Creating a Vibrant Urban Retail Centers in USA

Urban Retail Properties

Urban Retail Development Gaining Momentum 

It has been widely discussed that many big box retailers are making the move from suburban sprawl to the heart of urban centers. This trend had been triggered by a number of factors including strengthened urban demographics, inherent land value and stable demand for staple products - which big box retailers are increasingly featuring. Though it may seem like a tight fit, big box retailers are showing a willingness to adapt and reconfigure in order to enter the urban retail market.

Without question, key urban retail markets such as Washington DC, New York, Chicago, Boston and Miami consistently outperform the secondary  and tertiary markets. This trend has only been exacerbated by the recession and resulting economic turmoil. Prime urban locations have the advantage of strong inherent value in their real estate, increased foot traffic and an easier tenant replacement process. Furthermore, issues such as commute time and city gentrification are attracting an affluent – often young – demographic to these areas. As a result, cap rates in prime urban locations have markedly declined in the past 3-4 years.

Big Box retailers have taken note and are committing to widespread urban development.Wal-Mart has six new sites planned for the Washington DC Metro Area alone. Office Depot has recently opened eight stores (about 1/5th the size of the traditional 25,000 sf) in urban areas, including Hoboken NJ. Best Buy has urban locations in Washington DC, Baltimore, Chicago and New York City. Target has opened stores in Washington DC, Minneapolis, Denver, Chicago, San Francisco and Gaithersburg MD. Even Costco is developing a store in DC. 

This is a major trend and is changing the previous suburban image of Big Box retail. Another important development concerns the expansion of grocery products offered at stores such asWal-Mart and Target. With the recession making customers more value focused and web retail services such as Amazon.com growing more popular, big box retailers have begun to place a higher emphasis on groceries. Unlike entertainment products like TVs, Computers, Games and CDs which consumers are increasingly willing to buy from online sources groceries often require a human to visit a bricks and mortar store. 

Furthermore, groceries and other staple products have inherently stable demand, making them essentially recession proof. Intact, Wal-Mart has developed a new concept Wal-Mart Express with a much smaller footprint and healthy offering of grocery/staple products. These new stores are specifically targeting both rural and urban areas. By placing a focus on these items, big box retailers are hoping to take out a new lease on life. 

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