The Real Deal Miami

Retail centers strive to sign ‘Internet-proof’ tenants

Landlords seek gyms, medical offices, restaurants and other firms with limited online competition
August 28, 2016 10:15AM

Lowe's offers a virtual reality headset to customers so they can preview a home improvement project before starting it.

Lowe’s offers this virtual reality headset to customers so they can preview a home improvement project before actually starting it.

Owners of shopping centers increasingly seek tenants with limited exposure to competition with online retailers.

Real estate brokerage JLL recently reported that online sales account for only 7 percent of retail sales nationwide, but Amazon and other Internet-based retailers are expanding while traditional department stores and big-box stores are struggling.

Ron Wheeler, chief executive officer of St. Petersburg-based property developer Sembler Co., told the Tampa Bay Times “Internet-proof” tenants are in high demand among retail landlords because they provide “experiences you can’t get online.”

Sembler cited urgent care centers and dental offices, for example, as well as gyms, hair salons and restaurants.

Some established mass merchants also are trying to provide customer services unavailable online. For example, home improvement products retailer Lowe’s has experimented with a virtual reality headset, the “Holoroom,” which customers can wear to experience a remodeled kitchen or bathroom before hiring a contractor to do the work.

Some grocers, including Publix, invite the public to wine tastings and cooking classes at their stores. More grocers also are offering home food delivery through such delivery services as Shipt, Amazon Prime and InstaCart.

Retail experts who attended a recent Orlando conference of the International Council of Shopping Centers said more shopping centers are relying on restaurants, not department stores, to serve as traffic-generating anchor tenants.

Mike Milano, managing director of retail services for Colliers International in Tampa, said “shopping centers want Internet-resistant businesses now that offer services that can’t be replicated online,” because many consumers are “willing to drive farther and stay longer if they can touch and feel something in a new way in a store.” [Tampa Bay Times] — Mike Seemuth