u201cWe're seeing more building conversions than new development, generally in u2018hot' urban areas,u201d says Geiger.

LAS VEGAS—Since we are all about digging into retail trends while at ICSC RECon here in Las Vegas, we thought we would catch up with our thought leader, Partner Engineering & Science Inc., who can provide a different angle on the subject. Bob Geiger, principal and national client manager at the firm, tells GloebSt.com that as retail continues to move online, brick and mortar stores are increasingly being used as showrooms. As a result, many retailers are downsizing to smaller stores —in better, urban areas to be able to reach their clientele.

“We’re seeing more building conversions than new development, generally in ‘hot’ urban areas,” he explains. But repositioning of retail space changes the site infrastructure, he notes, including requirements for ADA compliance and building systems such as HVAC and MEP, “so we’re seeing high demand for these services.”

And with the growth in e-commerce, industrial has been a hot sector particularly for sites that are perfect for distribution centers, Geiger explains. “Existing industrial properties are requiring expansion and modification as they convert to more state of the art distribution facilities.” He points to the large retailers increasingly incorporating wholesale, retail and e-commerce operations under one roof to reduce overheads and meet increasing demands for overnight shipping or same day delivery.  “From an expansion and upgrade standpoint, we are assessing current property conditions as well as evaluating the mechanical and other building systems to see what’s adequate and can be utilized for the new design, and what the costs will be for new equipment and system.  These evaluations are referred to Basis for Design Evaluations, and they can help minimize the capital costs on an expansion.  He explains. “As the online shopping market continues to grow, I expect more stores will be looking at ‘omni-channel’ retailing— incorporating both online and brick and mortar stores —and we’ll see the above trends continue.”

Another trend Geiger has noted in retail is a greater focus on sustainability. Energy efficiency is a scope being added more and more to our acquisition due diligence, whether by choice or by regulation in some states. He tells GlobeSt.com “some want to benchmark and identify energy efficient ROI opportunities as a value input, and some need to comply with increased regulations demanding that a property’s energy performance be considered and disclosed, such as California’s AB1103 and CALgreen laws.  Others need to abide by broader corporate sustainability initiatives and goals and look at ways to implement energy efficiency measures and sustainability programs on a site and state-specific basis. 

Because of this increased sustainability focus, “we’re seeing a continued uptick in demand for energy audits, retrocommissioning studies, solar feasibility studies, and other energy efficiency services in the retail space,” Geiger says. “The scale of shopping centers means that even low-cost measures like minor adjustments to building systems can amount to significant savings.”  His forecast? “We expect that once the ‘low-hanging fruit’ has been picked, retail investors and owners will start investing in more comprehensive energy efficiency measures such as lighting controls for parking lots and outside areas, to name one example.” In addition, he says, “there will be a need to help retail investors access available financing to fund these upgrades, through local retro-commissioning incentives and similar programs.”