3 Reasons The Bay Area Is A Strong Retail Market
Despite headline after headline of closures and bankruptcies hitting large retailers throughout the country, San Francisco Bay Area retail remains a strong market.
“The Bay Area has lots of people who want to get out [and they] tend to be of means,” Jamestown Properties Senior Vice President Joshua Callahan said. “That makes [the Bay Area] an ideal place for retailers to be.”
The Bay Area boasts density, weather and affluent residents, according to Callahan. The density of residents allows retailers to be selective about where they want to open and how many stores. Weather allows for shopping centers and streets to have ongoing foot traffic and provides nearly a year-round shopping experience, he said.
Even though big-box retailers have closed stores and declared bankruptcy, online businesses are seeking more physical stores to demonstrate their products, according to Callahan. San Francisco-based Everlane is among the local business looking for ways to show off their physical products, he said.
“It is really long-standing businesses that are struggling, but that doesn’t mean retail is not interesting and vibrant,” he said.
Some new-to-market retailers are partnering with companies to better showcase their products without having to open a store. B8ta, which has locations in San Francisco and San Jose, offers physical space within a store for subscribing companies to display and sell new products. The companies can monitor sales via an app.
Health and wellness are becoming an integral part of retail, whether through products that monitor a person's health or health-and-wellness service providers.
“Retail is more vibrant and more fun now than it’s been in years,” Callahan said.
The Changing Role Of Retail Landlord
The economics of retail have become challenging and more capital is needed to do build-outs. Jamestown offers flexible rent and leasing terms and has become more of a partner with a retailer than just a rent collector, he said.
Jamestown looks for unique places where it can come in and make the property more active and engaged with the community and better serve the people the center is trying to serve, according to Callahan.
While he said the company would love to buy more properties, there is a lot of competition chasing these products, making it hard to find new opportunities.
When it does purchase an asset, the company will assess how it can make the greatest impact on it. At Fourth Street in Berkeley, the owner/operator added another building to bring in more retail and a second floor to the office to add more office users to support the retail, Callahan said.
Retail's Changing Role
Retail is becoming more of an amenity and is bringing people together in an outdoor setting. Bay Area retail will no longer have dense retail centers with parking lots around an interior mall, such as with the Hilltop Mall in Richmond.
More retail will have a mix of uses and not be an island unto itself. Callahan said retail is starting to look more like it did when retail was more about corner stores and immersed in neighborhoods.
Jamestown, which owns 12 retail and mixed-use assets in California, identifies the customer base and creates a focused environment for those shoppers. That means identifying the type of environment needed to draw in the retail center's targeted audience.
Its Ghirardelli Square is a destination for families so the property owner will have food and activities to serve those families. It is working on adding miniature golf, culinary classes for kids and family-oriented programming. A shopping center it owns in Malibu has a strong emphasis on health and wellness and retailers include Lululemon and Saje.
“People in high-density cities live in smaller apartments and homes and need and want to spend more and more time outdoors,” he said.
Find out more on San Francisco's retail market from Callahan and other experts at Bisnow's San Francisco Retail & Mixed-Use Showcase Feb. 21.