NAI Global October Retail Real Estate Trends

NAI Global October Retail Real Estate Trends

Trends and Insights on Retail Real Estate by Experts in Multiple Markets

October 2023

In the early fall, NAI Global Retail Council meeting took place a bit auspiciously. The night before, looters had stormed an electronics store in Philadelphia, setting about 80 looting incidents throughout three nights across the City of Brotherly Love. Among the retailers impacted were Apple, Foot Locker, Lululemon, GameStop, a medical marijuana dispensary, a liquor store, streetwear businesses and at least one women’s beauty supply shop.

The morning of the Retail Council meeting, Minneapolis-based Target announced it was closing 9 of its stores across 4 states, effective Oct. 21st, citing rampant store-theft and the inability to curb it through different tactics, such as employing security guards and locking higher-valued items in plexiglass cabinets. Target also expressed safety concerns for its employees and shoppers in its announcement. The stores that are set to close are in New York’s Harlem neighborhood, downtown Seattle, three in Portland and four in the San Francisco Bay Area (one in San Francisco, two in Oakland, and one in Pittsburg, which is in eastern Contra Costa County).

After recapping these unfortunate events, about a dozen retail real estate professionals located throughout multiple states within the NAI Global network moved on to other retail business, starting with the ongoing merger news of Kroger and Albertsons and the impact on grocery stores in numerous markets. Foremost, New Hampshire-based Piggly Wiggly, a supermarket chain operating in the Southern and Midwestern American regions, is reportedly buying 39 Albertsons or Kroger locations. It isn’t known at this time where the stores are, but there is a strong possibility that they could be in the Pacific Northwest, where both Kroger and Albertsons have stated they would off-load the greatest number of grocery stores in their two respective chains. The largest acquirer of the two stores, however, is C&S Wholesale Grocers LLC, which is set to buy 413 stores, 8 distribution centers and 2offices as a result of the big merger.

Always a favorite anchor for shopping center owners, the grocery business remains one of the most dynamic industries in the U.S. retail scene. For example, NAI’s retail pros cited 7 new Food City stores in the Huntsville, Alabama market, while the Portland, Oregon market continues to experience growth by a local company, New Seasons Market. New Seasons is a neighborhood-focused, community-oriented grocer that values sustainability and healthy food choices in its offerings, including a considerable organic section in each of its 21 stores.

The meeting also included a conversation about the evolving world and business of movie theaters and cinemas, starting with the August announcement by the parent company of Regal Cinemas (Cineworld, which is based in England) on its emergence from Chapter 11 bankruptcy protection. The firm has since then reorganized into “New Cineworld.” The Knoxville-based company (Regal) had filed Chapter 11 last year.

According to analysts, there are 40,700 theater screens in the U.S., and some theater executives believe there doesn’t need to be more than 25,000. More than 5,000 screens have closed since the pandemic, according to the National Association of Theater Owners, and the organization thinks more closures are forthcoming. In addition to theaters being vastly over-supplied, very few markets have enough demand to support multi-screen cinema complexes (properties with 20 or so screens). In particular, theaters in ‘zombie malls’ are moving towards the way of the dinosaurs.

However, there are some bright spots, with demand still significant for IMAX theaters, which offer customers the best in theater experience, visual and sound quality. And while AMC is one of the companies that is closing theaters, the company (and others) will continue to open theaters in under-served markets with growing populations. For example, AMC recently acquired Rave Cinemas in the Valley Bend submarket of Huntsville.

While movie theaters are extremely difficult to convert to other uses (they would require major construction modifications or demolished altogether), some of them have changed operations to lure more theater-goers. In Bend, Oregon, the Regal Cinemas there introduced wine and spirits sales a few years ago, changed out Coke for Pepsi and started advertising its theaters for private parties – and did land the local Indie Film Festival, BendFilm. However, it hardly put a dent in theater traffic or populated the company’s 16-screen facility in the central Oregon city.

On that note, one of the meeting participants offered that vacated theaters can be adapted to other uses, such as training centers, adjunct facilities for nearby universities and colleges, and sports showings (think really big TV screens at ‘the ultimate’ sports bar).

The retail pros also visited the topic of growing and expanding convenience stores and some of the new concepts that go well beyond your neighborhood 7-eleven, as in, “this isn’t your grandfather’s convenience store.” Hardly.

Sheetz, Maveric, Philly-area based and East Coast favorite among super-convenience stores, Wawa, are all opening new locations. However, it is Buc-ee’s (pronounced, Bucky’s) that generated the animated conversation as the sheer size and concept of these highway-serving stores are redefining the category of convenience stores.

Described by Southern Living magazine as “a sprawling chain of gas stations/convenience stores/mega-marts that boast the best kolaches, tasty barbecue, freshly roasted nuts, a fresh soda bar and the cleanest restrooms in the country, the stores are fixtures in the south.” The Jackson Lake, Texas-based retailer opened a store this past summer in Sevierville, TN, that boasts 74,000 square feet of retail space, 100 or so gas pumps and 24 EV car-charging spots on nearly 10 acres of land.

Thought Leaders

• Dan Hiffman, NAI Hiffman, Chicago, IL 
• Deanna Dal Pos, NAI Platform, Albany, NY
• Kayla Saunders, NAI Black, Spokane, WA
• Karen Koppel, CCIM, NAI Cascade, Bend, OR
• Katelyn Panella, NAI Business Properties, Billings, MT
• Jay Blacker, NAI Excel, Lehi, UT
• Robert Render, NAI Robert Lynn, Dallas, TX
• Shelby Tworek, NAI Horizon, Phoenix, AZ
• Maria Herman, NAI Vegas, Las Vegas, NV
• George Macoubray, NAI Elliott, Portland, OR
• Craig Merlin, NAI Miami |Fort Lauderdale, FL
• Jim O’Hara, NAI Emory Hill, Wilmington, DE
• Brandy McAdams, NAI Skyway, Tampa, FL
• Gael Zongazo, NAI Elliott, Portland, OR
• Michael Jacobs, NAI Glickman Kovago & Jacobs, Worcester, MA
• Bhagyesha Darji, NAI Chase Commercial, Huntsville, A

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About NAI Hiffman:  

NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.

About Hiffman National: 

Hiffman National is one of the US’s largest independent commercial real estate property management firms, providing institutional and private clients exceptional customized solutions for property management, project management, property accounting, lease administration, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 250 employees nationally and an additional six hub locations and 25 satellite offices across North America.