Upstate New York retail market continues to hold its own: Who will come next?

Spring is around the corner, and the upstate New York retail market is poised, once again, for growth and revitalization. The impacts of the downturn in the national economy have not dealt this market a crushing blow, by any measure. The shopping centers of the region are reasonably well occupied and the ownership has been able to weather this most recent storm. While the national storm cast a wide berth in many of the regions throughout the country, upstate New York, with its stable economies, growth driven by technology and innovation is fairing very well. Occupancy levels within the major malls continue to show limited levels of stress in smaller store categories, but rents have seen some erosion, both from requested rent concessions from the tenants, to necessary rent reductions coming from retail concepts that are stressed based on sales declines over the past 12- 18 months. Overall, vacancy in the retail sector has increased, but only to the extent that the markets were affected by wholesale closures due to failures of the national retailers like Circuit City and Linens 'N Things. The good news is new deals and new tenants are around the corner. With the slight increase in overall vacancy, opportunities abound for retailers that have been denied positions due to tenant mix considerations, or those whose product lines had some level of overlap. The market rent correction that has occurred, now has created a stage that is poised for sustainable growth and re-tenanting. Now it is up to real estate professionals to seek out the tenants whose market attraction coincides with that of the location and demographic makeup of the community. The next wave of retailers will be those whose business format and overall plan incorporate the impacts of online retailing with that of a "bricks and mortar" retailer, while offering value and service. The public has become far too savvy to accept poor service, bad quality and a lack of customer service. In many cases consumers have determined that they want to deal with a retailer that will stand behind the goods they sell and not create an unreasonable quagmire for returns or exchanges. This can be achieved and retailers like LL Bean, Target, Toy 'R Us, Bed, Bath and Beyond, Nordstrom, Land's End/Sears, and others have demonstrated the model the public likes. These, and other retailers, have shown proven success by integrating their online operation while making it more convenient for the shopping public to obtain the goods and services they want when they visit their stores. But who are the next group? We can easily find these retailers by looking in other parts of the U.S. for those operations that are successful in formats that confirm to the demands of the customer base. If one looks at historical elements in the northeast only, we see that Wal-Mart and Target brought a pricing and fashion format to a public that have been relegated to retailers that chose not to be sensitive to pricing demands, or quality for a long time. By delivering lower pricing, better fashion alternatives and customer service considerations, they have been able to endear a market share that previous operators considered their domain. The past will show us the future. Find retailers in other parts of the U.S. that have been successful and we will find our next new tenant groups. Who will be the users of all the available real estate of Starbucks, Linens, Circuit, and all those car dealerships? I would focus my vision on elements of the retail market that are founded on green initiatives. The 18-45 year old demographic is going to drive the future of retail, and the people of this generation are the innovators/creators of the green technologies. They will support the initiatives that foster their positions relating to global warming, equitable pay, child labor, organically grown, environmentally friendly packaging, and ecologically sensitive material usage. What Does that Profile Look Like? Those retailers that support good customer service while delivering value in a comfortable and enjoyable shopping experience will be our next customer group. Restaurants that are responsive to the changing economic times (smaller portions and lower prices) and those who are different from everything else you see in every other shopping center. A shopping and/or dining experience that is both entertaining and value driven, while blending customer service will be the foundation factors of the coming wave of retailers. Find them. They will be yours. As real estate owners, operators and practitioners, we must never forget the reason why a retailer comes into one of our properties. It is to operate in a manner that will generate a profit for that retailer. Howard Carr is the president of The Howard Group, TCN Worldwide, Albany, N.Y.