Real Estate

Exciting times for downtown districts

March 25, 2015

These are exciting times for downtown districts. When comparing the downtown districts of today with those of a few years ago, we see that vacancy levels are rising and that the retail range has changed significantly.

We see more and more so-called pop-up stores and discounters. And who could have imagined five years ago that telephony and internet providers would occupy the prime retail locations? At the same time, mobile telephony and internet are the main source of changing consumer behavior.

Downtown districts are struggling to keep up with this rapidly changing consumer behavior. Today's consumers switch retail channels at all stages of the purchase process. The downtown districts of the future will have retailers that seamlessly adapt to this multi channel behavior. They will no longer see a store as the place where sales must be made, but as a place where the consumer is informed, guided, and seduced.

Is there then no more room for the retailer without an online strategy? There will still be a place for the distinctive retailer. We see that smaller retailers with unique store concepts respond well to the increased interest in manual work, just as baking and gardening are now popular. These retailers add something to the amenity value of a downtown district. But new chains that purely take advantage of perception, such as Lush (handmade soap) or Flying Tyger, also find their place. The latter is a good example of a concept that takes advantage of impulse purchases with a store full of goodies with nicely rounded-off prices.

But how can these new concepts find a place in a downtown district where vacancy levels are rising? Downtown districts are in a transitional period. Old is making way for the new. But this will not happen without a struggle. Downtown districts will not adjust that quickly to the rapidly changing consumer behavior. Suppose that downtown districts were festival sites where we would have a free hand to create a new program every year.

Would there still be room for V&D, the biggest Dutch chain of department stores, on the main stage? Probably not. New store concepts now form the main acts in the shopping program. Accommodating these new concepts requires creativity and flexibility of downtown management and the real estate sector. Think of initial rents, easing zoning rules, and shortening of lease terms. This brings with it uncertainties which many stakeholders involved in the downtown districts are uncomfortable with. It is difficult to see vacancy as an opportunity that can be exploited in this transitional phase. 

This article was published in BN de Stem/De ondernemer.

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