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Landlords Target Dining, Personal Services and Fitness to Woo Customers

Dulce-de-Leche-New-Jersey

National brands, expanding local mom-and-pop businesses and regional chains like café and bakery Dulce De Leche (pictured) serve as ‘internet-proof’ placemakers for the retail properties they occupy.

Shifting consumer preferences for convenience and variety have become key drivers for brick-and-mortar retail. And when it comes to creating co-tenancies that drive traffic to retail properties, dining, personal services and fitness are among today’s most desirable categories. Fortunately, they also are among the sector’s most active space users in today’s market.

Strong restaurant demand among brands new to, and expanding in, the regional market continues unabated, and year-to-date activity reflects a new level of diversity. From national brands to regional chains like café and bakery Dulce De Leche to expanding local mom-and-pop businesses, these tenants are serving as “internet-proof” placemakers for the retail properties they occupy.

And many tenants are looking to step up the dining experience with outdoor seating, revolving menus and entertainment, among other offerings that spark return visits.

David Townes, Cushman & Wakefield

The same holds true for personal services, where boutique concepts have become sought-after shopping center additions. Again, diversity is a common theme, with activity involving traditional salons as well as specialized concepts like Sport Clips, which caters to men and boys, and local businesses that offer makeup services, waxing and other niche beauty treatments.

We also are watching with interest the emergence of brands offering coworking space for hair stylists and other beauty professionals. Among them, Phenix Salon Suites is expanding rapidly in the region and just signed on for its first two locations in New Jersey.

Fitness Frenzy Continues

Variety again prevails in the fitness sector. Big-box players are still finding opportunities. However, this popular category is becoming far more specialized and with a wider range of space requirements than in the past — from big boxes like Retro Fitness and Crunch Fitness, to small gyms like Orangetheory Fitness and Anytime Fitness. Chain and mom-and-pop studios specializing in Pilates, yoga and cycling, among others, are growing in popularity, both here in New Jersey and nationally.

All of this is good news for well-located traditional shopping center sites, as these active tenants seek locations offering visibility on roads with strong daily traffic counts. Properties in the highest demand sit on main streets and regional highways, provide attractive storefronts and desirable, stable co-tenancies (as always, a grocery or other big-box anchor is a huge draw, particularly for smaller tenants).

Here in New Jersey, parking is a big consideration, and properties with easy, open parking fields have a competitive edge.

Answering the Bell

On the landlord side, property owners are working hard to make their retail sites attractive and relevant in today’s market. This includes an emphasis on curb appeal and redeveloping spaces that may previously have been occupied by a big-box tenant. Many are turning larger vacancies into multiple spaces to accommodate junior anchors and smaller tenants at a time when many retailers are rightsizing and working to maximize efficiencies.

At the same time, landlords are replacing building façades and updating landscaping, parking areas and lighting to enhance visual appeal.

Development and redevelopment activity is creating new opportunities for tenants in our market as well. While undeveloped land sites are few and far between in the New Jersey market, they do exist as illustrated by Bridgewater Commons, a new, Whole Foods-anchored property in Somerset County.

More often, infill properties are being adapted to accommodate mixed-use or pure retail product. For example, Market Plaza in Saddle Brook was once the site of a stand-alone restaurant. Today, it houses eight residential units and 8,000 square feet of retail (a personal services tenant, Moxie Blow Dry and Beauty Bar, recently was the first to commit).

In Bergen County, Paramus Crossroads occupies a former office building site. Among its new tenants is Firenza Pizza, an expanding national franchise that can now boast two New Jersey locations.

Homegrown Retailers

Property owners also are exercising more flexibility when it comes to vetting tenants. This results directly from a new crop of entrepreneurial brands that have achieved local and regional followings, and are expanding successfully. While national credit tenants are always going to be attractive as leasing targets, smart landlords know that these emerging niche players add flavor and draw for their centers.

We anticipate the trends that have launched 2019 as a year with great potential will continue in the coming months. Watch for property owners and tenants alike to seek competitive positioning in New Jersey and throughout the Northeast.

— By David Townes, senior director of retail services, Cushman & Wakefield. This article first appeared in the May 2019 issue of Northeast Real Estate Business magazine. 

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