Landlords on the prowl for new tenants have reason for optimism.
Although vacancy rates in all retail property types continue to creep higher, retailers that were knocked down by the recession are pulling themselves off the floor and restarting the expansion pipeline. Moreover, there is a growing cadre of up-and-coming retailers that operate handfuls of stores today, but are looking to make the leap to becoming larger chains.
As a result, the attitude has changed a bit in leasing circles. Recently, most emerging and expanding retailers sold necessity products or were value oriented, says Doug Healey, senior vice president of leasing for the East Coast with the Macerich Co., a Santa Monica, Calif.-based regional mall REIT. But the tenants coming onto the scene now increasingly sell discretionary goods, Healey says.
For example, some retailers have succeeded by going after parents’ wallets with concepts aimed at preschoolers and tweens. Among these is the new Crazy 8 chain from the Gymboree Corp. and P.S. from Aeropostale from Aeropostale Inc.
Then there are concepts that might sell stuff for kids, but also offer relief for stressed-out parents. For instance, WONDER!, a new-to-market emporium that will sell everything anyone needs for a child under seven years of age, was originally conceived as a stress-free place where parents could do all of their shopping and grab a bite while their children run around an in-store playground.
Meanwhile, a much smaller, but relative in spirit concept, has emerged in the form of Little Monkey Bizness, a new chain of playgrounds that also sell gourmet coffee and snacks. Little Monkey Bizness recently signed leases for its seventh and eighth stores in Wheaton, Ill. and Tampa Bay, Fla.
Among the fastest growing categories in the next year or two will be fast-food operators that take spaces under 5,000 square feet, according to the June edition of a monthly retailer demand report put together by Rich Moore, an analyst with RBC Capital Markets, that includes data from Retail Lease Trac.
One such retailer is Freshii, a newcomer to the quick service sector that concentrates on fresh, healthy, custom-built menus. Freshii’s founder, Matthew Corrin, hopes to eventually have a North American fleet of at least 1,000 stores. The chain opened its first location in Toronto in 2005, but it’s already considering expanding worldwide. It currently operates stores in the U.S., Canada, Austria and Dubai. “If Subway has 30,000 [stores], I believe we can achieve 10 percent of that number,” Corrin says.
Another growth area is the market for organic, environmentally-conscious products. Freshii touts its fresh, preservative-free offerings and biodegradable packaging as some of its selling points. Two other new retailers—Melvita and Rain—are building their concepts around organic offerings. Melvita, a French chain run by the same company that owns L’Occitane en Provence, focuses on selling beauty and hygiene products made with natural ingredients.
“The U.S. is the perfect market for Melvita because there is such a need for clarity in the marketplace about whether personal care products are actually organic and to what extent they are organic,” notes Deanna Elstrom, vice president of Melvita U.S.A.
Finally, the current market environment has provided an opportunity for some regional chains to start mulling national expansion. Among these is apparel seller Body Central, which has previously operated stores primarily in the West and Southeast, and Hibbett Sports, a Southeastern retailer trying to enter new states.
“We are still profitable and our stores are making money and our year-over-year comps are still positive,” says Jeff Gray, vice president of real estate with the chain. “The reason we slowed down our growth [in 2008 and 2009] was because of lack of development, we just didn’t have places to go.”
For profiles of 23 up-and-coming concepts, continue reading here.
Category: Beauty products
Coming from: France
Parent: L’Occitane
Current stores: 3, in Newport Beach, Calif., San Francisco and Seattle
Planned openings: At least one by 2011, in New York City. The company is using the three current locations to gauge what kind of an expansion it can support in the U.S.
Average store size: 850 sq. ft.
Target audience: Health- and beauty-conscious women between the ages of 25 and 45
Buzz: “It will definitely attract a consumer who appreciates organic and leads a healthy lifestyle,” says Lynn Beck, general manager for Pacific Place, a 325,000-square-foot retail center where Melvita’s Seattle store is based.
