TFK

Time to Join the BOOM?

Retail is booming in the right location – Is now the time to reposition your property?

Slow but steady consumer confidence is driving growth, particularly in live-work-play zones. Traditional retail has evolved. Owners and developers are evaluating properties to create unique destinations and mixed-use experiences.

As noted by Eric Goldstein, Executive Director of the King of Prussia Business Improvement District at the recent Philadelphia Magazine Think Fest, people want “the city without the city.” We’re seeing large-scale improvements in addition to pad site development.  Underutilized parking lots are sprouting new restaurants. Fast food operators, convenience stores and casual dining restaurants are all looking for the right location. Surprisingly most areas are actually underserved. Retailers hoping to be in high-profile locations are willing to pay extremely high rents – which wave swelled to over $100/sf.

How the Market has Evolved

Current high market rents are pushing land owners into considering near total redevelopment. Even recently redeveloped centers, while performing at a high rate, are being re-assessed to determine ‘max-out’ potential. It’s time to adapt. Now is the time to reinvent your property and understand its best use. Here’s what you need to understand: What are tenants looking for? What does the community want to see? Are you in the right location for higher rents?

In areas like King of Prussia, PA where there is a focus on attracting new employees, residents and visitors – retail is thriving.  Zoning may have changed in your favor since your last development, affecting use, parking, building and impervious coverage and setbacks. An updated assessment looks at ‘hidden potential’ (yield) that might be available from new and more favorable zoning ordinances. You may be able to get more square footage and reposition your property to obtain higher rents.

Get Started – Do Your Due Diligence

If you’re considering purchasing a property, due diligence is already part of the process, but for those who are looking to reposition a current asset, it’s still a MUST! After refamiliarizing yourself with your Title Report, possible site constraints also need to be factored into your decision. Getting a feel for the local municipal climate is a good first step. Knowing if their ordinances have changed and what they’re looking for is important. It’s also vital to understand if current environmental/stormwater regulations could potentially reduce your yield. Also, does the off-site utility and roadway infrastructure exist to accommodate a possible change in use and expansion?

While we’re seeing a newly evolved retail market, it’s important to do your homework and know if you’re in the right position to take advantage of this movement.

Timothy J. Brennan, PE is a principal at Nave Newell.