Experiential Tenants, Grocery Shake Up

LOS ANGELES—GlobeSt.com recently caught up with Gary Glick, partner at Cox Castle Nicholson, based here in Los Angeles, to discuss the two major movements his retail team is seeing in the market today. “There is a movement towards 'Amazon-proofing retail centers,' or leasing to experiential tenants like restaurants, theaters and fashion retailers over any tenant that competes with Amazon.com,” he says. Another movement he is seeing a lot of based on the deals his firm is doing involve the “shake-up” in grocery.

According to Glick, “With the increasing popularity of non-union specialty grocers such as Whole Foods, Sprouts and Trader Joe's and non-union traditional grocers such as Wal-Mart Neighborhood Market—not to mention the increasing amounts of groceries sold by non-union big box retailers such as Target, Costco, Wal-Mart and Sam's—the traditional union supermarket industry will be facing major consolidations and challenges.”

As for the “Amazon proofing retail centers,” Glick says that, “Landlords are connecting the strong performance by luxury retailers and higher end restaurants to the experience that these tenants deliver. Experiences like trying on clothing and enjoying a meal with friends cannot be ordered online, but the products that Best Buy and Barnes & Noble carry can.”

How do these movements play together? “In addition to space created by retailers who are looking to shrink their footprints, there continues to be some second generation space on the market resulting from the closings of retailers like Circuit City and Borders,” Glick tells GlobeSt.com. “Fortunately for retail landlords, specialty grocers like Whole Foods, Trader Joe's and Sprouts have been willing to absorb some of the vacant space, and that trend is expected to continue.”