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News release

LAS VEGAS, NV

Does Your Retail Center Have What It Takes To Stand the Test of Time?

Three ways to keep your retail assets relevant in a new consumer era


LAS VEGAS, May 22, 2014 – It’s not just for Fields of Dreams. For decades, the mantra “build it and they will come” shaped the retail industry, but when is the last time you stepped into a brand new shopping mall? It’s been nearly a century since the first shopping mall opened in the United States, and today that principle just isn’t cutting it for retail owners and investors. U.S. construction deliveries of retail assets in 2013 were 76.6 percent below the high levels of 2008, and Q1 2014 deliveries for major markets were only 9.8 million. The lack of new supply coupled with fluctuating consumer confidence is pushing retail real estate owners to strategically evaluate their current assets. They’re also contemplating value enhancement strategies to create an engaging environment and continue to draw in customers. According to JLL’s Retail Property Management and Leasing experts, these decisions require thoughtful approaches and preparation.

“Think about where people gather. Restaurants, movie theaters, and yes, even malls, will continue to make up the core of places that attract workers, shoppers, diners and social gatherers. But with minimal new development, owners will increasingly look to revamp their existing space,” said Karen Raquet, JLL’s Director of National Retail Property Services. “Getting the environment right has become crucial, and it’s what really creates a resilient retail center. It is the basic building block of the physical offering, and can’t be left to chance anymore.”

JLL’s property management and leasing experts have identified three approaches owners can implement to boost their current assets:

1.       Identify and Attract the Right Retailers: Through the development and execution of a strategic merchandising plan, owners can identify and attract the right retailers to complement the existing merchandise mix. This can reveal an opportunity to create entertainment clusters and boost Net Operating Income (NOI). Looking holistically at the long-term viability of a center--three to six years down the road--rather than filling vacant holes as they occur can make all the difference. Additionally, securing the right retailers for a particular space and center is crucial, because regardless of how attractive, stimulating, well-located and connected a retail site is, it will only attract visitors if it has a platform that meets or exceeds the demanding requirements of the local consumer.

Branson Landing in Branson, Missouri, is a prime example of how implementing a strategic merchandising plan can drive retail sales and increase revenues. JLL’s leasing team implemented a new plan, and within the first 12 months negotiated and executed deals with first-to-market and regional retailers. The center has maintained an occupancy level of more than 90 percent and has established itself as a primary retail and entertainment destination for local shoppers and tourists alike.

2.       Engage with the Local Community: A retail center does not, and cannot exist in a bubble – it’s an intrinsic part of the community in which it sits, be it a suburban town, urban city, or even an airport. Building and promoting a strong identity for retail centers has become essential in an environment where competition is rife and where the shelf life of products and services appears to be diminishing. By giving back to the community, through the provision of free space for school art projects or charity events, retail centers can help to embed themselves into the heart of a community.

Last year, nearly 20 JLL managed centers participated in Kids, Inc., a community program that allows local residents ages six to 15-years-old to create a retail concept from scratch, offer a service or resell a product purchased from a wholesaler. The winners were invited to a one-day “business showcase” at their local JLL-managed shopping center where they sold their products or services to customers and, better yet, kept their earnings. The wildly successful program is being launched again in the summer of 2014.

3.       Detail Capital Improvements: Following the economic downturn, capital expenditure renovation work slowed substantially in the retail sector. Today, upgrades or additions of any size that restore and renovate a property can drive returns, and help a center overtake its competitive set. The biggest conversions that are likely to take place in the coming year will revolve around remerchandising and retrofitting space, including cosmetic remodels, and improvements to lighting, water and electric efficiency and consumption. But even simple proactive measures like replacing equipment at responsible intervals will help a building’s value. Plan accordingly, however, to take advantage of a slow season for minimum revenue displacement.

“The shopping environment covers more than just the physical space, although this is extremely important, it is about how a space makes you feel as a visitor. Is it uplifting, entertaining, stimulating? Creating the right environment is one of the best ways that the physical space can truly differentiate itself from the online experience,” said Kimli Cross, JLL’s Director of Retail Leasing. “When these single strategies stand alone, they can in fact boost a property’s shopper appeal, cash flow and positively impact sales in the near term; however, when they are combined, they can truly transform a retail space into a place that both creates and responds to demand.”  

JLL’s Retail Group serves as the industry’s leader in retail real estate services. The firm’s more than 850 dedicated retail experts in the Americas partner with investors and occupiers around the globe to support and shape investment and site selection strategies. Its retail specialists provide independent and expert advice to clients, backed by industry-leading research that delivers maximum value throughout the entire lifecycle of an asset or lease. The firm has more than 80 retail brokerage experts spanning 20 major markets, representing more than 100 retail clients. As the largest third party retail property manager in the United States, JLL’s retail portfolio has 305 centers, totaling 65.7 million square feet under management in regional malls, lifestyle centers, grocery-anchored centers, power centers, central business districts, transportation facilities and mixed-use projects.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. For further information, visit www.jll.com.