Category: Food
Parent: Freshii
Coming from: Canada
Current stores: 4, including Chicago, Washington D.C. and Denver.
Planned openings: The chain would like to end the year with 40 stores in the U.S. Long-term, it is aiming for approximately 1,000 stores in North America.
Average store size: 800 to 1,500 sq. ft.
Target audience: What the chain’s founder, Matthew Corrin, describes as “mass affluents”
Buzz: Freshii’s food comes wrapped in eco-friendly packaging made from vegetable starches and can be ordered in advance. “It’s healthful, quick service food,” says Andrew Moger, president and CEO of BCD, the New York City-based firm which represents Freshii.
Category: Computers and related gadgets
Parent: Microsoft Corp.
Current stores: 4, including in Arizona, California and Colorado
Planned openings: Unknown
Average store size: Approximately 7,500 sq. ft.
Target audience: PC lovers
Buzz: Microsoft will continue to test its early stores close to its home base, in Redmond, Wash. But judging by the record traffic at the Microsoft store at Macerich’s Scottsdale Fashion Square, it won’t be long before the company opens stores nationwide. “If things work out for them, and all indications are it will, they can have major expansion across the country,” Healey notes.
Category: Coffee and playground
Parent: Monkey Bizness Holdings
Current stores: 6
Planned openings: 100 over the next 18 to 24 months; up to 200 in the next five years
Average store size: 6,000 to 8,000 sq. ft.
Target audience: Upper middle class parents who’d like to drink their coffee in peace and kids looking for amusements
Buzz: The chain offers parents a full line of gourmet coffees and healthy snacks while catering to kids. Little Monkey Bizness prefers to open stores in anchored shopping centers with easy access to major thoroughfares.
Category: Apparel
Coming from: Spain
Current stores: 5
Planned openings: Unknown
Average store size: 4,000 to 6,000 square feet, but the chain is flexible
Target audience: Desigual means “different” in Spanish and that’s what the retailer tries to offer, something different for everyone, says Cheryl Rose-Mack, principal of Columbus, Ohio-based CM&R Group, Desigual’s U.S. broker.
Buzz: The chain sells colorful, fashion-forward apparel and so far, shows major expansion potential, says Healey. Desigual will consider locations in malls and on urban streets, as long as they boast a high fashion, high traffic image, adds Rose-Mack.
Category: Bath and beauty products, gifts
Parent: Rain Africa
Coming from: South Africa
Current stores: None; one is coming on line later this year in New York City
Planned openings: Unknown
Average store size: 1,000 to 1,500 sq. ft.
Target audience: Women between the ages of 25 and 45
Buzz: Rain sells natural, handmade bath and body products ranging from soaps to candles to back scrubbers. “All their packaging is recyclable and they support ethical trading, which is a big issue in Africa,” says Michael Stone, senior director with Cushman & Wakefield, who’s representing Rain in the United States. Rain plans to take locations in tourist areas and regional malls.
For more concepts, click here.
Category: Children’s apparel
Parent: The Gymboree Corp.
Current stores: 91
Planned openings: 28 during the second quarter of fiscal 2010 alone, 75 to 100 by the end of the year
Average store size: Approximately 2,200 sq. ft.
Target audience: Children, from newborns to early teens
Buzz: Janet LaFevre, senior marketing director with the Glendale Galleria in Glendale, Calif., where Crazy 8 recently signed a new lease, says the chain offers fashionable clothes at lower price points than Gymboree stores. A pair of jeans at a Crazy 8 store costs $6.99, versus $28.75 at Gymboree.
Category: Food
Parent: Zoup! Fresh Soup Company
Current stores: 26
Planned openings: 34 stores by the end of 2010, 70 by the end of 2013 and more than 100 by 2015
Average store size: 2,000 to 2,200 sq. ft.
