Has the plethora of new restaurants made an impression on the general public? Have they made an impression yet on those of us who read these blogs? Guess what? This phenomenon has made a very significant impression on those of us who develop and own retail properties!
Remember the days when we would visit retail strips to shop for shoes, clothing, books, pets, furniture, hardware, flowers, drugstore items, gifts, flowers, toys, sporting goods, hunting equipment, doctors, attorneys, optometrists, specialty store of all kinds owned by small “moms and pops?” You could find almost anything at these neighborhood strips.
Come forward a few years to the present and let’s see what has transpired.
“Giant Killers” like Walmart and Target came in years ago and killed the “little guys” by offering almost all of the above items, with greater selections and cheaper prices. Additionally, the giants now offer bank services, optometrists, food, veterinarians, clothing, drugs, auto services and equipment, etc. Malls have centralized many of these same uses and also many of the smaller giants. (However, malls are having their own problems, which I won’t get into here.)
Now, think about internet retailers, like Amazon, and go back to the list and see how many of these items and services you can find online. It’s staggering!
For guys like me who hate to shop, I visit the internet for all of my needs before I venture out to a “real” store. I can get almost everything I need on the internet except suits, haircuts, dry cleaning, food, and my physician. I never ever thought I’d be buying shoes and books on the internet. Yet almost everything else I need is there: and I can get it tomorrow. You can also “go to dinner” on the internet!
So, now when a developer decides to build a strip center, let’s say, with a food anchor along with a few smaller “giant killers,” who is left to lease what we refer to as the spec space?
Well, lets’ look at what we can’t get on the internet. We will probably get a dry cleaner/laundry store, barber shop, nail salon/spa, an insurance agent, small doctor or dentist; come on, help me out here! Man, it’s tough finding someone to open a store that competes with the big guys!
Speaking of giants, have you all been to the new Nebraska Furniture Mart? This Big Guy not only competes with furniture stores, but carries appliances, mobile phones, TV’s and other electronics, etc.
So, what we’re seeing is that retail developers are planning much less spec space, and restaurants are proliferating. Name a chain, and if they are not here now, they will be shortly. Restaurants are not only filling spec space, but they are also buying and renting pads of land in front of strips to build their new restaurants. They have become secondary anchors.
At one time, the Dallas-Fort Worth area had more restaurant space per capita than the island of Manhattan. And that fact likely remains true today. How is that possible, you ask? Well, look at the new restaurant announcements every day. It’s mind boggling.
I meet monthly with a group of retail developers and, to a man, they marvel at the growth of the restaurant trade. A meaningful change to developing retail strips is that now they have to provide more parking spaces to accommodate all of the new restaurants, which require twice the parking of regular retail.
We wonder if homes of the future will eliminate kitchens entirely or at least be downsized. Restaurants, after all, are pandering to the needs of a population that prefers to eat out.
Many new“town center” projects (think Legacy) are being built and planned; they include office buildings, multifamily, and retail. With these projects, many developers are replacing the traditional strips of an anchor surrounded by spec space. And many of are incorporating a grocery store, along with many restaurant choices.
The times are a changing! Your typical retail strips are no longer typical. There are always exceptions, but take a look at an older typical strip and count the number of spaces that are dark. Now, look at a new retail strip or town center and count the number of restaurants. Wow!
