LA’s Retail Market Update: ICSC Western Division Conference

JLL’s Craig Killman is attending the ICSC Western Division Conference today in San Diego, and takes a closer look at the Los Angeles retail corridors:

  • What types of retail properties are investors seeking in Los Angeles?Craig K

The two hottest categories in Los Angeles right now are specialty food-anchored neighborhood centers and high street retail. Major specialty grocers, like Whole Foods and Trader Joe’s, are driving the recovery as the wealthy segment of the trade area continues to grow and increase in net worth. The areas with the lowest retail vacancies continue to be Rodeo Drive, North Beverly, Robertson, Melrose, 3rd Street Promenade and the up and coming Abbott Kenney in Venice. These high street trade areas are all surpassing pre-recession highs for rents and occupancy, and are different in the sense people are looking for an investment that will hold real value down the road – there is a significant amount of international money floating around, so areas remain competitive for quality space.

  • How is the local economy impacting the Los Angeles retail market?

As the chasm between the haves and the have not’s widens, the economy will become more and more of an issue. The high-end market is doing well as is the bargain basement value sector, which is being driven by dollar stores, fast fashion and lower-end super markets. California is always going to be a desirable place to live but as the cost of living continues to outpace the rate of inflation and living expenses in the rest of the country, we expect corporations, individuals and families to struggle to maintain their expendable income.

  • What shifts or new retail concepts are infiltrating the Los Angeles market?

Retail concepts are looking for smaller footprints that are more efficient in space and design. The major change is in the incorporation of technology into bricks-and-mortar to further integrate digital with the physical spaces in stores. The retailers who take advantage of multi-channel selling, which includes bricks and mortar, digital and mobile, are the ones that are thriving. They are reaching the consumer where they feel comfortable browsing and buying, but most importantly they are creating conduits to reach the powerful buying power that is harnessed in the millennial generation – giving them the ability to converse in real time about products, share experiences, and then purchase. By 2018, Millennials will “out-buy” the Baby Boomers for the first time and successful retailers are meeting that challenge today, head on with virtual dressing rooms, digital sizing, and virtual product walls, and options to purchase online and then pick up in store

  • What do you predict 2015 will be like for the Los Angeles retail market?

I’m confident that 2015 will see similar retail growth as we’ve seen in 2014. There is finally ground up development both in the core with vertically integrated mixed-use projects, and in the more affluent suburban markets. Economic changes and growth will not start to slow down until late 2016, early 2017, when supply could once again become depleted based on the history of demand in primary trade areas. That being said there is still a lot of economic growth to be experienced in all markets.   

Department Stores Hope Same-day Delivery Trumps Amazon


USA-NYC-MacysInstant gratification keeps getting more instant in the shopping world. In the race to keep up with e-commerce players, retail giants Macy’s and Bloomingdale’s will this fall launch same-day delivery services in 50 of their stores – across eight Macy’s markets and four of Bloomingdale’s.

The move is a direct response to relentless competition from e-commerce players like and eBay, which have been consistently pushing down delivery times and prices for years. Customers of Amazon Prime, for instance, have grown accustomed to free next day delivery. Amazon has even tantalized shoppers with the idea of same-day delivery via drone. Now department stores hope to get ahead of that frightening (in more ways than one) prospect with same-day service of their own.

The retailers have partnered with California-based Deliv, which uses crowd-sourced couriers to deliver goods from store-to-stoop. In an article in the Chicago Tribune [subscription required], Deliv’s CEO and Founder Daphne Carmeli says “pricing has not yet been announced, but it will be very market competitive.” Only products available in local stores will be available for same-day delivery, but Carmeli said that shouldn’t be an issue — Macy’s and Bloomingdale’s have already adjusted their inventory to allow online customers to pick up purchases in stores.

JLL’s Head of Retail E-commerce Distribution , Kris Bjorson, believes that Macy’s and Bloomingdales are recognizing the new reality that stores aren’t just stores anymore — they’re distribution and fulfillment centers, too.

