Evolving Retail Properties and Dynamic Retail Markets

Abstract

The American Real Estate Society (ARES) appreciates the financial support of the International Council of Shopping Centers (ICSC) for this monograph dedicated to Megatrends in Retail Real Estate.¹ As retail marketplace participants already know, retail real estate properties and their marketplaces are in a state of constant change. New and growing value formats, such as power centers, category killers, warehouse clubs, and factory outlet malls, along with the powerful and enlarging discount formats such as Wal-Mart, provide traditional shopping centers and malls with increasingly competitive challenges. These value and discount retail formats generate higher sales per square foot and have lower construction costs than many traditional shopping centers and most regional malls. Given their rapid expansion, combined with the slow growth in total retail sales and the increasing alternatives to in-store retailing such as electronic shopping and catalogues, the question arises as to what future retail marketplaces will look like and which retail formats will be the leaders of the future. Ultimately, an even more challenging question is, “Will the equilibrium amount of retail square footage be changed?” And if so, in what direction?