We can all agree that almost every industry of commercial real estate has been in one way or another affected by the policies and limitations due to covid-19. The effects of this will continue to influence all industries for many years to come.
Our respect for space, personal safety and cleanliness has higher standards right now. In this moment of shared human experience, we are in this together, but as the crisis pass, the retailers that have learned, adapted and pivoted will stand strong.
We Are In This Together
Out of all of the types of commercial real estate, there is one thing is for certain, retail and retail real estate are the two that has completely reinvented themselves. There are more creative lease deals happening and more innovative ways on how to get the product quickly and safely into the customer hands. The new set of social norms and rules has the ability to enable our society even stronger than ever.
In the past, a Landlord making a large tenant improvement contribution was a type of partnership with a tenant. Now amidst covid-19, hopefully we’ll begin to see new lease structures based on true occupancy costs, shared profit and equity in retail and real estate. This lease alignment of interests now may seem hopeful today; however, in a world of private equity returns and securitized loans, perhaps it will be a path to long-term prosperity for all.
Display of Gratitude for the Little Guy
Customers today want a safe shopping experience. In order to provide that retailers must deliver a secure, smooth and engaging experience to the customer. That is why it is increasingly becoming important for the brick and mortar retail store to establish an omni-channel presence with online tools that enhances the customer journey.
We cannot forget about the unseen army needed in the supply chain. The little guy in the retail store who stocks the shelves, cooks the food, cleans the premise are all-important in delivering the store experience that is expected. Today we live in a 24/7/365 world. Services are provided around the clock and capturing that business requires focus on how to keep the supply chain moving automatically.
Mixed-Use Development
One way to capture 24/7/365 days of business is by investing in mixed-use locations. A retail center with office, residential, hotel, medical, etc. will draw more customers at all times of the day. This is why we believe you will start to see more mixed-use projects like The Well a 36-story development that is going to be a mix of condo, office and of course retail.
Retail adds even more economic value as part of the amalgamation of mixed-use development then as a standalone in today’s world. The reason a new apartment or office development will lease will depend on the retail they have. Why? This is due to the fact that most people will need and want to shop close to home in order to feel safe and remain in compliance with any future restrictions.
Summary
As we emerge from self-isolation, businesses will focus on how to thrive in these historic times. Reinventing your business model and adding more efficiency is always a good investment. We have the opportunity to do things better and create a new best practice in our business and our society. The new normal can be better for us as consumers, retailers, citizens and businesspeople with the right focus.