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NEW YORK CITY-  The retail market has begun to see a shift as stakeholders buffer their portfolios in the case of a market downturn. Retail investors have begun to focus on quality assets that are deemed recession-proof or resistant, such as assets that may include neighborhood locations that provide goods and services purchased regularly in person, or proven locations over many years, Brian Watson, CEO of Northstar Commercial Partners, tells GlobeSt.com.  

Because of this fact, larger box retail and malls not located in prime areas will continue to be negatively impacted as the market appears to move closer to an even greater online marketplace, which may lead investors to sell large box retail,  he added. 

Some destination and proven malls and galleries will continue to serve as good synergistic areas for tenants to occupy, but dated malls or ones with low traffic counts will continue to underperform, according to Watson. "Retailers must be very smart about where they locate, how much space they take, and if other tenants will create synergy for and with them," he said. 

For retail tenants to find the right formula, it may require flexibility in lease terms, commitments and reasonably sized space at affordable terms. For landlords, this may require creating a quality synergistic environment with positive energy where people want and need to shop, Watson said. 

"More and more, traditional retail spaces will be used for marketing purposes, where consumers can see the brand, visit, touch, interact with some of the products, but will most likely buy online," he said. "Consequently, retailers must adjust to how they evaluate their locations, as the traditional sales per square foot method may not apply."

Northstar is receiving more business to do with unique retail boutique ideas, shared concepts such as "food halls" that have multiple restaurant concepts sharing the same kitchen or eating area, and unique interactive spaces for families that you can not get online.

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Mariah Brown

Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.