A decade ago, talk was that the Internet would revolutionize retail real estate. Back then, the feeling was that it was just a matter of time before online shopping killed the traditional shopping mall. A host of online retailers and services popped up, raised tons of capital and then went bust. Besides Amazon.com and eBay.com, most of those sites have long disappeared.
But while the Internet did not destroy the mall industry, it has changed things. In one of the most exciting developments, more mall companies are adopting software that enables customers to virtually shop every store at a mall from home and then come to the property to actually pick up their wares.
That's not all.
In one piece, we look at a host of emerging sites that enable investors to peruse potential property acquisitions online. New Google-like search engines and listings are streamlining the process through which investors find developments. Traditional brokers are still involved and many have embraced this technology. Photos, site plans, trade area data and more are available at a buyer's fingertips. As these sites are continually enhanced — with 360 degree property views, virtual tours and more — online trading of properties should only grow.
Similarly, the art of site selection is becoming more of a science as reams of data become more accessible. Web sites and software suites offer retailers and developers drive time maps, demographic data and projections, lists of competitors and much more. Providers are continually adding new features.
We also look at how one developer has revolutionized the way it presents its properties to retailers. Using FlashPaper, W/S Developments turned all of its meetings at this year's ICSC Spring Convention into virtual, interactive presentations. Maps, trade area data, site plans and more are dynamically generated and available through its new presentation system.
In the next few pages, Retail Traffic provides a look at four technologies that are having an impact on the retail real estate industry. We hope you find it useful.
Mining Site Data Online
By Beth Mattson-Teig
More and more, real estate professionals and investors are relying on the Internet to research prospective acquisitions. Those that log on find a mountain of information, encompassing listings, customized analysis, graphics and even help to navigate through the data.
LoopNet and CoStar remain the dominant players in the online listings market. As of June 30, LoopNet's (www.loopnet.com) online property database contained more than 515,000 properties, with more than $440 billion in commercial and apartment real estate for sale — including about $88 billion in retail properties.
CoStar's (www.costar.com) inventory of 2.4 million commercial real estate properties contains about 290,000 for-sale listings, of which approximately 52,000 are retail or include a retail component. Those numbers are staggering when you consider CoStar entered the retail market just last year with the release of its new Retail Dimension, a service used for acquisitions, development and site selection.
The two sites alone draw millions of registered users. LoopNet reports having more than 2.2 million registered users.
Still, both LoopNet and CoStar continue to roll out new products and services with additional features that provide more value for users. For example, LoopNet's RecentSales service delivers sales comps on commercial property transactions across the United States.
“This service now incorporates LoopNet's full mapping suite, including bird's-eye imagery in most major metropolitan areas,” says Thomas P. Byrne, chief marketing officer at San Francisco-based LoopNet Inc.
CoStar's maps and aerials allow users to display a wealth of market information, including traffic counts, street names, retail properties by name, retail properties by type, parcel boundaries, and more viewed a layer at a time or in a composite displaying up to 10 layers of market information.
“With these information overlays, CoStar's online aerial images go far beyond a 30,000-foot view of centers and retail complexes,” says Michael Griffin, director of retail sales at CoStar Group Inc. in Bethesda, Md. Users can view tenant rosters displayed by location across the center's rooftop either as end cap or in-line. The building outline is also digitally highlighted, featuring frontage location and length for a more accurate perspective.
Newcomer RealProspex (www.realprospex.com) is an online commercial real estate listing service trying to distinguish itself by combining state-of-the-art technology with a personalized touch.
Real estate professionals not only analyze and update each listing, but they notify registered buyers when existing or new listings match their investment criteria.
“Instead of you having to search through all these deals that are not what you are looking for, we are going to rate deals based on cash flow and upside potential, and give you a little bit of our feedback on them,” says Meir Kessner, executive vice president of New York-based RealProspex.
The RealProspex rating system follows a basic “traffic light” pattern where deals are coded green, yellow or red.
Green is cash flowing with upside potential. Yellow means a deal isn't cash flowing at the moment, but has great potential. A red deal is a listing that either has negative cash flow and downside risk, or has recently posted and has not been analyzed. Staff also follows up with brokers to make sure properties are still available and are not under contract or off the market.
