Ringing Up the Competition in Chicagoland Grocery

grocery

It wasn’t too long ago when the outlook for Chicago grocery could politely be called ‘uncertain,’ with the shuttering of Dominick’s 72 stores at the end of 2013 as the most visible sign of this. But that picture is changing, says Peter Caruso of JLL.

What’s the current state of the Chicagoland grocery landscape?

Peter Caruso says: Extremely competitive! As competition in the grocery arena continues to increase, supermarkets are generally seeing razor-thin margins, and staying profitable will continue to be a challenge. That being said, the supermarkets that will be most successful are those that find a strong value proposition. The grocery store market is fierce in Chicago, and split between the everyman stores, the independent grocers, discount grocers and lastly the organic/natural neighborhood markets.

We’re seeing grocery stores like Pete’s, Caputo’s and Tony’s really break down the neighborhood by its demographics and make sure that the product being carried in the store represents what their studies find. This has helped them build consumer loyalty and become the leading grocer in a trade area over the “everyman store.” Despite competition, the upside is that everyone has to eat and with food costs skyrocketing, more and more families are opting to stay home and cook.

For more information on the national grocery sector, and three reasons why the grocery landscape is shifting read JLL’s recent Out with the Old, In with the New Report or visit http://bit.ly/JLLgrocery. Read more about Chicago’s grocery landscape in Globest.com

Fast Fashion Retailers Head Down Under

fast-fashion-retailers-head-down-underForeign retailers are flocking to Australia to invest in bricks and mortar after finding their feet online, according to retail experts at JLL. E-commerce adoption in Australia is high – largely because of its remote geography – and online shoppers spend more per purchase than anywhere else in the world. As a result, city high streets have been dominated by home-grown brands, until now. Forever 21 is the latest US-based fashion house to set up shop in Australia’s major cities, following moves from American retail giants, including Volcom, Tommy Bahama, Brooks Brothers, American Eagle and Victoria’s Secret.

From clicks to bricks

“Australia is a big ecommerce market for many of these brands and they’re now turning to bricks and mortar after getting comfortable online,” said Cameron Taudevin, manager, retail leasing, JLL Australia.

“We’re seeing a secondary wave of brands that are new to market, based on the strength of online sales here.”

Zara, Topshop, Uniqlo and Gap are at various stages of entering the Australian market, added Taudevin.

“This will put pressure on local brands,” he said. “Retailers such as Forever 21 and Uniqlo are leaders in the ‘in store experience’ and that’s something that will really shake up the national retailers as they’re forced to compete.”

Renting prime retail space in Australia’s city centres is likely to become even more competitive with the influx of international interest. Space in Sydney CBD is already among the region’s most expensive per square foot at US$7,265 per square metre – second only to Hong Kong.

“Forever 21 has nabbed a prime position in one of the most tightly held retail markets in Australia – Pitt Street Mall in Sydney,”added Taudevin.

While the 2,741 square metre flagship store, signed with a 10-year lease, cements the brand’s position Down Under, its first Australian outlet opened in November 2013 in Brisbane.

“One of the reasons Forever 21 might have chosen to launch in Brisbane – instead of Melbourne and Sydney – was because luxury retailers including Gucci, Tiffany & Co and Louis Vuitton were also in the mall or nearby,” said Taudevin.

Asia Pacific expansion

Although the success of luxury brands across the region is well documented, driven by Chinese spending power, it’s the mid-tier brands that are stepping up their activity in the market to take advantage of the rising middle classes.

For many of these fast fashion chains, Australia’s relatively robust economy and rise in consumer spending is driving the extension of their Asian footprint.

But, despite the potential in Australia, cities in Greater China remain the most attractive for international retailers, according to the latest Retail Cities report from JLL.

“There are a lot of untapped opportunities for expansion for these brands,” says Tom Gaffney, head of retail, JLL Hong Kong.

“Consumers are becoming a lot more sophisticated and savvy in their selections when choosing where to shop and as a result brands that represent good value for money are the ones we are seeing benefiting the most in terms of sales growth.

“The likes of the brands such as Forever 21, Michael Kors, Kate Spade, H&M, Brooks Brothers, we foresee ramping up expansion plans and we are trying to help them to get established in many countries.”

VIDEO: Asian Retailers Look to U.S. for Expansion

 

The burgeoning middle class of China is traveling abroad more often and spending more money when they do, and homegrown retailers want to make sure they get a share of that business. JLL’s Tom Gaffney, explains which markets Asian retailers are targeting in this short video.

 

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 Amazon.com 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.