As retail real estate hits the doldrums, landlords and property owners need to focus on nurturing vibrant commercial districts with tenants that provide more than the typical shopping experience like in Wynwood and Brickell City Centre, according to a panel of prominent real estate professionals.
“Moderate and mediocre is not going to cut it,” said Jessica Goldman Srebnick, CEO of Goldman Properties, one of the largest Wynwood landowners. “It is a really about future casting what the customer wants and trying to create experiences that tailor to that.”
Goldman Srebnick joined East End Capital‘s managing principal Jonathon Yormak, Swire Properties’ retail vice president Debora Overholt and Rob Tubajon of apparel store Lululemon, in a discussion about reshaping the retail experience during the Bisnow event, “Future of Retail in Vice City,” held at the JW Marriott Marquis Miami on Tuesday.
Goldman Srebnick noted that on a recent trip to Los Angeles she visited a Toms shoe store on Abbot Kinney Boulevard where she was amazed by how the store was set up with a coffee bar, a community board and a lounge area. “Maybe one-quarter of the store is dedicated to shoes,” she said. “And the place was packed. That is how we have to think about retail and the type of tenants that we want to populate our projects.”
Overholt said Swire succeeded in quickly leasing out 90 percent of the 500,000 square feet of Brickell City Centre’s retail because of the “unique density” in downtown Miami and the Brickell financial district. She added that Swire is currently in negotiations to lease the remaining 10 percent. “I talk to our retailers on a daily basis,” she said. “They are thrilled to have 3,000 hotel rooms within downtown area. In Miami, visitors are a very lucrative market for retail.”
Yormak said the concept behind East End’s first project in Miami, the Wynwood Arcade, was to create a place where people can congregate and that adds value to the shopping experience.
“We took a 25,000-square-foot warehouse and popped a hole in the middle of it, creating a community spot where we would ultimately do programming,” Yormak said. “And then we curated a cross-section of tenants that would be interesting to people who would spend time in the location not only consuming, but also collaborating and enhancing the community overall.”
The value for tenants comes from customers staying longer and consuming more, Yormak explained. “The value proposition for us is that we would get higher rents than we might have gotten,” he said.
The challenge for landlords is being able to accommodate aspirational local retailers while also attracting national retailers that have established credit, Yormak added. “Local tenants supporting local retailers is an amazing privilege, but it is also exceptionally difficult,” he said. “The challenge is to find your spot where you can support these retailers, while to some degree bringing in credit, national retailers on an appropriate basis.”