With millions of square feet of Class-A retail and restaurants being developed—some in spots once considered “out of the way”—Boston’s on the verge of a new retail era, said the experts at Bisnow's annual Retail Real Estate Summit yesterday. (Our credit cards are about to melt.)
At the Fairmont Copley Plaza, our all-star panel was The Lyons Group’s Patrick Lyons, WS Development SVP Leasing Mark Roberts, Kimco Realty prez for the northeast Joshua Weinkranz, Samuels prez Joel Sklar, Noodles & Co’s Bradley Toothman and our moderator, CohnReznick partner Stephen Wyss. Changes in technology, demographics, and demand are bringing in new online options and new types of bricks and mortar stores. But one old adage seems to still apply: whatever they want, however they shop “the customer is always right." (Even if they want to buy velour track suits.)
Metro Boston “has turned a corner” and is headed for a new growth phase, Joel says. Before, there were a few core Class-A markets—Back Bay and Harvard Square. Now that their vacancy rates are about 4%, for the first time retailers are pushing out to Downtown Crossing, Fenway, and the Seaport, and also to neighborhoods like Dudley Square where the redeveloped Ferdinand building is “oversubscribed," he tells us. Shoppers want a “walkable” environment. While ground-floor space may only be 15% of a building’s space, it’s critical because it sets the tone for the neighborhood.
It’s all good for many, but not every retailer or restaurateur, says Patrick, a founder of House of Blues, who manages 250k SF of restaurant and entertainment space. With mobile apps shaking up the retail world, venues that aren’t the best local, hand-crafted experience “are in trouble." The Seaport take-off as a new destination—with 1,200 new restaurant seats— hurt eateries in the North End, South End, and Back Bay. (You can only eat at one place per meal unless you are training for an eating competition.) Soon, 1,900 new seats will open in Burlington, at Nordblom’s 3rd Avenue development. And food trucks—after Pat spends years in permitting and millions on construction—add “enormous pressure,” he says. (Sometimes gastrointestinal.)
In July, WS Development will start construction on the 4th and 5th buildings that are part of its 1.2M SF of retail space at the Seaport, says Mark. What's driving development? Tremendous demand, the growth of good paying jobs; solidity of the meds and eds, technology, and life science. New tenants' exotic names create a brand that sets their stores apart and other retailers follow them. The key: create a unique place where people want to spend time by offering a mix of apparel, food and entertainment. (Add a WiFi connection and people will never leave.)
Kimco, the largest owner of neighborhood shopping centers, has 122M SF in the US, Canada and Mexico. Its metro Boston portfolio is 99% occupied and rents are at pre-recession levels, Josh says. Overall, Boston has little retail space available; that’s why there’s talk about new retail development, but it has to offer convenience like a medical facility and fitness center with the stores. Online shopping isn’t killing bricks and mortar stores; it’s making them smaller, with less inventory, which provides space to add more convenience uses.
Fast, casual dining is driving the lunch business and compressing the time people spend in the restaurant. The lunch break can be down to 15 minutes for those who order lunch online then pick it up and eat back at the office; aka "catering." (Gone are the three-hour-long booze lunches that we always see on Mad Men.) Smaller restaurants can be good because it’s easier for a room to fill-up and feel popular.
The success of our events depends on having great sponsors like CohnReznick whose Drew Julian and Tom Kiley (with Massport’s Beth Rubenstein and consultant Charles Samiotes, far right) tell us that the Boston office just merged with Ercolinni. The new head count is 125-plus.
AEI’s Peter McGlew, Doug Olson and Stephen Graham tells us that the company, which does environmental and building due diligence and remediation, recently worked on Center Plaza during the Shorenstein acquisition and at the Boston Design Center for Jamestown.
Civil engineers, surveyors and land planners at RJ O’Connell, an event sponsor, are working on the new development at the former Polaroid site in Waltham say Brian McCarthy, Brian Dundon and Roy Smith. RJ O’Connell also prepared site construction documents for the Verb Hotel in the Fenway for Samuels & Associates.
Control Point Associates prez Richard Butkus Jr says his surveying team provided laser scanning on the Providence Mall in RI and is now working on a Cambridge Street TD Bank store in Boston. He tells us, depending on the job, from site selection and due diligence to final a-built and certificate of occupancy, Control Point uses traditional and revolutionary solutions: GIS, 3D Modeling and Remote Sensing. Control Point was also a sponsor.