The Web site has about 7,500 registered users who have taken advantage of the free membership — 1,200 brokers who are listing properties and about 6,500 prospective buyers who are looking for properties. RealProspex receives 100 new listings daily, most posted within 24 hours. The site contains approximately 1,900 commercial real estate properties — all of which are greater than the $500,000 minimum purchase price. RealProspex is retooling its Web site to make it easier to navigate and offer more features. The redesign is expected to be unveiled in December or January.
Site selection software providers add more features to help retailers and developers find locations.
By Beth Mattson-Teig
The latest site selection technology ranges from needle-in-the-haystack views from Google Earth to reams of data that address nuances of consumer buying patterns.
Not bowled over by the bells and whistles, retailers and developers utilizing these high-tech gadgets look beyond the gee-whiz factor to examine the products' broader applications that can help them maximize their efficiency and profitability — such as improving day-to-day operations of existing stores and shopping centers.
“Retailers that are sophisticated realize that a market is dynamic, not static,” says Rudy Nadilo, CEO of Woburn, Mass.-based geoVue, which primarily serves retail and restaurant clients. Nadilo says brands need to view the market as a changing landscape. For example, using geoVue's input and iPLAN market planning software, Walgreen's realized it needed to move a store twice in three years to keep up with market changes. Relocating ultimately improved its sales 30 percent.
“The technology decisions that are made today have to scale with the customer over the next five years,” says Olivia Duane Adams, founding partner at Orange, Calif.-based SRC LLC. SRC recently released new versions of its Alteryx platform, which integrates data and analytics, allowing users to quickly perform data profiling, transformation and geo-spatial analysis. Real estate pros can use the software to transport data from the site selection phase to tactical deployment — helping retailers identify customers and drive consumers to those locations.
Fort Worth, Texas-based Buxton, meanwhile, has enhanced its Customer Analytics Report, which gives users insight into their customers' purchasing habits. What had predominantly been a site selection tool can now be used for additional business functions, including merchandising and marketing. The Customer Analytics Report lets retailers see what products customers are buying at stores within various trade areas. Users can transfer the data to stock and restock stores and test products. “The new tool delivers the ability to take customer analytics to an entirely different level of granularity for our customers,” says Rich Hollander, president of the CustomerID Division at Buxton.
Pitney Bowes MapInfo offers users access to site selection tools by deploying its advanced predictive analytics models via the Web. Retail and real estate professionals can create sales forecasts and run “what if” market scenario analyses from anywhere they can access the Internet.
Pitney Bowes MapInfo also is deploying its predictive analytics technology to the Web in an application called AnySite Online RM. This application creates a trade area profile for the developer's property that is matched against a database of preferred trade area profiles and returns a targeted list of the best-matching tenants, so the developer can optimize the retail tenant mix.
W/S Development's shift to paperless presentations.
By Beth Mattson-Teig
W/S Development leasing reps are wowing prospective tenants with an electronic presentation called Property Portfolio. The high-tech process allows the firm to quickly access volumes of information and images on the company's portfolio of 75 properties.
Chestnut Hill, Mass.-based W/SDevelopment, partnered with Beehive Media, a Boston-based technology firm, to create Property Portfolio — an easy-to-navigate Flash-based presentation system. Data ranging from lease plans and detailed maps are displayed using Adobe FlashPaper, a product that allows users to zoom in directly on specific areas of a plan or map with far more precision than they could with a PDF.
“It is very efficient and cutting edge,” says Mark F. Sweetser, vice president of real estate at Gap Inc. in Waltham, Mass. “It is a great way to present projects…. And, I think, it is several steps ahead of what other developers are doing.”
In the past, W/S Development — like most developers — relied on oversized paper-based materials to present information to prospective tenants. “Sales reps were carrying these things around just like encyclopedia salesmen,” says David Fleming, corporate marketing director at W/S Development.
The new system is much more streamlined. Retail properties are organized by state, and individual property pages contain demographic data, property features, maps, aerials and lease plans, as well as photos or renderings. In fact, the equivalent amount of data in a PowerPoint presentation would consume about 600 pages. Using W/S Property Portfolio, reps can move through data rapidly and in random order.
“This is similar to maneuvering on the Web in that you can click and get around quickly,” Fleming says. The user can easily move from image to image and property to property with immediate results. The user can also click on images to zoom in and out on the view. W/S can show an aerial photo of a shopping center and then zoom in to show features such as a particular road or access point.
