The Retail Development Industry Today
March 1, 1999
Janis Boyarsky Schiff- Washington
Stephen W. Snively- Orlando
Holland & Knight LLP is pleased to publish its first Annual Retail
Development Industry Special Edition of Property Writes. Many of you are regular
readers of Property Writes, other are receiving it for the first time. In either
event, we hope that this Special Edition is informative and helpful to your
business.
In 1999, we foresee the retail real estate industry expanding and growing in
many markets throughout the country, while consolidating and shrinking in other
markets. Retail bankruptcies, both reorganizations and liquidations, will
undoubtedly occur. So long as the economy is strong, retail consolidations will
continue as old concepts struggle to keep up with emerging businesses and
repositioned players. Food and entertainment uses still play lead roles in many
new developments, as movie theater and restaurant chains flex their economic
muscle. Traditional neighborhood centers, anchored with a grocery store and
drugstore, remain strong and relatively easy to develop and finance. The
"power centers" with "category killers" appear stable, while
many of the "big box" retailers have slowed their expansion plans.
"Urban retail" is the new industry buzzword with many developers
diversifying into this new concept. Regional malls still attract record numbers
of shoppers and maintain their market value. For the first time in many years,
we see a resurgence of new regional mall construction, at the same time that
many "tired malls" are undergoing major facelifts, ready to emerge and
compete with the new guys on the block.
Shopping center REITs, while not skyrocketing in value, still maintain their
prominence in the financial markets. Lenders remain comfortable loaning on
credit-backed retail projects, especially those in major metropolitan markets.
Innovation and diversification are the trends with exciting new mixed use and
renovation projects being planned from coast-to-coast. These projects include
urban retail, big boxes, convenience retail components such as drug and food
stores, as well as entertainment components such as theaters and health clubs,
and restaurant concepts such as breweries, theme restaurants, casual dining and
purveyors of "home replacement meals."
The arrival of year 2000 is a milestone that symbolizes technological change
for our nation. The new millennium will present new challenges for the shopping
center industry. As Internet commerce increases, traditional retail businesses
will concentrate even more on dining, entertainment and real-world opportunities
to enhance the shopping experience. The specter of national, state and local
regulations will expand, and pose greater burdens for our industry. The
concentration of economic power in fewer larger developers and retailers, will
test the ability of our industry to retain the competitive forces that made it
thrive in the past. Demographic changes, evolving lifestyles, technology that
targets precisely product marketing and a shifting population base are all in
the future for the retail industry.
These are exciting times for the retail and shopping center industry. As the
annual convention for the International Council of Shopping Centers in Las Vegas
approaches, we all benefit from stepping back for a look at our industry, and
the challenges and opportunities visible on the horizon.
This edition of Property Writes examines several timely issues, such as the
Visual Artists Rights Act and its impact on owners, the struggle between a
shopping center owner's rights and the First Amendment and Telecommunications
issues for property owners and managers. We hope that these articles will help
you prepare for the new millennia.
Ms. Schiff is a Partner in the Washington, D.C. office and practices in the
real estate practice group. She can be reached at 202-862-5994, or by e-mail at
jschiff@hklaw.com. Mr. Snively is a Partner in the Orlando office and practices
in the real estate practice group. He can be reached at 407-244-2112, or by
e-mail at ssnively@hklaw.com