Retail N Illinois

Retail is dead. Long live retail.

The opening of physical Amazon storefronts is tacit proof that an omnichannel approach is the best way forward for retailers. The opening of physical Amazon storefronts is tacit proof that an omnichannel approach is the best way forward for retailers.
Wheeling Town Center is a great example of a mixed-use project that elevates both the multifamily and retail sides of the development. Wheeling Town Center is a great example of a mixed-use project that elevates both the multifamily and retail sides of the development.
The 40,000-square-foot REI in Lincoln Park takes advantage of its location next to the Chicago River, offering the type of experiential asset that every retailer wants to introduce into their brand. The 40,000-square-foot REI in Lincoln Park takes advantage of its location next to the Chicago River, offering the type of experiential asset that every retailer wants to introduce into their brand.

There have been plenty of obituaries written for retail real estate, an unfortunate casualty of consumers’ choosing to shop online. But the sector isn’t moribund, it’s molting. Five-and-dimes and malls were once the hot new thing before becoming passé; this is just the next step in the evolution of physical retail.

To learn more about what the future holds for this contentious asset class, join us next Thursday, September 5th for the 10th annual Chicagoland Retail & Mixed-Use Conference. Registration is still open.

Experiential

One oft-repeated trend for retail is to provide experiences—things that can’t be shipped from a warehouse. Consider all the niche establishments that have cropped up recently: high-end ping-pong bars, a variety of escape rooms and even axe throwing.

But this trend—driving up foot traffic by offering something more intangible—need not apply to the enterprise as a whole. Many retailers are incorporating amenities and experiences in a more traditional setting.

The new REI in Lincoln Park is a great example. CallisonRTKL and R2 Companies helped the sporting goods and camping gear purveyor design a 40,000-square-foot location at North Kingsbury and West Eastman in Chicago. Even in a community with demographics like Lincoln Park, that’s a massive retail footprint in an age of struggling storefronts.

However, as this location backs up to the Chicago River, it provided an excellent opportunity for REI to rent and demonstrate kayaks, paddleboards and canoes on the river’s edge.

“Every retailer is looking for ways to introduce experience into their brand,” said Keith Campbell, vice president, CallisonRTKL and one of the speakers at the upcoming Chicagoland Retail & Mixed-Use Conference.

Since 2011, CallisonRTKL has partnered with REI on mainline, small-format, as well as flagship stores. For REI Lincoln Park, they helped develop the store interior as well as the exterior architecture, outdoor patio seating and the series of ramps that will connect to riverfront activities.

Omnichannel

Buying online has so much going for it—the consumer can do it anywhere, they can compare prices in real time and items are virtually always in stock. But despite the disruption that e-commerce has leveled on brick-and-mortar retail, the two sides are starting to merge as more time goes on.

Warby Parker began as an online-only source of prescription eyeglasses, but they now have five physical locations in the Chicago metro. Bonobos used to only sell men’s clothing via their website, but now you can get in-store fittings. And even the ruthless mom-and-pop killer that is Amazon has multiple storefronts now, from book stores to convenience stores.

“There are actually a lot of digitally native retailers who are our clients now,” Campbell said. “We are designing and building brick-and-mortar stores for them because there is a lot of synergy between actual in-store sales and internet sales.”

A retailer with both a strong online and physical presence can use each to bolster the other. If a customer comes into a store to return an item they bought online, for example, they are far more likely to buy something during that visit.

Mixed-Use

Another trend in retail is practically a return to form. Today’s emphasis on mixed-use developments harkens back to the time of five-and-dimes and mom-and-pop stores. Before automobile access defined how we got around, retail was located as close to the consumer as possible.

For many residents, that is once again the case. Whether renting or owning, multifamily residents want convenient access to a host of retail options. Developers have taken notice, erecting more and more projects that integrate the two sectors.

But is this is a one-sided relationship? It could be that multifamily-adjacent retail options are like balconies and pools—a nice looking amenity that encourages people to sign a lease, even though in the end they will rarely use them. So do the retail portions of mixed-use developments falter even as the residential side is adding prospects to a waiting list?

“In our experience, they do definitely attract residents,” said Campbell. “Both sides benefit because the nature of the retailers in mixed-use developments tends toward food and beverage, entertainment uses, fitness—the kind of stuff that residents really want.”

CallisonRTKL served as the architect for the recently completed ONE luxe apartments complex, which is phase one of The Lynmark Group’s Wheeling Town Center development. The master plan includes a five-story, 301-unit residential component among retail options such as a movie theater, full-service restaurant, 100,000 square feet of single-story retail, an early childhood learning center and a variety of casual restaurants. CallisonRTKL is designing the second phase as well, which should wrap up later this fall.

Outlook

While there has been a decline in conventional soft goods retailers, especially in mixed-used developments, food and beverage options have performed particularly well as of late. According to Campbell, this trend is only going to continue.

“We all say that we are foodies and we like to cook, but we really don’t. We like to go out and rub elbows with other people at bars and restaurants,” Campbell said. “So I think that’s going to continue for a while.”

Another strong segment is fitness. Developers particularly like to combine the two in mixed-use projects because they create a symbiotic relationship that extends stay time. The gold standard is to have a consumer go for a workout and then have lunch or dinner afterward at a nearby establishment.

It’s too early to eulogize brick-and-mortar retail. Those comfortable with, and unwilling to deviate from, how the sector behaved in the past are feeling the pain. Those able to look ahead at how consumer behavior is changing will reap the benefits.

Registration is still open for the 10th annual Chicagoland Retail & Mixed-Use Conference on September 5th. Click here to reserve your spot.