While the technology doesn't eliminate the need to go and visit the site, the electronic format has a wealth of information, notes Don Kuszmar, development director for the northeast for New York-based Barnes & Noble Inc. “It definitely helps you get a better overall picture of the location with the site plan, how it ties into other roads and what other businesses are nearby,” he says.
The W/S Development Property Portfolio was unveiled at the ICSC Spring Convention in Las Vegas in May 2007.
Since the trade show, the presentation has become the primary vehicle for the W/S Development leasing team to market its retail property portfolio.
“I think there is always going to be a role for paper in this industry, especially when you're looking at site plans and maps,” Fleming says. “But when you can move things to an electronic format, it opens more opportunities to do more and show more properties, and it is more portable.”
Consumers use handheld electronic devices to search for products and sales.
By Beth Mattson-Teig
Mall patrons are taking advantage of a technology that makes racing through the shopping list a whole lot easier.
NearbyNow Inc. offers a Web-based service that allows consumers to search everything in their local mall — by product, brand and items on sale. Shoppers can “pre-shop” the mall Web site before visiting the property or conduct an online search while at the mall by text messaging via a cell phone.
“We like to think of it as a search and concierge service, and we're going to try every piece of technology that users want,” says Scott Dunlap, CEO of NearbyNow, based in Los Altos, Calif.
The virtual shopping service debuted at Eastridge Center in San Jose, Calif. in August 2006. Since then, NearbyNow has signed up 178 shopping centers across the country. The hosted service is specifically designed to enable consumers to access local information either before or during their shopping excursion. This is no simple list of a handful of items in each store. The average Web site includes data on up to 700,000 items.
Inland Real Estate Group of Cos. signed a contract with NearbyNow to introduce the technology to 15 of its shopping centers. The first will be up and running by 2008.
“What we really like about the technology is that it is making shopping more convenient for our customers,” says Cherilyn Megill, vice president of marketing at Inland U.S. Management in Oak Brook, Ill. Equipping consumers with information on where to find brands and learn about sales, Inland is hoping the technology will provide a competitive edge and drive more shoppers to its retail properties.
A feature of the NearbyNow technology is a search service on the mall's respective Web site. Shoppers can log on to the Web site of their local mall and search for a specific item, such as Nike Air Jordan Retro 5 sneakers, or conduct a more general search for flip-flops. The search results list the mall stores that carry the items, as well as a map indicating the stores' locations in the mall.
Also, shoppers can check the availability of a product, as well as reserve the item so that it will be waiting. “We actually coordinate with the retailer to check the inventory, often making a phone call to a sales associate to verify that (the product) is there,” Dunlap says. “We then send an e-mail or text message back to the shopper, usually within 10 minutes, saying that ‘yes, it is available, and it's waiting for you.’”
Almost a year ago, NearbyNow launched a mobile service that allows shoppers to use text messaging to search the mall while shopping. Each mall has a unique two-letter code, such as “MI” for Midland Mall in Midland, Mich. When shoppers at Midland text that code to 632729 (NEARBY), they can search all available products and sales, as well as receive exclusive offers.
CBL & Associates Properties Inc. introduced NearbyNow at Midland Mall this past June, and it is expected to be available by June 2008 at all 79 of the Chattanooga, Tenn.-based developer's regional malls and open-air centers. CBL expects the technology will be integral in attracting online shoppers to come to its malls.
The service costs about $150 per month per mall property, with discounts available for owners that sign up multiple properties. NearbyNow shares the advertising revenue it makes from the service. According to Dunlap, most of the malls make enough through revenue sharing to pay for the service within nine months, and at that point the service produces revenue for the mall.
The technology also provides valuable information on consumer shopping patterns. “What you really get is a snapshot of what everybody is looking for in your mall,” says Dunlap. For example, mall managers pay close attention to NearbyNow's report that shows which requests generated zero store results. “That report tells the mall operator what products or services people are searching for that are not provided by any of the current mall tenants,” he adds.
Some mall queries have shown that a number of shoppers are looking for a dentist, while other properties have turned up frequent requests for a particular brand, such as Puma shoes. Dunlap says, “It really helps mall owners think about what kind of retail mix they would like in the future.”
At least one other company is attempting to roll out a service similar to what NearbyNow offers. New York City-based LBDS (which stands for Location Based Directory Service), in March announced a similar business plan and promised technology enabling shoppers to search malls via cell phones. The company, however, did not return calls for comment and had not announced partnerships with any retail real estate firms.