“The ‘ship-from-store’concept will transform retail distribution strategy at the store level,” Bjorson says.

This evolution could mean good things for the size and shape of industrial and retail real estate. Bjorson expects to see continued demand for more one-million-square-foot warehouses as well as the need to allocate up to 15 percent more space for fulfilment inside traditional retail store locations.

Department stores versus e-commerce: the retailer race is on. Who’ll be first to your door?




Big Real Estate Moves in the Big Apple: Amy Zhen Joins JLL to Expand Retail Capabilities


JLL continued the expansion of its retail platform in New York City with the addition of Amy Zhen. Zhen will serve as a Senior Vice President working on the team lead by Vice Chairman Bob Gibson, who joined JLL earlier this year Zhen Amy_Headshotto lead the firm’s New York retail brokerage practice. In her new role, Zhen is tasked with developing and executing leasing strategies to maximize the full potential for the firm’s retail investor and owner clients’ assets. She brings with her an unparalleled roster of institutional investor clients, and strong retailer relationships at the national, regional and local level.

New York is a target market for our retail investor clients and it’s critical to have a skilled expert, like Amy, on the ground to support their investment goals and leasing needs. Amy’s expertise on the landlord side will complement our established tenant representation capabilities in the market, and we’ll partner together to boost our ability to service clients. – Bob Gibson

Zhen began her career at a global commercial real estate firm as the Director of Retail Brokerage, where she specialized in agency leasing. During her time there, Zhen repositioned several urban assets and negotiated and executed flagship storefront leases for national retailers. Zhen earned a Bachelor of Science degree in mechanical engineering from Rochester Institute of Technology, and is an active member of the Real Estate Brokers of New York (REBNY) and the International Council of Shopping Centers (ICSC).


Cooper & Caldwell Named 2014 Power Brokers by Chain Store Age

MC&KCphoto 1

For the first time in eight decades of publishing, Chain Store Age has compiled a list of the nation’s top retail real estate brokers, ranking them based on number of retail transactions in 2013, dollar amount of those transactions and, just as importantly, reputation in the industry. From hundreds of nominations collected from retailers and brokerage houses earlier in the summer,  Chain Store Age has selected 15  “power brokers” including  JLL’s Kris Cooper and Margaret Caldwell!

According to Chain Store Age, mall movers Cooper and Caldwell are the retail industry’s power team. Together they have a combined 50 years of retail investment experience and closed nearly $1.13 billion in 2013, ranking second nationally for mall sales last year. They have a stout roster of REITs, private equity and institutional clients who look to them when selling a single asset or large portfolio. They are true team players who are coaching and mentoring the next generation of retail all-stars. Their team of seven, including four women, says they provide excellent and thoughtful advice on all fronts, and continually push them to develop their individual talents.

What makes the pair a good brokerage team? “Our success is built upon a great team of people, all committed to delivering top-notch results for our clients, who will always be our first priority. In this business, we never take anything for granted.”

 See the full list of Chain Store Age Power Brokers 

New Partnership Brings Media Advertising to JLL-Managed Malls


IMGn an effort to generate additional revenue opportunities for its retail investor clients, JLL Retail today announced a new partnership with McGavren Guild Malls, LLC, to exclusively provide media representation services within the firm’s third-party-managed shopping centers. As part of this agreement, McGavren Guild Malls will represent national media opportunities, which include sponsorships, brand advertising, sampling and promotional events primarily within JLL-managed enclosed malls.

The partnership with McGavren Guild Malls affords JLL the ability to pursue and facilitate national advertising and brand sponsorships for the properties we manage, providing an additional revenue stream for our clients. As we continue to grow and expand our specialty leasing platform, we’ll continue to seek innovative ways to refresh the common areas of the property with new campaigns and create an optimal customer experience for our clients. - Tracey Hatley, Director of Specialty Leasing at JLL

McGavren Guild Malls provides retailers, brands and their media agencies an independent resource for buying and managing mall media programs throughout the country.


