Overcoming Challenges Through Adaptability
Over the past few years, the rapid rise of e-commerce has created turbulence and uncertainty in the retail business. And we, like our clients and business partners, must have the flexibility and willingness to adapt or we risk becoming irrelevant and obsolete. Adapting does not involve changing who we are at our core. It means finding more innovative ways to continue to provide value to customers and delivering what they need. For us, that means bolstering our commitment to quality and ensuring effective use of our skills and resources. It me>ans listening to shifting customer needs and finding creative ways to address them. This may include expanding offerings to our existing clients by supporting a wider range of project types beyond physical stores and leveraging our experience in e-fulfillment centers and office space. It may mean acquiring new personnel, enhancing service offerings, modifying our processes, etc. to meet the demands of the evolving market. Although the changing business environment is daunting, we are excited to see how clients will adapt and the opportunity for us to adapt with them.
Chief Executive Officer
It’s no secret to any of us that the brick-and-mortar retail world continues to be impacted by e-commerce. Many retailers are closing less profitable stores, reducing store sizes, or even disappearing all together. In the e-commerce era, retailers, landlords, retail developers, and yes, even contractors, must evolve to survive. Diversification will be key to reshaping retail developments and maintaining relevancy in the minds of today’s savvy consumers. Current redevelopment trends reported by various media indicate a movement towards an updated mixed-use or lifestyle center approach. Redevelopment trends include converting former anchor store retail spaces to office space and/or multi-family, adding more entertainment establishments, including green spaces for outdoor events, adding more traditional dining options, and integration of non-traditional mall tenants such as fitness centers, spas, grocery stores, financial services, and healthcare clinics.
In the midst of rising retail vacancies landlords and developers are offering generous lease incentives to fill vacant space especially for off-mall locations. Landlords today are more willing to make concessions including offering flexible lease terms, increased allowances for tenant improvements or greater contributions towards tenant finish-outs, free or reduced rent for an initial period allowing tenants to allocate funding to moving in sooner, placing caps on rent escalations, or even taking equity in restaurants in return for lower rental rates. At the same time, many tenants are often seeking smaller lease spaces and shorter lease terms. A little creative negotiating can result in a fair and equitable agreement for both lessor and lessee.
These trends are quickly shaping the retail construction environment. They also create opportunities. Our portfolio of experience reflects the variety of facility types trending in mall redevelopment plans across the country. It’s an interesting and exciting change that will provide great opportunities for us. For example, we have seen an increase in our business related to landlord work for “vanilla boxes” in preparation for new tenants. We’ve also noticed a shorter mobilization period and compressed construction schedules for new projects as owners and clients are more eager than ever to generate revenue quickly from any investment in physical locations.
Retail landlords and developers can benefit greatly from seeking general contractors with broad experience and demonstrated flexibility and innovation that complements these new redevelopment trends. And such general contractors can also provide added value to their clients by supporting other construction projects for different groups within the client’s organization – from retail stores, e-commerce facilities, commercial office spaces, etc. This is a challenging time for all of us. But if we are willing and able to adapt, we can all find success.
President & Chief Operations Officer