While most of my focus is in the retail sector of commercial real estate, I also develop mixed use apartment projects in New Jersey. More recently, I began realizing and seeing the correlation between retail and residential projects. While designing the size of a residential unit, understanding the construction of a parking deck, and the allocation of one, two, and three-bedroom apartments couldn’t appear further from the retail sector, I think there are more correlations than most would believe. And I don’t mean the obvious topics which every development site has to contend with like construction costs and projected revenue. I am referring to a more personal connection; if you understand how people shop, shouldn’t you also understand how people live?? Now I may have just lost many of you but consider this; if you are a retail broker marketing the ground floor retail of a new mixed-use project or a developer looking at a site that maybe should be a hybrid-mixed-use project, you SHOULD LISTEN to this. If you want to be a successful developer in today’s market or a good broker, can you really afford to NOT understand this correlation? Perhaps this works in the prairie fields of Nebraska, or the swamps of Central Florida, but in the Northeast and in my world where so much is and has changed, I believe one MUST attempt to understand this new world.
Not only is retail undergoing an evolution, but the way people live has changed drastically as well. It is not by coincidence that these things are changing simultaneously. The instant gratification that the internet has brought, has, in my opinion, created demand and expectations in the way we live. From renters in a new building wanting to have amenities in their building and access to mass transit, restaurants, free-wifi, and grocery stores, to the Amazon shopper who wants same day delivery. This used to be viewed as a Millennial Evolution, but it is obvious that it has bled to all demographics and all ages.
In a world where fortress malls are doing health clubs, constructing office buildings on excess land, incorporating entertainment districts, and proposing residential units on their property and cities are developing three stories of retail with full LED building signage, one does not have to look too far for the changes in retail than what we see happening in the New York Metro Market
Whether a Broker or Developer, consider this; you are trying to convince a retailer to take a site that perhaps has some of the characteristics mentioned above, don’t you think you should be able to explain who may be the office worker or the resident that lives or works above or near the location you’re trying to convince a retailer to take? I mean how can you NOT do this?? Alternatively, if you’re a developer perhaps raising capital, looking for debt, or selling a project, don’t you think you need to explain WHO your perspective renter or buyer will be? What I mean is, if you’re leasing a building to on-the-go commuting millennials, do you want to lease the ground floor retail space to a hearing aid shop. Some will say that in the mixed-use space, the retail is “gravy” and you’re not concerned with that, but as explained above, the retail components have become part of the amenities of the building and who you place there could greatly change the perception of the building. This is a topic that a sociology major could write their senior paper on…more will come on this topic