Landlords and CRE professionals are leveraging technology to establish new ways of leasing and purposing space in an era of physical distancing.
No one would question that the COVID-19 pandemic has had a huge impact on the retail industry. PiinPoint data demonstrates that visits to retailers were down 76% from March 23 to April 25.
For retailers, the pandemic has forced many to reevaluate their real estate strategies. In light of this reimagination, our team has been working hard to provide tools for retailers to develop new strategies for their physical footprint; be it to evaluate changes and performance in their network, understand the potential of omnichannel, or experiment with new operations. No matter who you are, we’re all acknowledging that this “new normal” requires a plan for success.
At the same time, many landlords and commercial retail real estate professionals are anticipating increased vacancies and asking big questions about what it means to lease their spaces and what reimagining retail truly looks like. One of the most obvious ways retail leasing will evolve is towards mixed-use retail communities. This is not a new trend by any means, but the transition towards it will certainly speed up as a result of vastly changed retail strategies.
I wrote an article in March that was sharing some observations on trends in the commercial real estate industry and how it impacts brands like PiinPoint. Before the COVID-19 shutdown, one of our most consistent observations had been that there are parallel pursuits of data to support location decision-making for both brokers and tenants, but without a lot of intersection. On one side, you have tenants methodically seeking the perfect locations; on the other, property owners who are trying to fill vacancies and use data to guarantee a strong tenant fit for their space.
Thoughtful + Relevant Leasing Recommendations
Without creative collaboration between these groups around how to best utilize space and serve the local consumers’ needs, there is a gap. This gap is what turns a downtown core into a ghost-town as spaces are not purposed to meet the evolving demands of an area. This gap contributes to high vacancy rates in shopping malls who need to redefine who should be their anchor tenants. It’s also what causes the small entrepreneur to pick the wrong location and struggle with their business, while at the same time costing larger brands hundreds of thousands of dollars in missing the best opportunities for them.
Now, in a time of complete retail reevaluation, this disconnect will continue to present significant challenges. How do we efficiently purpose real estate for the things consumers need, in a way that fits how they want to consume them?
Growing Vacancies and Business Uniformity
A heartbreaking statistic that was released last month was that 4 out of 5 businesses in Canada have closed due to COVID-19, our own data shows that visits to retailers were down 76% from March 23 to April 25. While these closures for some businesses are temporary, they threaten many independent businesses’ futures, and understanding of ‘normal’. Landlords are being forced to not only come up with compassionate, flexible leasing arrangements with their tenants, but also seek out tools to protect their property occupancy.
Looking long term at a post-COVID real estate world, we believe the tenant mix will become increasingly mixed-use, especially when it comes to enclosed malls. The mixed-use strategy as we know it today mixes entertainment, amenities, hospitality, food and beverage, services, office space, and traditional retail together. What it also includes is close proximity - if not integration - to residential communities. This attachment allows CRE spaces to better cater to the evolving consumer’s behaviour and their meshing of work, play, shopping, and life in general. With each community hosting different consumer demands, mixed-use can help to diversify not only a landlord’s portfolio but also the look and feel of the places people spend time.
The Importance of Exposure Technology
For property owners faced with reinvention, using technology to consider how a balanced distribution of services, amenities, and products or experiences could look will help to mitigate risks in times of uncertainty. There is a wealth of data available to real estate decision-makers; data that articulates who is visiting a property, how far they travel, where else they spend time, and what they care about.
With the right tools, property owners can also gain insights into how strong their property appears to potential buyers or tenants, to know what’s most likely to remain vacant and require that reimagination.
Taking a locational context into consideration when purposing space is what builds both resilient and thriving retail communities.
Exposure of brick and mortar retail continues to be critical, but beyond the traditional audiences, too. The regular tenant pool is shrinking; as fewer retail brands vie for space and instead invest in their omnichannel strategy. At the same time, because the new demands for space require physically distant distribution capabilities, buy online pick-up in-store (BOPIS), and integration with e-commerce, creative uses for space will need to be inspired.
For those that are looking at available spaces, they need to know beyond just what’s available to why it’s worth the risk of physical expansion or relocation. Making data-driven network decisions is more important than ever. And since the on-site gut check is largely out of the question, there is a lot more being asked of the virtual due diligence process.
Retail trends we’ve observed - perhaps with some trepidation - over the last decade have come front and center with the COVID-19 pandemic. We knew these things were underway, but are only now being forced to reckon with the impact they truly have on our existing retail paradigm. We will adapt accordingly. There’s lots to learn in this new normal, and the answers on how to fill space in 2020 and beyond won’t arrive overnight. That said, we can look to data and analytics for insight.
Reimagining Retail Communities Together
At PiinPoint, our goal is to help businesses succeed in their location strategy. We want to see businesses of all shapes and sizes - no matter how unprecedented the circumstances - thrive. One of the maxims we deploy is to build for our users, by our users. We take pride in how we actively engage users of our technology and invite them into our visioning and development process.
You’re invited into this process.
Right now, we’re developing a tool that uses Location Intelligence to connect the dots between:
- Those looking for sites to support their new location strategy, and
- Those looking to host the future of retail
If you’re a Retailer, or Commercial Real Estate broker or landlord doing the hard work of retail reinvention, let’s figure this out together.
About the Author
Sarah is PiinPoint’s Chief Product Officer, and is one of the first employees. She has gotten to know our customers closely, having worn many hats over the years including sales, marketing, customer experience and product management. She is passionate about giving retail real estate professionals the data they need to make significant decisions around site selection easier and informed.
Outside of product leadership, Sarah enjoys the creative process, as well as sharing her passion for yoga, cooking, community-building, and dance with others.
Since the early days at Piin, our goal has been to "build for our users, by our users." As we expand our products to support the "new normal", that doesn't change! I'd love to hear your thoughts on what we're building next. :)