Finding a New Normal
Bucksbaum Retail Properties opened for business in April 2012. The Chicago-based company has already opened one project and is working on four more.
The 53,000-sq.-ft. Kingsbury Center near North Chicago has opened with four tenants: Buy Buy Baby, PetSmart, Road Runner Sports and Jimmy Johns. It is a joint venture with Chicago-based Structured Development.
Set to open in the fall of next year, Mariano's Fresh Market will occupy a 66,000-sq.-ft. space in Chicago's South Loop. The market is a joint venture with Outlook Development of Milwaukee and Simon Konover Cos., based in Hartford, Conn.
Three developments will break ground soon: The Maxwell will provide 230,000 sq. ft. of retail, serving more than 15 Chicago neighborhoods around the South Loop. Chicago-based Bond Cos. is the joint-venture partner.
New City, a 500,000-sq.-ft. mixed-use retail and residential development, will rise in Chicago's Clybourn Corridor. Structured Development is the joint-venture partner.
And, the mixed-use Liberty Center in North Cincinnati will encompass 835,000 sq. ft. of retail, 100,000 sq. ft. of office, 155 residential units and 135 hotel rooms. The project is a joint venture with Steiner + Associates of Columbus, Ohio.
Chain Store Age asked Bucksbaum Retail Properties' CEO John Bucksbaum about the new realities driving retail shopping center development in the post-recession world.
Where are the development opportunities today?
I believe that more retail development opportunities exist in the urban core. These opportunities don't look like the traditional, safe opportunities we've seen in the suburbs. City projects typically will be smaller. They may involve re-using facilities or building near mass transit stations, and cities will likely offer more mixed-use opportunities.
None of this rules out suburban development. Right now, for instance, we're planning a major mixed-use project in suburban North Cincinnati.
How has retail development changed since the recession?
Development has changed dramatically. Suburban opportunities are more limited. Generally, existing retail properties already accommodate retail demand in the suburbs.
As I mentioned earlier, more opportunities exist in the urban core. Young workers enjoy the 24/7 lifestyle that cities offer, and they want to live in the city. In response, companies are moving downtown, in search of workers. Look at Google, Motorola and Kraft — all are taking large urban locations in Chicago.
Retailers understand the growing demand in the city and the flattening demand in the suburbs. Those that want to grow by opening new stores must consider city locations.
Compared with other countries, the United States seems to be dramatically overstored. What does that mean to future retail development?
While we aren't necessarily over-developed, we are certainly under-demolished. Underperforming centers, particularly underperforming malls, have been slow to die. It will be interesting to see what happens to these properties going forward.
Do you think the rise of online retail will accelerate the decline of struggling properties?
Electronic retail will certainly play a larger and more important role in retail. Brick-and-mortar stores need to find ways to work with electronic retail and not compete against it.
Let's summarize: Suburban markets are declining. Future retail development opportunities lie in the city.
That's not true of productive suburban centers. Good properties will continue to grow stronger in the suburbs. The unproductive properties are in trouble. Suburban centers must deal with that dynamic.
Going forward, however, urban as well as suburban development will demand creativity, new ideas and experimentation.