LOS ANGELES—Successful retailers are using the current market togain market share and they are once again actively seeking dealsthat make sense for their business plan. That is according toStephanie Skrbin, principal and retail specialistat Lee & Associates-LA. Skrbin recentlychatted with GlobeSt.com on the main considerations for retailersin new locations, on e-commerce, suburban vs. urban and more.

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GlobeSt.com: What are the main considerations forretailers as they assess new locationstoday?

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Stephanie Skrbin: Retailers arefocused more than ever on A+ locations so they don't findthemselves in the position they were in back when the recessionbegan. Prior to the recession when consumer spending was at anall-time high, many retailers focused on expansion for expansion'ssake. Now tenants need to justify their expansion choices from anROI point of view. They are focused more than ever on A+ locations,and they are scrutinizing expansion opportunities from every anglefrom location to demographics, visibility, traffic patterns,accessibility and retail synergy.

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GlobeSt.com: Are they measuring these elementsdifferently than they did in the past? In other words, if a certainthreshold of traffic was 'good enough' before, is it stillsufficient or do they require stronger numbers?

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Skrbin: Sales forecasting has becomemore conservative, and that is limiting the number of new storeopenings and having an impact on where retailers choose to locate.When the recession hit, rents had peaked and the lower salesvolumes brought about by the business downturn no longer justifiedthose rent levels. So we went through a period when rents werequite depressed, but rents have been steadily increasing in thelast two years, and landlords in strong trading areas are notgetting any pushback from tenants with these higher rents. In fact,in some areas rents are even somewhat higher than they were beforethe recession.

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GlobeSt.com: What are some of the other differencesyou are seeing now versus five yearsago?

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Skrbin: Location is still key, so thathasn't changed. Successful retailers are using the currentmarket to gain market share and they are once again activelyseeking deals that make sense for their business plan. In the BigBox arena we are seeing retailers adjust to smaller footprints thatallow them to be more efficient and to penetrate urban markets.

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GlobeSt.com: How has the growth of e-commerceaffected store size or the kinds of build-outs retailers wanttoday?

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Skrbin: It's a little differentdepending on which sector of retail you are looking at. In general,retailers have been forced to look at their traditional footprintand decide if it is the most efficient one for their needs. Those that have seen a sizable portion of their business shift tothe online arena don't need the same store space if they have adistribution center fulfilling online orders. Best Buy, forinstance, is doing a smaller footprint in new stores because theyknow that many of their customers are searching online and buyingonline. On the other hand, department stores, many ofwhich were built on customer service and face-to-face contact, areworking hard to establish a strong online presence, but they stillwant to allow customers to pick up their orders at the store, sothat is not having as great an impact on their traditionalfootprint. We are also seeing more retailers who got theirstart in the e-commerce space move into brick and mortar storesbecause it gives them an opportunity to fine tune their businessand get more immediate feedback about their merchandise mix fromtheir customers. Birchbox is one recent example of a retailer thatoriginated online but is now moving into the brick and mortarspace. So we will probably see more online retailers do thatas well, and as they get more experience with their customers wemay see differences in store size or the types of build-outs theyrequire.

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GlobeSt.com: Has the way negotiations proceed todaychanged over the past five years?

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Skrbin: We're seeing more tenants askfor 'right to terminate' clauses and 'ongoing co-tenancy' clauses.It's part and parcel of the whole focus on greater scrutiny and themore conservative outlook. Retailers want to be protected ifthe location does not meet their sales expectations, and they wantto be protected if something should happen in the center, as it didwhen the recession struck, and an anchor or a large portion of thecenter becomes vacant. These clauses have been in use formany years, but we're seeing them more today. We're alsoseeing landlords ask for similar protections if, for instance, aretailer's sales do not meet expectations. Landlords too arecognizant of making maximum use of the space they have, and theydon't want to be saddled with a tenant whose sales are not up totheir expectations.

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GlobeSt.com: What are some of the differencesbetween how urban and suburban locations are beingevaluated?

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Skrbin: Some tenants have a strongbase in suburban markets and those tenants are continuing to expandin those areas. Newer concepts tend to want to start out in urbanlocations because the densities are greater and that provides themwith a greater likelihood of success. Then too, big box stores,which have traditionally been in suburban areas because of theirsize requirements, are more frequently exploring urban locations.Even though these locations require a smaller footprint than thesebig boxes are used to, these urban markets provide a goodopportunity for building their sales base.

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.