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The Future of Retail?
April, 2019
by Karl Niehaus, President, CREI
Commercial Overview:
THE FUTURE OF RETAIL? The proliferation of the live-work-play lifestyle is among the chief tenets redefining retail. Health & wellness tenants are taking up space in shopping centers and malls across the country to fulfill the need. Walgreens is at the forefront of this trend, as it strives to combine healthcare, retail and technology. “We have customers & we have patients - 2 different businesses within 4 walls,” said Joe Brady, Walgreens’ divisional vice president of real estate. “We want you to see your primary physician and be able to walk 10 steps to get your prescriptions filled”. Walgreens transition into a customer-centric designation for many health-related needs and services is a microcosm of the changes occurring in retail. Health clubs and fitness is changing the retail market too, “The number of fitness tenants in retail has more than doubled in the past 10 years,” said Stephanie Cegielski, an ICSC spokesperson. About 14,000 fitness leases were signed in 2018 compared to 6,200 in 2008. In 2018 alone, the year-over-year growth was 17%. The reason fitness compliments retail is because consumers went to their health clubs more than 6 billion times, according to IHRSA. Retailers want traffic and health clubs are delivering it in bucket loads.
Economic Overview:
LA ECONOMY SLOWING? Trade out of the major harbors and airports continued to decline for the 3rdstraight month. Higher tariffs on an expanding list of items were not the sole reason for slowing trade. A slowdown in international economic growth and a strong dollar have all contributed. In addition, LA’s unemployment increased to 4.7%, up 0.2% compared to 2018, with a 1.3% decline in new job growth for LA. Nationally, only 75,000 new jobs were created last month, which is well below normal. We have seen isolated drops below 100k new jobs on rare occasions in the past 7 years, but this is the first time since 2012 that we have seen it twice within a few months, concerning trend?
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