Lakeshore Mall Gains Retail Boost with New Management and Leasing Team

BV Belk Properties has retained JLL Retail to manage and lease Lakeshore Mall, a 490,000-square-foot retail center located in Sebring, Florida. Lakeshore Mall was built in 1992, and is the only enclosed regional mall within 40 miles of Sebring.

LakeShore Mall“I see nothing but a good future for Lakeshore Mall, and I am thrilled at the opportunity to take a steady center and make it extraordinary for locals and passer-byes with the support of JLL,” said B.V. Belk Jr., Owner of BV Belk Properties. “We’re committed to serving the community’s shopping needs, and during the next year we’ll be taking proactive measures to upgrade the property making it a gathering place for the community.”

Florida Retail Market Lead John Lambert and Vice Presidents Chris Ralph and Heather Levesque are leading the JLL management and marketing teams, and Andrew Dieringer is tasked with leasing the asset.

JLL’s Managing Directors Kris Cooper, Margaret Caldwell and Carson Good, sold the property to BV Belk Properties earlier this year. “BV Belk Properties’ purchase of Lakeshore Mall in May was perfectly timed with the Florida retail market’s upswing,” said Lambert. “The mall represents a strong value enhancement play and BV Belk’s ability to capitalize and act on that with a renovation and repositioning is expected to propel the property for renewed growth and strong yields.”

The center anchors the retail hub that serves central Florida along US Highway 27, a major north/south corridor between Orlando and Miami, where traffic counts average approximately 38,500 vehicles per day. Sebring is also home to the Sebring International Raceway, host of the “12 Hours of Sebring Endurance Race,” which is one of the automotive world’s oldest and most prestigious races drawing over 100,000 people annually.

Sunshine State’s Construction Comeback Driven by Malls and Shopping Center Development

While many tourists flock to America’s panhandle looking for sand and sunshine, Florida’s retail development market is doing the opposite: moving indoors. According to JLL research launched today at the International Council of Shopping Centers Florida Conference in Orlando, nearly half of all retail commercial construction happening in the state, in the first half of 2014 is taking place in malls and shopping centers.

“While most markets are seeing a boom in grocery-anchored power centers or strip centers, Florida has a distinct need for traditional retail assets that’s driven by the tourist shopper base, which prefers a one-stop shop for their goods along with a climate controlled experience” –  John Schupp, Senior Vice President of Retail Development at JLL.

FL Construction Comeback Image 3-01Florida’s construction numbers stand in stark contrast to the rest of the country, where the retail development pipeline remains slim, with just 45 million square feet nationwide under construction. However, Florida benefits from expanding retailers and increasing investment allocations. More than 29 percent of all new retail deliveries in the United States in the second quarter of 2014 occurred in Florida, and its major cities are absorbing the space well.

Tampa, which has historically been a strong U.S. tourist destination, is seeing the most robust growth with 1.43 million square feet of space under construction as of Q2 2014. Miami, which is a strong international city and one of the tightest Florida markets, has 1.42 million square feet under construction, the greatest amount of development in proportion to its existing inventory. These two locales are leading examples of resilient markets that have the fundamentals and key drivers to support additional supply.

The Florida retail market shows no sign of slowing, despite its loss of momentum during the recession. Development in the state accounts for nearly 13 percent of retail assets under construction nationwide, and a tidal wave of space is expected to come to fruition during the next 9 to 12 months in South Florida. Liquidity in the financial markets has continued to rise to pre-recession levels, increasing the ability to develop new retail assets, or redevelop older properties.

“Local, regional and national banks are the most viable sources available for development financing in core markets like Florida, that are in need of new supply. While not as common, we are also seeing life companies open their ledgers for construction-to-permanent financing, especially for strong grocery-anchored assets. Beyond the debt markets, there is a significant amount of institutional equity seeking the opportunity to invest in new and/or stabilized core retail product.” –  Jimmy Board, Executive Vice President of JLL’s Capital Markets.

