Commercial Real Estate Finance

Posts Tagged ‘big-box’

Can big-box retailers make the transition to more urban markets? Here’s what you told us:

See our previous polls here.

Remember that controversial New York Times story, published earlier this year, reporting  that big-box retailer Target (NYSE: TGT) had refined its data-mining and analytics to the point that it could predict pregnancies among its female customers?

Scary! people said, and I wholeheartedly agree, but Target certainly isn’t the only retailer with such sophisticated attention to customers’ buying habits.  (Engage in social media or an online email program and you’ll see a similarly eerie awareness in adjacent advertising.)  While the often-sneaky data collection usually informs a company’s marketing efforts, promotions, and inventory choices, recent population data is now affecting a much more fundamental aspect of the traditional retail sector: location.

And retailers aren’t taking their cue from the information mined from customer discount cards or Internet histories, either. Instead, they’re learning from the rather obvious trend in which Americans are migrating to rather than from urban areas. The change, described in recent census data and a related study by the Brookings Institution, is leading to what may be the most significant shift in retail strategy since the advent of e-commerce, and the biggest shift in traditional retail since the big-box model gained prominence.

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Tom Barrack of Colony Capital discusses a significant new trend in the retail sector: a movement away from the “big-box” model.

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Week in Review for April 7 – 13:

- Washington, D.C.-based alternatives manager Carlyle Group prepares for an IPO, which Reuters predicts could fetch as much as $800 million. The initial public offering would bring 10% of its management company to the public.

-  The first quarter of 2012 saw a decline in U.S. CRE demand. However, analysts point out, diminishing inventory has softened the impact of this decline.

- After years of growth, big-box stores are losing their appeal for many retailers. This is a consequence of increasing online shopping, which has forced the closures of Circuit City and, more recently, Sears, Kmart, and Best Buy locations. Even retail giants like Target (TGT) and Wal-Mart (WMT) are moving toward smaller-scale retail stores.

- In Washington, D.C., upgrades to Union Station are expected to benefit the area’s nearby commercial tenants.

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For years now, the U.S. economy has seen an ongoing struggle between traditional retail stores and their nimbler, lower-overhead online counterparts. Last week, retail property giant Simon Properties (NYSE: SPG) made news by suing the state of Indiana over a dispute with its rivals—or, more accurately, it’s tenants’ rivals–Amazon.com (NASDAQ: AMZN). SPG is seeking, as they put it, greater fairness to taxpayers (in particular, the offline retailers who do pay taxes to the state.)

It is certainly unfair that Amazon, which does millions of dollars of business in the state of Indiana, is avoiding the taxes that Simon Properties and its retail tenants must pay. This legal move will likely prove another important chapter in the ongoing debate over how or if to tax an Internet retailer, which has become a pretty sticky issue. Typically, whether or not to tax is determined by an online retailer’s physical presence in a particular state. Read the rest of this entry »