Los Angeles

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The current disruption in the retail market aside, restaurantand entertainment tenants have become the pillars of the retailsector—in many cases replacing traditional anchor tenants. This isno short-term trend, but rather a fundamental shift in the retailmarket and the way that consumers use brick-and-mortar retailtoday.

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"Restaurant and entertainment companies will continue to beactive because people want to eat and people want to beentertained," Chris Wilson, head of nationalretail agency leasing and EVP at JLL, tellsGlobeSt.com. "These aspects have always been part of the mix, butare increasing in importance as the experience economy continues togain momentum.  I also think that we will see othersectors like health and wellness and fitness concepts continue totake market share as landlords look to provide shoppers with theamenities they are looking for."

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Tenant mix is just as important as securing these types ofretailers. In addition, landlords should commit to improvements thewill create an welcoming environment for consumers. "Retail ownersshould be looking at dining and entertainment companies of allsizes to help activate their centers," says Wilson. "Inthe end, retail owners need to be willing to invest capital toimprove their center."

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These tenants have helped to drive leasing activity across thecountry, particularly in the class-A market. However, the growth iswidespread. "With class-A centers, rents are stable and growing,but there is likely to be some continued softness in lower-tierassets," says Wilson. Of the 72.6 million square feet of retailcurrently under construction, 96.5% is either class-A or -Bspace."

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The COVID-19 outbreak will certainly disrupt the market, but interms of fundamentals, the retail market and demand is healthy.Restaurants and entertainment will continue to play a significantrole. "I expect this trend to continue for the foreseeable future,"says Wilson. "The good news is that there is solid projects in thepipeline, as proposed retail development is five times the volumeof current construction, so leasing fundamentals should remainpositive."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.