Asia is the New Land of Opportunity for U.S. Retailers

Picture1Will Asian shoppers buy into the classic all-American look? United States-based mid-level casual apparel brands, are hedging their bets that “preppy” rugby polos and chic velour track suits will entice Asia’s rapidly growing middle class to buy U.S. goods. Newly released JLL research shows that U.S.-based brands are flocking to Asia faster than any other, knowing an untapped market awaits:

  • Approximately 21 percent of retailers expanding into Asia are U.S.-based, followed by Italy and the United Kingdom
  • More than one third of mid-tier retailers[ii] migrating to the market are U.S.-based
  • North Asia and Greater China stand out as the markets for greatest returns for retailers

“Rising income levels in Asia mean that an all-new consumer base can afford to purchase fashion and luxury items for the first time,” said Michael Hirschfeld, Senior Vice President of JLL’s National Retail Tenant Services. “Middle-class buyers are rapidly turning to the urban core, creating dense areas with top-shelf demographics – a perfect entry point for international retailers.”

In the coming decade, urbanization will drive wealth creation and mold consumer buying habits in the Asia Pacific region. Established U.S. mid-tier brands are expected to grow in peripheral Asian markets, while luxury retailers are anticipated to focus on the core markets, like Hong Kong, as many brands view it as a stepping stone to enter Mainland China. Shanghai and Beijing will also remain top targets, as the markets’ retail sales grew an average of 15 to 17 percent during the last three years.

“While the growth of luxury goods sales in China has cooled since 2013, it hasn’t been across the board,” said Jane Murray,Head of Asia Pacific Research for JLL. “Light luxury U.S. retailers are performing with strong same-store sales growth in China. There are strong growth prospects in the market, and though expansion will be very methodical and selective, we expect U.S. brands to continue to develop their footprint in the region. One of the major drivers is increased Chinese tourism, with the Chinese estimated to be the largest luxury spenders worldwide.”

While gateway U.S. cities remain top targets for growing retailers, major U.S.-based brands have simply run out of locations to expand at home without over saturating their presence. Asia is set to account for 40 percent of the world’s economy by 2020, growing twice as fast as the rest of the globe and JLL anticipates that established brands will begin to target outlying tier two and tier three cities. The region’s rapid growth and the purchasing power of its emerging 1.3 billion middle-class consumer base during the next six years is expected to continue to pique the interest of U.S. retailers.

About A Magnet for Retail: Research Methodology




Want to know the future of back-to-school shopping? Look to the past.

Shopping online just keeps getting easier. As deal sites abound, shipping prices fall away, inventory endlessly expands, and it begs the question: “does anyone load the kids up in the family car and drive to the mall anymore?” Turns out they do—and especially when school’s about to start. A recent survey shows that 90 percent of American households plan on doing their back-to-school shopping at physical retail stores this year, according to research from the International Council of Shopping Centers.

The explanation for this anomaly may have less to do with the convenience of the shopping itself than with the quirks of shopping for school-age kids. For Catherine Langell, mother to eight- and 12-year-olds in Dunwoody, a suburb of Atlanta, a trip to the mall is actually easier than shopping online. “Kids are influenced by their friends and they know exactly what they want and where they can buy it,” she says. “As fast as kids grow, parents know kids need to try on clothes and shoes in the stores to avoid returns—so online shopping is just not practical.”back to school shopping

For bricks-and-mortar retailers this is very good news. Back-to-school spending is expected to generate $74.9 billion in sales this year, according the National Retail Federation. On average, a family with kids in grades K-12 will spend around $670 on back-to-school gear, from iPads and mechanical pencils to shoes and backpacks.

