlach, on the first day of the conference.
Chris touched on many topics having to do with retail real estate, but I found his insights on technology to be the most striking. He discussed how the 800-pound gorilla of E-Commerce, Amazon.com, has been experimenting with drone-delivery. Drone-based delivery would lower Amazon’s overhead cost to $1.00 per delivery, compared to the current $5.00+ that Amazon pays now. If Amazon cut its delivery costs to 1/5th of the current level, it would allow the company to further disrupt the brick-and-mortar retail industry. Chris also touched on other technologies: 3D printing (Additive Manufacturing), Virtual Reality, and Autonomous Vehicles. The data seems to show that these advanced technologies are going to shape the industry in the future, but no one seems to know when or how much they will impact it.
Overall, I learned that some technological advancements will fuel growth in the industry and some will disrupt the industry. It is a good idea to begin planning how you can leverage these technologies to your advantage. As retail real estate professionals, we have to be ready to adapt to a constantly changing environment, or risk becoming obsolete. – Alexander Dawejko