Target audience: White collar office workers and support staff, busy moms
Buzz: Zoup! is an upscale fast casual chain that has developed hundreds of soup recipes by testing them on friends and family, says Eric Ersher, the company’s founder and managing partner. Flavor choices run from Lobster Bisque to Sicilian Pizza and there are options available for people with diet restrictions and allergies. f
Category: Apparel
Parent: Aeropostale Inc.
Current stores: 14
Planned openings: 25 to 30 in fiscal 2010
Average store size: Approximately 2,400 square feet
Target audience: Elementary school children between the ages of 7 and 12
Buzz: Like its parent chain, P.S. from Aeropostale focuses on casual clothes and accessories. So far, real estate insiders who have seen the stores have been impressed. “They’ve been extremely, extremely successful,” Healey says.
Category: Apparel and accessories
Coming from: United Kingdom
Current stores: 4 in New York, Boston, Miami and Los Angeles. New openings are already planned for Chicago, San Francisco and Santa Monica, Calif.
Planned openings: According to published reports, the company would like to open 30 stores stateside over the next three years
Average store size: 8,500 to 10,000 square feet
Target audience: Urban, fashion-conscious consumers between the ages of 20 and 50. The stores sell clothes for men, women and children.
Buzz: AllSaints’ New York store reportedly made $1 million in its first two weeks. The chain is named after All Saints Rd. in Notting Hill, London.
Category: Apparel and accessories
Parent: Hot Mama
Current stores: 16
Planned openings: 6 in 2011, 8 in 2012. The firm plans to grow its store base 33 percent on annual basis.
Average store size: 2,500 sq. ft.
Target audience: Affluent 30-something women with kids, moms to be
Buzz: Hot Mama aspires to be a boutique store in a kid-friendly setting. Property owners at centers say the chain develops a loyal following among local women with its cool designer duds.
Category: Apparel
Coming from: United Kingdom
Current stores: 9 at the beginning of 2010
Planned openings: 50 worldwide in the next five years
Average store size: 2,500 to 3,000 sq. ft.
Target audience: Fashion-conscious men and women with aspirational shopping tendencies
Buzz: What sets Ted Baker apart is that the brand has a very clear brand image and a sense of humor about itself, says Laura Pomerantz, principal of PBS Real Estate LLC, whose firm represents Ted Baker in the United States. “It’s not an ordinary designer label. It has spirit and personality and a good price point relative to its design value,” she notes.
For more concepts, click here.
Category: Children’s apparel, furniture, toys and accessories
Parent: WONDER!
Current stores: 1, coming later this year
Planned openings: 19 in the next five years, 200 in the long-term
Average store size: Larger than 100,000 sq. ft.
Target audience: Well-to-do parents looking for a relaxing shopping experience for children under the age of 7
Buzz: Retail real estate executives are excited about the chain, touted as a one-stop shopping emporium for kids, because if successful it has the potential to take hundreds of big box spaces off their hands.
Category: Apparel and accessories
Parent: Body Shop of America Inc.
Current stores: 190
Planned openings: 40 in 2010, possibly followed by another 50 in 2011
Average store size: 4,000 sq. ft.
Target audience: Young women between the ages of 15 and 23
Buzz: A regional player focusing on affordable fashion, Body Central is rolling out a new prototype store for a major expansion, says John Bemis, executive vice president and director of leasing with Jones Lang LaSalle Retail, an Atlanta-based third party property manager. “They are a very solid player, a true value-oriented retailer,” he notes.
Category: Apparel, accessories, home décor, gifts
Parent: Francesca’s Collections
Current stores: 187
Planned openings: 60 on an annual basis for the foreseeable future
Average store size: 1,200 to 1,500 sq. ft.
Target audience: Affluent women between the ages of 18 and 34—the same demographic that shops at J.Crew and Anthropologie
Buzz: Landlords laud Francesca’s Collections for its eclectic mix of merchandise and affordable prices. “A lot of their products are unique and the price points offer very good value, which in this climate, speaks well,” says Lynn Beck, of Pacific Place.
Category: Sports equipment and apparel
Parent: Hibbett Sporting Goods Inc.
