Embracing the Return of Brick-and-Mortar: A Win-Win for Retailers and Real Estate Developers

In the ever-evolving landscape of retail, one trend has resurfaced with undeniable force: the return of brick-and-mortar stores. In fact, this trend presents a unique opportunity for retailers to thrive in an increasingly digital world. The fusion of physical and online shopping experiences isn't just a renaissance for traditional retail; it's a dynamic and unprecedented leap forward. Consequently, retailers should welcome the return of brick-and-mortar by strategizing on the selection of optimal commercial real estate spaces and harnessing the potential of percentage leases.

The Return of Brick-and-Mortar: A Compelling Proposition

While the digital age has revolutionized the way consumers browse and purchase products, it has also brought forth a desire for authentic, tangible experiences. Brick-and-mortar stores offer precisely this, creating a unique space where customers can engage with products, interact with knowledgeable staff, and immerse themselves in the brand's identity. The physical presence builds trust, fosters loyalty, and drives brand recognition. It's an opportunity for retailers to create lasting connections that simply can't be replicated online.

Tactics for Retailers Choosing a Commercial Real Estate Space

Selecting the right commercial real estate space is paramount for retailers seeking success in the competitive market. The following tactics can guide retailers in this critical decision-making process:

• Location is Key: Choose a location that aligns with your target demographic. Consider foot traffic, nearby businesses, and the overall vibe of the area. A strategic location can significantly impact your store's visibility and customer base.
• Analyze Market Potential: Conduct thorough market research to understand the demand for your products or services in the chosen area. A deep understanding of local market trends will help you position your store effectively.
• Evaluate the Space: The physical attributes of the space matter. Consider factors like layout, size, visibility and accessibility. A well-designed space can enhance the customer experience and drive sales.

Leveraging the Power of Percentage Leases

Percentage leases are a powerful tool for both retailers and real estate developers. They tie the rent to a percentage of the retailer's sales, creating a mutually beneficial arrangement. For retailers, it means rent is directly related to their performance, reducing fixed costs and providing more flexibility during challenging periods. For real estate developers, it aligns the success of the retailer with the profitability of the property.

Tips for Retailers on Leveraging Percentage Leases

• Negotiate Fair Terms: When entering into a percentage lease agreement, ensure the terms are balanced and favorable. It should be a win-win for both parties.
• Monitor Sales Closely: Regularly track your sales and understand how they correlate with your rent. This will help you make informed decisions and negotiate effectively when the lease is up for renewal.
• Collaborate With the Landlord: Maintain open communication with the property owner. A strong landlord-tenant relationship can lead to collaboration on promotions, events, and improvements that benefit both sides.

In conclusion, the return of brick-and-mortar retail presents an exciting opportunity for retailers and real estate developers alike. By embracing this trend, retailers can create meaningful connections with customers, and real estate developers can cultivate thriving spaces that drive mutual success. With strategic location choices, well-negotiated percentage leases, and a commitment to innovation, retailers can position themselves for remarkable growth in this new era of retail.

Brad Zackson is co-founder and director of development of New York-based full-service real estate firm Dynamic Star.