How Apparel Retailers Are Becoming Landlord Favorites

Apparel retailers may be moving up to the top of the list for shopping center owners. In the past few years, entertainment-based retailers, specifically restaurants, have been a favored retail tenant because they are internet resistant and create an experience at a shopping center. However, apparel retailers in Southern California are showing strong brick-and-mortar sales and consumer demand, according to recent research from CBRE. The activity is changing landlord’s minds about tenant dynamics.

“In the past, restaurants and entertainment brands typically followed the apparel retailers into new centers,” Jeff Moore, senior managing director at CBRE, tells GlobeSt.com. “Today, that is no longer the case and can often be the reverse.  E-commerce has impacted sales, higher rents and lower margins, thus this has created an environment where food and entertainment are driving retail leasing activity while providing an experience for the consumers.”

Apparel retailers are now adopting the experiential concept of entertainment centers, driving traffic into stores and sales up. “Borrowing the concept of experience from food and entertainment, retailers are innovating and repurposing themselves as showrooms and are creating experience-driven concepts to introduce customers to the look, feel and style of their overall offering,” says Moore. “One example is Bonobos, where you can try on and experience their clothes in their stores but you can’t actually walk away with the product. You purchase in-store and the items are shipped to you.  The store itself acts as a showroom for the overall brand.”

Apparel retailers, however, is a wide swath of the market, and covers everything from the high-end to luxury models. “Value-oriented fashion retail boxes like Marshalls, TJ Maxx , Burlington and others are popular because they take larger amounts of space, attract other co-tenant activity, have good financial credit and drive traffic into the shopping center,” says Moore. “Other landlords are attracted to curated or local boutique brands that bring something different and unique to the shopping center and to consumers.”

The latter, smaller retailers can be more difficult to vet, but when mixed with other strong experience-oriented tenants, add a valuable element to the shopping center. “While these retailers may not have a strong financial credit statement, they provide a different consumer and experience that may help a shopping center to differentiate and brand itself,” says Moore. “The higher-rent paying tenants such as food and entertainment tend to be very parking intensive, so landlords might also favor fashion retail which has fewer parking requirements while helping to create a complimentary and positive customer shopping environment.”