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ICSC Envision 2020: 8 defining changes to impact the retail real estate industry

NEW YORK, 2015-9-30 — /EPR Retail News/ — As the retail real estate industry undergoes one of the most profound transformations in its 60-year year history, the International Council of Shopping Centers (ICSC) presents its final Envision 2020 report, a collaborative initiative that outlines where the industry will be in five years according to leaders from around the globe. The resulting Eight Bold Statements are unanimous but differ in progress, interpretation, and execution. This initiative will allow retailers, owners, developers, and investors to plan, progress, and innovate with the future in mind.

The final report includes a number of case studies and examples, interviews with top-level executives, commentary from thought-leaders, and supporting data and insights.

Access the full Envision 2020 report here and an overview below.

#1: Unification of Bricks-and-Mortar and Online Retail

The convergence of physical and digital appeals is occurring on both sides of the retail spectrum. Shopping centers now offer sophisticated digital interfaces, innovative websites, and mobile communications to fulfill the increasingly web-savvy consumer. Conversely, retailers like Bonobos and ‪ are among the rising wave of e-tailers who are rolling out brick-and-mortar stores.

#2: Unprecedented Intimacy with the Consumer

Developers and retailers are utilizing technology like mobile applications, social media, and beacon and geo-fencing technology to get to know the consumer and increase consumer engagement.

Last year, Kimco Realty Corp. updated its flagship property, Westlake Shopping Center, and found that consumers who logged into the center’s free Wi-Fi stayed twice as long as consumers who did not log in. Kimco plans to expand the center’s services with geo-fencing technology among other enhancements.

Centers like Simon are also outfitting malls and centers with similar Bluetooth-enabled Beacon technology that offer personalized promotions to shoppers’ smartphones.

#3: Conversion of Shopping Centers Into Communities

Retail properties are evolving into shopping, dining and entertainment hubs that are central to, and fully integrated with, the communities that surround them. Centers are increasingly taking on mixed-use elements including residential, hotel, and office spaces, and entertainment options including cinemas, health clubs, restaurants, and recreational areas.

Related Urban has partnered with Oxford Properties Group to create Hudson Yards – a 17 million-square-foot “city within a city” that will contain office towers (one of which features the city’s highest outdoor observation deck); residential units; public open space; a public school; a luxury hotel; and a shopping center, The Shops & Restaurants at Hudson Yards.

#4: Mall Environments that Engage Millennials

The millennial generation in the United States is projected to surpass baby boomers this year as the nation’s largest living generation, according to the Census Bureau. In order to appeal to this all-important generation, also known as Generation Y, shopping centers are providing customized, personalized, and sustainable features. JLL reports that most millennials (82 percent) prefer to shop in stores, although they spend a great deal of time browsing and researching products online.

#5: Incorporating Distribution Into Shopping Centers

As landlords position their properties to stay relevant in the digital age, shopping centers are increasingly doubling as distribution centers to fulfill both in-store and online orders. According to a report by consulting firm A.T. Kearney, 23 percent of customers purchase additional items when picking up an online order in-store; and up to 20 percent of consumers make an additional purchase when returning an online order in-store.

Same-day delivery service, Deliv Inc. has made a big splash in this area, collecting $4.5 million total investment from the likes of GGP, Westfield, Macerich Co. and Simon.

#6: Accelerated Developer–Retailer Collaboration

The landlord-tenant relationship will evolve into a more collaborative paradigm, resulting in the sharing of information and technology.

General Growth Properties, Inc. has benefited from a freer exchange of information with its retailers, who have become much more willing to share information that they once considered proprietary, such as traffic patterns and demographic data. This collaboration has helped both sides spend marketing funds more wisely and avoid duplication.

Kimco Realty Corp. is capitalizing on the growing e-tail to retail trend. Through its “Clicks to Bricks” program, the company offers qualified online retailers one year of rent-free tenancy and provides merchants with a “personal business counselor” to assist with site selection and store build out.

#7: Emergence of a New Blended Rental Model

Rent calculation will evolve into a new formula that incorporates the role of the physical store in the broader omnichannel retail activity, taking into account digital transactions.

According to Steven Lowy, co-chief executive officer, Westfield Corp., “The provision of the real estate itself will only be one part of the overall service that real estate providers will be able to offer to retailers. That will require leadership on behalf of leading retailers and real estate providers. Both are starting to invest heavily in technology, and for that technology to work together, commercial arrangements will need to be put in place.”

The range of potential models includes more traditional approaches such as fixed rent, and base plus percentage rents; enhancement of these models by including a proportion of click-and-collect via in-store and online sales in the percentage rent.

#8: Arrival of a Retail–Friendly Investment Outlook

As new shopping center formats emerge, lenders will increasingly favor retail investment opportunities. The amount of institutional capital allocated to commercial real estate is expected to increase dramatically in the coming years, according to David Funk, director of the Baker Program in Real Estate at Cornell University.

Institutions now allocate nearly 10 percent of their portfolios to commercial real estate, a significant increase over the last several decades.

Founded in 1957, ICSC is the premier global trade association of the shopping center industry. Its more than 70,000 members in over 100 countries include shopping center owners, developers, managers, marketing specialists, investors, retailers and brokers, as well as academics and public officials.  For more information, visit or


ICSC Envision 2020
ICSC Envision 2020
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