2016

RETAIL REAL ESTATE OUTLOOK

The retail industry’s evolution has accelerated at an unparalleled pace over the last few years.

And nowhere are these changes more apparent than in retailers’

real estate strategies.

So what does that mean for the retail real estate

industry in 2016?

Buxton turned to leading industry experts to find out.

State of the Retail Real Estate Market

The U.S. market will continue to offer retailers

significant opportunities to grow their business due to:

The strength of the U.S. economy

Increases in consumer spending

But, consumer demand and easier access to

capital has resulted in:

• Vacancy compression

• Rising rents across most major markets

Competition for Retail Space

Unlike last year, our panel of experts expressed a unanimous

opinion about what the level of competition for retail real estate will look like in 2016.

While retail space isn’t necessarily hard to find, quality retail space is absolutely competitive and only going to get more so.

Buxton Senior Vice President

Paul Schlesinger

Clay Smith, managing director of retail brokerage at JLL,

agrees, noting that it will be

“harder and harder to find

new real estate opportunities. In most major markets

retail development is still constrained.”

The intense competition for real estate has led retail and restaurant executives to consider alternatives, driving

many of the trends highlighted in the next section.

Real Estate Trends

Many of last year’s trends will continue into 2016. However, these are the four trends we believe will intensify in 2016:

Secondary and Tertiary Markets

Omnichannel Retail

Clicks to Bricks

Food’s Importance

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Secondary and Tertiary Markets

2016 is the year of the secondary and tertiary markets.

But why would retailers abandon the security of

proven primary markets?

Several factors are driving the trend:

Oversupply of Capital

Migration Patterns

Lower Prices

Data Provides Confidence

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2

3

4

Omnichannel Retail

As retailers move from planning to implementing omnichannel

strategies, patterns have emerged that have a significant

impact on retail real estate:

• Reevaluating and optimizing real estate portfolios

• Shrinking store footprints

Clicks to Bricks

Online retailers are increasingly announcing plans to open

physical stores, proving Scott Galloway’s bold claim that

“pure play retail is dead”and that online retailers must

open physical locations in order to survive correct.

Food’s Importance

Food is one thing that online providers have yet to master,

leading restaurants and grocers to play a key role in

driving traffic to retail centers.

Hot Markets

In the end, the question that retail decision makers care most about is

Where should I invest in 2016?

In order to predict hot markets for retail growth in 2016, Buxton

examined site scores run between December 2014 and December 2015 by a sample

of current Buxton clients in the retail and restaurant industries.

Some of the markets that seem to be drawing the most attention from retailers are:

AtlantaChicago

Dallas/Fort WorthHouston

Minneapolis/St. Paul

To view our entire list of hot markets and to read the full report, download it now.

GROW WITH US. 1-888-2BUXTON | www.buxtonco.com

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