The Retail Development Industry Today
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.