There’s only one reason to rent retail space. And that’s to make money.
How much retail space exists or is on the market is irrelevant to whether a location has a path to being animated with an actively paying tenant, connected to a profitable business. In that vein, the world right now is attempting to birth what the next set of profitable businesses in the retail space will be.
Market by Macy’s concept now open in Southlake Town Center provides an interesting clue as to how our shopping experience may evolve. “Market” basically condenses down the Macy’s fashion and home goods experience and then skims off the cream to populate what is essentially a well-furnished loft space.
The place feels more akin to a boutique hotel’s lobby, complete with sitting areas, a cafe, and a series of product clusters arranged almost as if they are in a modern art gallery. Clearly, this is designed and merchandised as an upscale luxury-level experience, but it’s easy to see how some of these concepts could apply to more mainstream offerings as well.
Perhaps one of the most significant aspects is a relative lack of size and density. The small store footprint feels good when considering the psychology of COVID-19.
We can be engaged and thoughtful in a space populated by others, but not in such a way that you will be fretting about being with too many people later. A slow roll past the Apple Store shows a high-density experience that doesn’t care about COVID. But that is definitely the exception to the way things are evolving.
It’s ironic that at this upscale Southlake Town Center experience, I can look out of the front window and see the permanently shuttered Harkins Theater floating in the middle of an empty asphalt parking lot. Different models of entertainment, shopping, and dining will evolve over the coming months and years. It remains to be seen which of the existing stock of space will be utilized and which stays dark.
Mike Kennedy is the principal of Avison Young’s Capital Markets Group Consulting & Advisory Sales & Leasing