Evolution of Seaport District as a Retail Hotspot, Other Trends to Watch
From new mixed-use developments popping up in the skyline to the increase of small-format stores, 2017 saw robust growth in downtown Boston’s retail landscape. Specifically, stabilizing rental rates have led to an uptick in retail leasing activity, showing the strength of both traditional retail destinations such as Newbury Street, as well as new mixed-use developments like One Seaport Square.
While the downtown retail market is poised to remain stable, 2018 will welcome new trends fueled by e-commerce and omnichannel retailers, new leasing models, shifting consumer shopping behaviors and the ongoing challenge to accommodate millennials’ evolving preferences and expectations.
The Seaport’s Emergence as a Retail Destination
Historically, Back Bay has served as Boston’s premier neighborhood for retail with Newbury Street as its crown jewel and nearby Prudential Center, Copley Place and Boylston, all within a few minutes’ walking radius from the famous street. While Back Bay will continue to be a hotspot in 2018, Boston’s Seaport neighborhood is breaking out as a retail destination to watch as it transitions into one of Boston’s premier work-live-play destinations. Most recently, retailers Bluemercury, Mr. Sid, TravisMathew, Filson, L.L. Bean, and Lululemon are finding the value in meeting Boston’s young professionals where they work, live and dine, expanding their footprints to join popular destinations like Tuscan Kitchen, LoLa 42 and Scorpion Bar.
Additionally, we’re seeing new momentum behind traditionally online-only retailers, like Warby Parker and Bonobos, taking an omnichannel approach, leasing brick-and-mortar locations in the Seaport. The trend of e-commerce retailers opening physical outposts is introducing a new segment of retail, and is one we expect to see more of in the Seaport this year.
Short-term Leases for Long-term Success
With the aforementioned influx of omnichannel retailers, a new leasing model is taking shape. As new retailers seek to test or break into the market and determine the viability for long-term brick-and-mortar success, short-term leases of four to six months are being signed before committing to a more long-term lease. We’re seeing the startup retail concepts using this leasing model in pre-existing, popular retail space, specifically along Newbury Street. Tie Bar, AUrate, State & Liberty, Alps & Meters, Daniel Wellington and Credo Beauty have used this model.
Sell the Experience, Not the Goods
The retail industry has shifted significantly in recent years as it works to keep pace with e-commerce giants and changing consumer demands. The best way for retailers to set themselves apart and keep customers coming back? Sell the experience, not the goods. L.L. Bean and Lululemon are just two retailers in Boston that are adding an element of experience to a traditional shopping trip. L.L. Bean, which is slated to open in the Seaport this spring, plans to offer kayak lessons at their storefront, and Lululemon shoppers can opt into yoga or meditation classes in and outside its stores.
Boston is also seeing leasing activity from entertainment venues like King’s Bowling — which we have already seen in the suburbs at The Marketplace in Lynnfield and Legacy Place in Dedham — anchoring more urban retail destinations like Seaport Square. Additionally, luxury movie theaters are being incorporated into mixed-use projects like Assembly Row in Somerville and The Hub on Causeway near North Station to improve the “experience” of living and working in the city.
Make Way for a New Dining Experience
A millennial-driven emphasis on convenience has led to one of Boston’s most competitive retail sectors: fast-casual dining. Less inclined to spend time at sit-down restaurants, millennials prefer quick, quality and healthy meals on the run, and restaurateurs are taking note. Additionally, many locations take the desire for convenience a step further by adding omnichannel capabilities where patrons can order ahead or complete transactions via their mobile phones or online. Sweetgreen, Dig Inn, Honeygrow, and Caffe Nero are just a few examples of dining options in the city that are driven by convenience, but still grounded in providing an experience that keeps customers coming back.
— By Matt Curtin, senior vice president and partner, CBRE New England. This article first appeared in the January/February 2018 issue of Northeast Real Estate Business magazine.