JL Architects

Retail

The Future of the Suburbs

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Creativity and resourcefulness has always been rewarded and Commercial Real Estate is no exception.  As retail interactions, life, and work change there is no shortage of lemons for lemonade.

The modern history of retail started with the Central Business District, a place filled with the drug store, grocer, doctor and hardware store.  The desire for greater convenience (parking), larger spaces and heightened customer experience led to the shopping center, the mall, and then online shopping. According to Nuveen Real Estate Investments, 78% of online orders involve a physical store.  Retail is not dead, it is simply changed. The complexion of suburban commercial real estate is changing and here are the top 4 reasons:

The desire to go back to an office 100% of the time is limited

  • There are industries where face-to-face is still important; those offices will get larger.  More frequently the hybrid model is taking hold, yet many offices are requiring everyone to be on site on a single day. The result is that those companies will need at least as much space as they did pre-COVID, even if only one day a week.

Retail store counts are decreasing.

  • Large and small, there are store closures due to bankruptcy/contraction (Men’s Warehouse, Kmart) or a new distribution model (Target). That leaves a lot of store space to be filled.

Repurposing and Repositioning

  • As of April 2020, warehouse and industrial leases are up 141%
  • Retail leases are down 47%
  • Office leases are down 17%
  • Decentralized medical services and consolidation of health care providers is up. Hospital Systems are building clinics that are closer to their customers.
  • Retail is downsizing and the 100,000 sf vacancy won’t be filled in the traditional methods. Options to repurpose include warehouse (last mile and mini storage), experiential opportunities, food halls, and medical uses.

Diversity and Stability

  • During the pandemic many retail and restaurant uses were forced to close or reduce accessibility to the point that being open did not make sense.  Medical providers, warehouses, online distribution, grocery and food (restaurant) delivery boomed.  A mix of uses will result in greater stability of rent collection.

One can look at the Exton Mall at the intersection of Routes 30 and 100 in Exton PA for an example of suburban re-purposing. The decline of the Exton Mall had its crossroads searching for an identity and long term plan. The Urban Land Institute in conjunction with West Whiteland Township created a panel (on which I served) to identify the personality that already existed at this prominent crossroad, creating a plan to leverage and manage the redevelopment of the Exton Mall. As a result, Exton’s “Town Center” is becoming a community that includes apartments and townhomes, shopping, eating, healthcare, an entry point to the Chester Valley bike trail, and access to the Exton train station which services both Septa and Amtrak trains.

As experienced in Exton, the mix of uses is a return to the Central Business District model enhanced with large, flexible footprints, opportunities for outdoor congregation and activity space, and ample convenient parking. Turns out, the future of the suburbs is a return to the past in convenience and diversity upgraded to the fill the need for entertainment and experience.

-John Lister, Principal of JL Architects

Managing your Leasable Space through a Master Model

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One of the services we provide at JL architects is the creation of a master model.  So, what is a master model? It is a digital representation of a multi-tenant space which can be updated each time a tenant space is turned over.

What is Your Benefit?

  1. Keeps a living record of your building. The more information collected on the building, the less time it takes to get a LOD when you need one. This holistic view of your property allows your design professional to offer best options for your tenants.
  2. With master models, we can demise the building however you need. Once the building is surveyed the first time, spaces can expand and contract as needed, and can be combined in any configuration possible. This allows for maximum flexibility when wanting to do tenant fit outs.
  3. Site visits: the master model will cut down on site visits, speed up production time, and complete your leases faster. While a site visit is required to create the model, it is not going to be needed for each new LOD.

Using JL’s Master Models gives you the opportunity to own accurate drawings, allowing for creative space planning in an efficient and cost-effective manner. It works equally well for your shopping center, your office building, or your lab space. Let us know how we can help you!

-Alex Schleicher, Project Manager

Urban Redevelopment- From Retail to Mixed Use

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M.S Yearsley and Sons, a True Value hardware store and John Deere franchise opened in 1917 and served the West Chester community from a series of attached 19th century buildings. In 2006 they relocated and the real estate was purchased for redevelopment. This project is a reflection of JL Architects history in mixed -use and infill projects. Today, the site is home to 88 apartments, over 20,000 sf of ground floor retail and restaurants, and over 100 off-street parking spaces.
To achieve that density and increased value, JL Architects supported the team in obtaining zoning changes and adjustments, Historic Review Board approval and the blessing of the community. Those efforts resulted in a site density increase of 100% over its prior allowance.
Our support came in the form of building and zoning code research and analysis, master planning, feasibility studies, sun studies, and expert witness testimony.
The property is now owned and managed by Hankin Group and was constructed by Pancoast and Clifford.

Adaptive Re-Use to Make Your Retail More Leasable

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When Toys R Us, Kids R Us, and Acme Grocery all vacated the Liberty Square Shopping Center in Burlington, NJ,  the center’s owners were faced with the challenge of how to lease the empty big box space. Owner’s National Realty Development Corp partnered with JL Architects to re-position the space to market to today’s retail tenants. Success was had with Planet Fitness, Ross Dress for Less, Marshalls/HomeGoods, and Five Below all signing on to join the the center.

