Five trends to shape Retail Real Estate in 2017

March 10, 2017 (STLRealEstate.News) Thomson Reuters Same-Store Sales Index posted a 2.4 percent increase for December of this year, implying a fairly positive outlook for retail real estate heading into 2017.  Unfortunately, stores like The Limited, Wet Seal, American Apparel, Kohl’s, Sears, and more turned in some pretty bleak numbers for their retail holiday season.  Challenges are definitely ahead for the brick and mortar style retail stores, so here are five trends to look for in the coming year:

1. Lease negotiation: Mall exits are pretty big today.   If department store anchors continue to close their locations, more and more mall residents are going to attempt to renegotiate their leases for cheaper rents, or leave altogether.  This widespread closure is presenting a seriously complex situation for landlords across the country.

2. Mall landlords get creative: While continues to dominate all shopping spheres, mall landlords are going to have to get creative in packaging a shopping experience that can’t be experienced over a phone or laptop.  Samsung and other innovative businesses are setting up “experience” stores to get people inside.

3. A+ Malls continue to thrive: Top-tier malls have maintained or increased their rents per square foot, and experts predict the same and even more in 2017.

4. Households feel more confident: Our country has been experiencing some pretty encouraging economic waves since the new presidential election, sending confidence ripples through households across the country.  This confidence is going to translate into increased consumer spending in 2017.

5. Retail innovation: Retailers, most of all, need to figure out ways to reward consumers for shopping at their in-person locations.  The retail real estate sector is facing an enormous challenge over the next 18 months – the maturing of about $47 billion in debt.  Lenders are going to get tough, and these retailers need to be ready.