SAN FRANCISCO—Wouldn't it be convenient if someone had clear, intelligent answers to most of your CRE-related questions? Problem solved. Nina J. Gruen, a.k.a. Ms. Real Estate, a.k.a. the principal sociologist overseeing market research and analysis at Gruen Gruen + Associates, is here to answer readers' questions.

Dear Ms. Real Estate:

I own an 80,000-square-foot community shopping center located in a suburban community. My closest competitor is five miles away. Our town's current population is approximately 75,000, and is adding between 500 and 1,000 new residents annually. A four-year college is located not too distant from our center. Some of my tenants have lease renewals as of January 1, 2015, and quite a few more on January 1, 2016. Several have already indicated they are unlikely to renew their leases because both the recent Great Recession and Internet have hurt their bottom line. My largest tenant is CVS, which apparently is doing OK, and the center's overall occupancy is at 89%. What advice can you give me to help me survive the Internet age – particularly given the nearby younger population?

—Trading Out of a Techno-Turmoil

Dear Techno-Turmoil:

You are facing a universal and ongoing problem. With each passing month (or should I say day), new apps are available to make shopping easier anywhere, any place and at any time of day. And as you are aware, many retailers already offer free shipping and free returns, as well as overnight delivery. Even food services are increasingly being purchased on the Net. There are some food services, however, we want when we want them – coffee, juice, ice cream and yogurt, for example. Given the makeup of your market area, many still are likely to eat out on a regular basis. And all demographic groups are increasing their purchases of take-outs.

Experiential services are and will remain your best bet. Examples include health and beauty related services like spas, hair salons, nail parlors, as well as yoga, pilates and cross fitness tenants. As Ms. Real Estate has commented before, pet-related services like pet grooming, including facilities where the pet parent can bathe their dogs continue to serve as center attractions. For your less desirable space, services such as dry cleaners, alterations and shoe repair will provide steady draws. And of course, tenants that relate directly to the Internet, like Verizon, and most desirable of all, an Apple store, are winners. If you should be able to have an opportunity to attract the latter – even a no-rent deal is likely to help assure close to a 100% occupancy rate for the rest of your center at acceptable rents.

Instant Insights /

Trading Out of a Techno-Turmoil

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