By: Nancy McClure, First Vice President, CBRE Tucson
Sensational headlines proclaiming the demise of physical retail have grabbed the attention of the public recently. However, consumers are still making the majority of their purchases in brick and mortar stores. Shoppers are looking for more than merchandise, they are looking for human experiences, connectivity, and the ability to touch and feel the product. The lines between where purchases are made has been blurred. Customers browse on-line and buy in-store; buy on-line and pick-up or return in-store; try on in-store and buy on-line. The rules have changed, and purchasing habits have transformed, as well.
The challenge for physical retail is to differentiate themselves, provide excellent customer service and interesting, relevant products. The challenge for landlords is to create exceptional experiences, those that over-paid for properties are having difficulty pivoting to reduce rents and meet the market. The science of retail is changing at warp-speed and everyone is working to keep up. Demographics, not e-commerce is the number one disruptor in retail.
Tucson is seeing many big box vacancies without the speed of traditional retailers looking to re-fill spaces. There are other, non-traditional retail uses; entertainment, fitness, self-storage, medical that see vacancies as an opportunity to enter the market. The addition of one of these often make centers more interesting and attract customers for more frequent visits. Unfortunately, leases often restrict uses other than true retail. Landlords have to work with their tenants or pay to allow for mixed uses.
One bright spot for Tucson over the past several years has been the attraction of new restaurant concepts; the right restaurant can act as new anchors for centers. That being said, one challenge restaurants face is the legislated increase in minimum wage and paid leave. This financial pressure on local restauranteurs has caused closures. Prime regional locations are always the target with eateries and bars. Tucson’s downtown has been a magnet for local restaurants to launch new concepts.
Arizona had one of the hottest tourism years on record and this bodes well for retail—restaurants, hotels, and storefronts are all winners when tourists come to town. Tucson’s proximity to the Mexican border makes it easy for Mexican tourists, business people, and investors to travel to the area and make major purchases. Retailers and restaurants, properly staffed, with bilingual signage gain loyal customers and word of mouth. It’s the time to break away from traditional business models and choose to be remarkable to gain consumer attention.
For further information on Tucson’s Retail Market this quarter click here.
Nancy McClure specializes in representing local and national retailers in their expansion pursuits across the Tucson area and other key markets in southwest Arizona. With more than 31 years of professional experience, Nancy has extraordinary insight into Tucson’s unique retail landscape, cultivating strong relationships and earning clients’ trust along the way through her dedication and commitment to creating exceptional real estate solutions.