John Lister of JL Architects highlights design and structural changes to the center that brought this leasing success.

How to Keep Your Shopping Center Leased

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Who remembers getting the JC Penney’s Christmas catalog as a child?  Besides having more than enough toys to go around, big department stores had something for everyone no matter the shopping occasion.  A family could easily spend an hour or so browsing the store’s shelves, and that’s even before going to the toy section.

Today, the 1-stop-shop department stores are fewer and fewer, creating vacancies in older shopping centers that single tenants simply can’t fill. To keep these centers current, occupied, and profitable, a restructuring of leasing spaces and a façade refresh is needed to attract a wider range of tenants.  A current project at JL Architects does just that.

Shopping Center 1

Located in New Jersey, this shopping center had 2 large vacancies, one at 33,000 sf and one at 45,000 sf. To appeal to a wider range of tenants, the building footprint was reduced at the rear wall, and the two spaces were converted to 4 spaces. In addition to reducing the building depth by roughly 11,000 sf, the front elevation was reworked, and tailored to potential tenants.

Shopping Center 2

Currently, this project is under construction, and soon we will turnover the first tenant space for interior work.  Our client is anxiously looking forward to a newly occupied shopping center with a fresh look, new leases, and increased profitability.

Brandon Runnels, GGP

Architectural Designer

ICSC in Philadelphia

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The International Council of Shopping Centers (ICSC) held its annual regional conference in Philadelphia last week. Attendance was down, but there were deals being done and new contacts made.

The conference included:

  1. A tour of developments in the Convention Center area, such as PREIT’s redevelopment of the Gallery, rebranded as The Fashion District, and National Realty and Development’s East Market mixed use development,
  2. Workshops on topics such as where operations and maintenance planning fits into development, women in commercial real estate, and leasing to the cannabis industry.
  3. Round tables on redevelopment, adaptation of prototypes and updates on opportunity zones.

Some of my take-aways include:

  • At every turn, it seemed there was a New York developer looking to get into the Philadelphia market. While the value of real estate in Philadelphia has risen, it still lags the markets to the south (Washington DC) and north (New York).  According to Real Capital Analytics, commercial prices in non-metro areas rose at a faster pace in 2019 Q1 than prices in the six major metro areas of New York, Boston, Washington DC, Chicago, Los Angeles, and San Francisco. In March 2019, commercial prices were broadly up by six percent in non-major markets compared to 4.5 percent in the six major metro areas.  None-the-less, the non-major markets have lagged over the longer term and present a value while they catch up.
  • The death of retail continues to be exaggerated, but you must read past the headlines to understand it. Globest.com reported that the retail apocalypse is driven significantly by a changing business model and investors trying to play the new game by old rules.  Since 2010 nearly 60% of major US retail bankruptcies have been driven by overwhelming leveraged buyout debt.  Better news is found in the report by research and advisory firm IHL Group. It found that more chains are opening new locations than closing locations.  Retail is not dead, but it is different.  In the past, the leasing team would call their top 10 contacts, and lease to 8 of them in each center. Now, those retailers are not opening as many and shoppers want more diversity and “shopertainment”.  Chris Harden of Cushman & Wakefield points out that retail is evolving. It is not competing with e-tail, rather complimenting it. Otherwise, why would e-tailers such as Warby Parker, Bonobos and Untuckit open physical stores and why would there be B8ta?
  • No one wants a 225-foot-deep store and a lot of centers have those big boxes sitting empty. The popular alternative for the closed Kmarts, Sears and Toys R Us stores is self-storage. There are hurdles to overcome such as lease restrictions and zoning issues. At JL Architects, we are working in repositioning a shopping center for National Realty and Regional Construction. It includes a closed ACME grocery store and Toys R Us.  The client opted to reduce the size of the building to fit their tenants’ needs.  In addition, the “unused” GLA (gross lease area) allows them to develop new pad sites or expand other users in the center.
  • Experiential retail (“shopertainment”) has been the leading antidote for many years. The popular notion is to include fitness, arcades, and theaters. Those are easy to pencil because the cost and revenue can be tracked like the good-old-days.  Things are changing. There was a movement towards “life style centers” years ago and, like everything else, it is maturing. The next generation of retail is for the destination to include retail and entertainment, but not be exclusively taking place in the leased areas. The ability to track shoppers as they drive by, come to shop, and hang out at the center has shown that in some of the most successful renovations and repositioned properties, not everyone who visits comes to shop or eat.  However, the property is still a destination and they come to experience the place.  The next generation of life style includes much more than a wide sidewalk, planters, a plaza and benches.  It a place to visit, be in and experience. Those visitors create activity.  They may or may not shop, but by being in the space, they create interest and attract other visitors who eat, drink and shop.

The greatest successes come from the greatest challenges.  There are many opportunities in the market, and this is an exciting time to be in it.  The need for creativity has never been greater.  Let JLA brings our balance of design creativity and business understanding to your next project.

John Lister, AIA, GGP

Principal