An Interview with Nicole Larson, Colliers Retail Research Manager: H2 2024 Trends to Keep an Eye on
As we approach the second half of 2024, the retail real estate market continues to evolve in response to shifting consumer behaviors, economic trends, and industry innovations. In this article, we’ll explore some key trends that industry professionals should keep an eye on in the coming months.
Thank you to Retail Research Manager at Colliers, Nicole Larson, for providing key input necessary for this article.
Nicole Larson | Retail Research Expert | Colliers
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Key ICSC Las Vegas Takeaways from a Retail Research Expert
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Retailers continue to face challenges in securing suitable retail locations. According to Nicole Larson “this was the biggest topic at ICSC Vegas, that there’s a lack of retail supply” Larson emphasizes that “there is a lack of quality supply. So that Class A space that everybody wants to be in is very limited.”.”
Shanice Lodge: How do you see the trend of pre-leased new constructions evolving in the near future?
Nicole Larson: “Landlords can’t just build something and say, if you build it, they will come.
I don’t really believe in that phrase anymore.
I think retail used to really follow that… I think retailers and especially landlords have to be a lot more creative, a lot more strategic on what they’re building and making sure that it fits with those consumers that live in that area.”
SL: What were some of the most innovative ideas or solutions that you saw presented at ICSC Las Vegas?
NL: “One fascinating insight I came across recently involves a retailer planning a significant U.S. expansion. They proactively contacted landlords, asking about tenants with upcoming lease renewals and gauging their performance. If a tenant might not renew or is underperforming, the retailer expressed interest in taking over the space. This proactive approach demonstrates how some businesses are getting ahead of the curve to secure prime Class A locations well in advance.”
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What is Retail Research Telling us about the State of the CRE Industry?
SL: How have you seen retailers optimize their existing space to cope with the shortage of desirable locations?
NL: “We’re observing a notable trend among retailers where they are reconfiguring their store layouts to incorporate fulfillment spaces. As online sales continue to play a crucial role, many retailers are now dedicating more back-end space for logistics, leading to a reduction in the size of the actual storefront. This strategic shift optimizes their operations to better meet the demands of e-commerce while still maintaining a physical presence.”
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Larson goes on to say ” It’s not that the amount of space that retailers are taking on is less, it’s that the actual storefront is getting smaller because they do have to find that perfect blend in order to balance the brick and mortar and also those online fulfillment orders.
SL: What impact do you predict the ongoing tight retail space conditions will have on smaller or emerging retail brands?
NL: “We’re noticing retailers becoming increasingly strategic and agile in securing prime locations, especially when another business files for bankruptcy. It’s fascinating to see how quickly some companies step in, ready to take over available spaces—whether it’s a high-traffic spot or a unique location. This quick adaptation highlights the ongoing demand for valuable retail space, even amidst market shifts.”
Larson also mentions the enhanced communication these conditions bring “Everyone has to be in constant communication with each other, whether that’s, you know, a broker talking to a landlord to say, when is this retailer? When is their lease up? How many years left do they have on that?”
With challenges in securing desirable locations and a shift towards smaller storefronts optimized for online fulfillment, the industry is witnessing a transformation in how spaces are utilized and leased. Smaller and emerging retail brands are finding opportunities amidst vacancies, while enhanced communication among stakeholders becomes essential in navigating the retail real estate landscape.
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