Supermarkets increasing their presence in power centers

Shopping Centers Today, an ICSC publication, recently published an article explaining that U.S. developers are changing the traditional shopping center retail mix by moving neighborhood stores - namely grocery retailers - into power and lifestyle centers. The article says that the ground was broken about a decade ago by stores like Costco, Target and Walmart, all of which offer supermarket shopping in a warehouse style or as a supplement to discount retail.

Several trends were cited for the changing retail mix, including the significant drop off in neighborhood shopping center development as well as the recent expansion of smaller-format, natural and organic grocers. More grocers and less neighborhood shopping centers being built means that these new formats have to go somewhere other than neighborhood centers.

The trend may be troubling for traditional supermarkets like Kroger, ShopRite, Giant and others. It's much easier for a 15,000 - 25,000 square foot small format grocer to find a spot in an existing power center than it is for a 50,000 - 100,000 square foot store.

In addition, power center owners have realized that customers typically visit grocery stores at least twice per week, and the increased visits benefit all tenants. An added benefit to landlords has been the resulting cap rate compression brought on by the addition of grocery retail. 

PREIT taking advantage of digital media tools

PREIT, the Philadelphia-based real estate investment trust that owns 49 retail properties, released its "roster of digital media efforts" in advance of the ICSC show in Las Vegas, which begins on Sunday.

The usual suspects - websites, Facebook pages and a Twitter account - are all there, as they should be. But what impresses me is the following:

Mobile App
PREIT is launching a free Apple iPhone application with information on each of its 40 shopping malls. The app will soon be available for the Android, Palm Pre and Blackberry.

Quick Response Codes
QR codes are a big deal these days. They're essentially bar codes on steroids. Perhaps you've seen them on signs or products; they are black modules arranged in a square pattern on a white background. Anyone with a smartphone can scan a QR code and boldly go where no man has gone before. Unless you've been to Japan, of course, where they've been in use since 1994.

Anyway, PREIT says they have introduced QR codes on advertisements, flyers, posters and other marketing materials for its consumer marketing programs. By scanning the codes, shoppers can receive details on fashion trends, store sales, coupons, etc.

They have also introduced the codes on leasing materials, which means real estate professionals can get instant access to aerials, leasing plans, etc. (Here at Equity Retail  Brokers we are testing the same technology.)

Apple iPads
PREIT's executives and leasing team members are currently testing Apple iPads loaded with custom apps that provide them with important facts and figures at their fingertips, not to mention the ability to bring up leasing materials during presentations.

Although I don't have an Apple iPad, I have seen firsthand how effective they are in this business. My colleague Rob Samtmann, one of the principals at Equity Retail Brokers, uses his Apple iPad on a daily basis, and it's an extremely convenient and effective tool, especially for tenant representation.

By the way, if anyone at Apple is reading this (for search purposes, I have generously and liberally inserted "Apple" in as many places as possible), I'm available to test iPhones and iPads.

See y'all in Vegas!

Shopping center executives remain optimistic, says ICSC survey

Earlier this month the International Council of Shopping Centers released the results of their February Shopping Center Executive Opinion Survey, which revealed that business conditions improved for the fourth-straight month.

• The Business Barometer reached 55.3%, which was the second-highest month reported since April 2007. (A reading of 50% means industry conditions were relatively unchanged from the prior period; a reading above 50% means there has been an improvement.)
• The Current Evaluation Index grew modestly with a reading of 52%. Ratings for sales, customer traffic and capitalization rates all improved from the previous month, while rent spreads declined for the second month in a row.
• The Expectations Index advanced strongly with a 58.6% reading, the highest in nearly seven-and-a-half years. All components of the index remained above 50%, with occupancy rates leading the way. The other components include sales, customer traffic and occupancy rates.

As for the biggest challenges that lie ahead, the panel of executives cited low consumer confidence, constrained financing and cash availability, and government restrictions and tax legislation affecting the real estate industry.