5 trends in Silicon Valley retail
- Nathan Donato-Weinstein
- Real Estate Reporter- Silicon Valley Business Journal
- Email | Twitter
According to ChainLinks Retail Advisors, retailers plan to open 38,000 new stores nationally in the next year, up from 36,000 stores six months ago. In the last 12 months, retail vacancy has dropped from 9.8 percent to 8.8 percent.
But how retailers are filling that space — and what shopping center developers are providing them — is changing as technology disrupts the industry.
The changes affect everything from the tenant mix of a center (more food) to size (smaller grocers) and what goes on inside (more events and less inventory).
Here’s a look at some of the key changes occurring, according to the experts.
Healthy appetites
According to Chainlinks Retail Advisors, 44 percent of all planned growth this year is from restaurant users. That’s up from 33 percent (or lower) before 2011. The reason is simple: Food is one thing e-commerce can’t make obsolete. And today’s harried consumers are more willing to let someone else do the cooking.“Food is incredible now,” said Tom Nelson of Colliers International’s San Jose office. “If you have a vacant restaurant space, it’ll lease up right away.”
Curtis Leigh, director of development for Hunter Properties, says food-user demand for Village Oaks, a large retail center he is building in south San Jose, is off the charts.
“If you go back 10 years, we used to have more nonfood uses. Now, a majority is food,” he said.
That has pluses and minuses for landlords: Food users generally pay higher rents, which is good for property owners. But because they also usually demand exclusive rights to their food category, there’s only so much food you can include.
Nathan Donato-Weinstein covers commercial real estate and transportation for the Silicon Valley Business Journal.
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