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.