Pent-Up Demand Grows for Experiential Retail in Texas
By Taylor Williams
With widespread vaccination several months away and the federal government having passed additional relief legislation, the end of the COVID-19 pandemic appears to be in sight.
To that end, retailers and restaurants that have survived the public health crisis can, with some reservations, start to look toward the rebound phase. Because there’s no question that American consumers are itching to make up for lost eating, drinking and socializing time, provided they can do so in what they feel are safe environments.
“Our biggest point of optimism for 2021 lies in the fact that people want to go out, eat, shop and be entertained,” says Lucas Patterson, executive vice president at metro-Dallas based Bright Realty. “As we continue to respond to the pandemic, people are increasingly ready to get out of their homes, be with others, eat at restaurants, have drinks and listen to music. We believe we can offer those opportunities as soon as the time is right.”
“Looking forward, our biggest source of positivity involves consumers’ built-up savings and pent-up demand for human connection in a more normal existence,” adds Terri Montesi, CEO of Trademark Property Co, the developer behind mixed-use projects such as Victory Park in Dallas and Alliance Town Center in Fort Worth. “The human need for community and interaction will likely lead to customers returning to our retail and mixed-use properties for non-daily needs.”
But until the “right time” is upon society, the pandemic and recession will likely continue to crush many categories of retail, regardless of how much federal relief money finds its way into brick-and-mortar stores.
While the bankruptcy and liquidations of some brick-and-mortar retailers were set in motion years ago and merely expedited by COVID-19, the events of the last 10 months have still contributed to the philosophy behind tenant roster construction.
“With the acceleration of online retail, developers have to be really smart about their food and beverage, entertainment and merchandising rosters,” says Mark Bulmash, president of mixed-use and master-planned development at Presidium. Bulmash, a 30-year industry veteran, is a staunch believer in the strong return of many retail and restaurant concepts that defined mixed-use projects pre-COVID.
“Unique retailers, non-chain restaurants and boutique fitness alternatives that provide different experiences have been hammered by the pandemic,” he says. “But there’s a lot of pent-up demand; cabin fever has set in and people crave these experiences. For owners, that means evaluating just how much of a destination a retailer is, as well as whether a concept has a strong online presence that helps them differentiate themselves from mass retailers.”
Presidium recently unveiled plans for River Park, a 109-acre master-planned community that will be located near Oracle’s newly announced headquarters campus in Austin’s East Riverside area. Presidium is co-developing the project with global investment management firm Partners Group. Preliminary plans call for some 10 million square feet of residential and commercial space, with the latter including retail, restaurant and entertainment space, as well as a network of trails, park and open green spaces to link the various uses.
Bulmash says that the emphasis on outdoor walking areas and gathering spaces that serve as the development’s “connective tissue” is also a product of a longstanding trend whose importance has been spotlighted by the pandemic.
“This movement toward outdoor-oriented projects with parks and trails and green areas and a general preference for being outside — there’s been a gravitation that the pandemic has accelerated,” he says.
“At River Park, we’re creating a drive-in movie theater as an alternative for people who have been stuck at home to go see a movie in a safe way,” Bulmash adds. “They can have a campy experience and just do something different. People crave those experiences if they can feel safe about doing it.”
Montesi of Trademark says that his company is equally bullish on the staying power of essential retailers in mixed-use properties, along with boutique users that provide personal services, food and beverage and entertainment. In his view, these types of tenants still offer the most insulation from e-commerce. But in order to get people through their doors, some increased activation of surrounding public spaces may be in order.
“Looking forward, we believe we will have fewer retail and restaurant openings than we have spaces, so programming and guest services will be key ways we work to give customers a reason to come to our properties,” he says. “We believe users and residents will be looking for new health and safety protocols that will require additional space as they move about our properties, such as shorter buildings and wider stairways.”
But retail components aren’t the only ones that stand to benefit from thoughtfully curated outdoor spaces in mixed-use developments. As developers grapple with keeping their office properties relevant amid a heightened movement to work remotely, being able to offer outdoor amenities should help developers entice companies to return to their office buildings.
“We believe our outdoor areas — fountains, park settings, mezzanines, courtyards and restaurant patios — are designed to make all of our tenants comfortable,” says Patterson. He also notes that all of the company’s outdoor spaces are equipped with Wi-Fi access to support office employees who want to access fresh air and nature while continuing to work.
In August, Bright Realty completed a 109,000-square-foot office building in the northern Dallas suburb of Lewisville. The project represents Phase I of the local developer’s 140-acre Crown Centre at Castle Hills mixed-use development. The property features a strong component of outdoor amenity space that should be attractive to office users in the post-pandemic environment.
“Over 10 percent of the land at Crown Centre is dedicated to open space,” says CEO Chris Bright. “Our vision for a pedestrian-friendly destination includes office interspersed with multifamily and retail linked by a system of trails, green space and water features.”
The retail portion of Crown Centre at Castle Hills includes some 140,000 square feet of shopping and dining space that will include ample outdoor patio spaces. Walking trails will feature landscapes with plants and trees that are native to and emblematic of Texas.
The pandemic has ravaged many sectors of the retail and restaurant market while augmenting a select few. But with each piece of medical news that becomes available, the timeline for when society can return to some semblance of normalcy becomes slightly clearer.
Public health experts generally agree that the mid-point of 2021 is a fair estimate of when enough vaccinations have taken place such that the United States may begin to show signs of herd immunity.
With that time frame in mind, retailers and restaurants have just a few short months to develop strategies and operating protocols that will allow them to hit the ground running.
“Once vaccinations become widespread and the pandemic begins to subside, we’re going to see a lot of pent-up demand for getting out of the house and going to your favorite hangouts,” says Bulmash. “As developers, we try to create those exceptional experiences by putting uses adjacent to each other. It’s appealing, especially to younger people who’ve been cooped up by the pandemic, and that appeal should be unleashed in the second half of next year.”