Back-to-school season, running from mid-July and through August, is the second most profitable shopping season of the year, behind the holiday season. Like buying holiday presents, back-to-school shopping is a must for most families, and many shopping centers now implement back-to-school marketing programs and events on par with the traditionally more elaborate holiday marketing programming than the simple back-to-school activities of years past.

“It’s not just a one-stop trip anymore; families are averaging about four visits to their local shopping centers.” - Julie Rickey, Director of Retail Property Marketing for JLL

Knowing their stores will be crowded, retailers will go the extra mile to make connections, taking proactive measures to enhance the overall shopping experience. Many have launched tween-targeted events like concerts and celebrity appearances. And of course they’ll reach out to parents with price promotions that can’t be matched online.

Julie Rickey, Director of Retail Property Marketing for JLL says this year she’s seeing the back-to-school season broken into several shopping experiences. “It’s not just a one-stop trip anymore; families are averaging about four visits to their local shopping centers.”

She points to promotions like My Day, My Way, a JLL social media campaign at properties like Windward Mall in Hawaii, which will award customers with a VIP experience at their local back-to-school events, including preferred parking, front row seating at the center’s fashion show, beauty makeovers and more. Promotions like this are proven to drive traffic and increase sales, Ms. Rickey says. Alexandria Mall (which JLL manages), is using this promotion for its second year to bring the community together with fashion and shopping as parents and students get ready to head back to the classroom.

Does the surprising back-to-school strength signal resurgence for bricks-and-mortar shopping? Shopping centers sure hope so. ICSC spokesman Jesse Tron says stores are making a comeback. “Pent-up demand has propelled sales,” he says. “This momentum will continue into the Holiday selling season.”

By Greg Maloney | | @Greg_Maloney

Uniqlo’s Unique Way of Retailing

By: Damian Sumner, Head of UK Retail Agency JLL UK Retail

Japanese retailers are leading the way in retail service. There are clear pointers that American and European retailers could take on board to avoid slipping back in the Global Retail market.

UniqloThis service offer is pivotal in today’s increasingly virtual world. In the UK we are seeing that the real winners are those retailers that provide a seamless multichannel retail offer, combining the best of both the physical and the virtual worlds. The Japanese stores I have seen here clearly recognise the importance of the human factor, from faceless checkout to a spirit of warmth, hospitality and gratitude. Put simply, if you make the decision to shop in physical stores then you deserve this as an absolute minimum.

For me, Uniqlo is getting it right when it comes to service. For example in their flagship Fifth Avenue store in New York, the time shoppers wait at their tills is strictly monitored, whilst shop assistants hand back credit cards Japanese style, using both hands and making full eye contact. They also offer basics in more tailored fits than its rivals and many more permutations (polo shirts come in 80 colours). Unsurprisingly Uniqlo outsold Gap last year and is closing in on H&M and Zara.

Also expanding in the US is Muji, one of Japan’s leading household and consumer goods retailers. It aims to increase its nine retail stores in the US to around 75 by 2016. Furthermore, two Japanese convenience store giants have also announced real estate expansion plans in the US. There is Famima, an upmarket foodstore, owned by Tokyo’s Family Mart that already have operations in California and also Lawson, which has opened in Hawaii.

In addition, much of the US press is reporting that many American urbanites will be attracted from IKEA by the quaint Aki-Home. Aki-Home has just opened two stores on the West Coast as a springboard to nationwide expansion over the next few years.

As the Japanese retailers continue to wow consumers in the major retail destinations, American retailers are starting to take notice, for example some fashion operators are beginning to experiment with ‘quiet zones’ whilst a few convenience stores are considering the notion of intentionally employing friendly shop assistants!

Damian Sumner is a Regional Director at JLL and Head of the UK Retail Agency Team. He advises national and international retailers and retail banks on their real estate portfolio strategy across the UK.

Email Damian and his team to discuss the UK retail market in further detail

Connect with Damian on LinkedIn

Follow @JLLUKRetail on Twitter

photo credit: Uniqlo’s 5th Avenue Store. Photo – Esquire