Current stores: 747
Planned openings: Between 30 and 40 in 2010, followed by the same number in 2011. Eventually, the chain would like to grow to approximately 1,200 stores.
Average store size: 5,000 sq. ft.
Target audience: Young families, team sports enthusiasts
Buzz: A largely regional chain headquartered in Birmingham, Ala., Hibbett’s is heading for a national expansion. Later this year, it will enter Colorado and South Dakota. The retailer prefers to go into secondary and tertiary markets.
Category: Tea
Parent: Kusmi Tea of Paris
Coming from: France
Current stores: 1, in New York City
Planned openings: At least two, in New York and California.
Average store size: 500 to 1,000 sq. ft.
Target audience: Tea lovers
Buzz: This 143-year-old company sells a wide selection of high-end teas, including Detox, Sweet Love and Violet flavors. Owner Sylvain Orebi says he’s looking for locations on swanky urban streets in major cities.
Category: Apparel and accessories
Parent: Love Culture
Current stores: 30
Planned openings: 25 during the remainder of 2010, followed by 20 in 2011. The chain hopes to operate at least 100 stores by 2014.
Average store size: 7,500 to 20,000 sq. ft.
Target audience: Young women looking for hip clothes at affordable prices
Buzz: “They are taking full advantage of current market conditions and moving from a smallish retailer into a national force,” Bemis says.
For more concepts, click here.
Category: Footwear
Coming from: Brazil
Current stores: 1, at the Pierside Pavilion in Huntington Beach, Calif.
Planned openings: Unknown
Average store size: 1,250 sq. ft.
Target audience: Havaianas sells flip-flops for every demographic, from babies to grown men and women
Buzz: Havaianas specializes in flip-flops and sandals—more than 100 varieties of them. Its first U.S. store will feature a selection of 150 products, including limited edition items. Since Havaianas were originally based on Japanese sandals featuring rice straw soles, the foot-beds of all Havaianas shoes have a textured rice pattern.
Category: Jewelry and accessories
Parent: Frey Wille
Coming from: Austria
Current stores: 2, in New York and Los Angeles
Planned openings: Looking for locations in Miami, Chicago, Dallas, Las Vegas, San Francisco and Beverly Hills
Average store size: 800 to 1,000 sq. ft.
Target audience: Art collectors, affluent men and women with a taste for fine jewelry
Buzz: The chain specializes in high-end enamel bracelets, watches and rings. Price points range from $100 to $2,600.
Category: Apparel and accessories
Parent: Arcadia Group Ltd.
Coming from: United Kingdom
Current stores: 1, in New York City
Planned openings: At least 4, including additional stores in New York, Chicago, Los Angeles and Miami
Average store size: 40,000 sq. ft.
Target audience: Young women looking for fast fashion at more affordable prices than designer labels
Buzz: British retailers have often opened too many stores, too quickly, in the wrong markets, says Craig Johnson, president of Customer Growth Partners, a New Canaan, Conn.-based retail consulting firm. “I think they will be very wise to make this a very slow expansion.”
Category: Apparel
Coming from: United Kingdom
Current stores: 2, in Martha’s Vineyard and Nantucket, Mass. A third store is reportedly scheduled to open in Boston this summer.
Planned openings: Unknown
Target audience: College age kids looking for upscale casual clothes
Buzz: Industry insiders describe Jack Wills as an Abercrombie & Fitch wannabe, but with a British twist. The stores sell items like trench coats, priced at $249, and deck shoes, priced at $149.
Category: Food
Parent: Crumbs Bake Shop
Current stores: 26, including New York, New Jersey, Connecticut and California
Planned openings: 15 to 20 on an annual basis
Average store size: 1,000 sq. ft.
Target audience: Anyone with a sweet tooth
Buzz: The chain, which sells more than 50 varieties of cupcakes, is looking for sites in high density downtown areas and in high density, high income suburban locations, according to Andrew Moger, of BCD. (BCD is representing the chain).