print header

# 1 Commercial Real Estate Information Company

  • Find Properties 
  • Market Properties 
  • Analyze Properties 
Products
Commercial Real Estate News

Big CRE Brokers Race to Bulk Up Retail Offerings

CBRE, JLL and Rivals Expanding Retail Practices in Top U.S. Markets Through Recruitment, M&A
January 27, 2016
With retail real estate inching closer to finally hitting the sweet spot in its cycle, large CRE services companies have been steadily expanding their retail brokerage, property management and advisory capabilities.

In addition to keeping pace with accelerating deal volume, many see opportunity in advising on often complex space and site requirements as chains reassess their brick-and-mortar needs in the age of e-commerce. CBRE, JLL, Colliers International and Newmark Grubb Knight Frank have all recently made moves to bulk up their retail offerings.

"Retail has so many unique variables, and many people say retail has its own unique language," said Anjee Solanki, national director for Colliers International's national retail practice. "Brokers need to look at how to optimize the tenant mix and how that mix continues to evolve over time. Clients want a retail team that works together as a group to speak such topics as whether e-commerce truly represents a threat to their bricks and mortar stores."

Chicago-based JLL has been especially active, seeking to build up its California retail presence through a series of transactions in recent months, starting with last summer's acquisition of Mill Valley, CA-based property management firm Shelter Bay Retail Group. The acquisition added 30 professionals and 74 shopping centers totaling 6.5 million square feet in the Golden State to the company's third-party U.S. retail property management portfolio.

In November, JLL agreed to acquire Orange County-based project and construction management firm Martin Potts & Associates in November, adding 11 professionals to JLL's 200-strong Project and Development Services division for the Southwest U.S. Also, JLL in October reinforced its New York City retail team with the addition of Patrick Smith from SRS Real Estate Partners.

Other brokerages have sprinted to capture their own retail dream teams and talent:


Competition for Talent Reflects Increased Complexity of Retail Deals



The continued appetite for retail property on the part of institutional and international investors also makes it important for a CRE services firm to bring a full complement of retail services to clients, from leasing and investment sales to advisory and property and facilities management, Colliers' Solanki noted.

Many retailers are not simply right-sizing their stores, but are trying to create new models and prototypes that better fit the local community and transformed physical retail shopping environment, Solanki said.

"We’re taking storefronts today that are 15,000 square feet and re-demising them to match or better align that space with a larger pool of retailers," Solanki said. "Some of the major questions that need to be addressed are: Does it make sense to cluster this store in a co-tenancy within a certain zone of the project? How and why are we zoning the property for food versus non-food, and how does it tie in with parking? You have to take all these components into consideration."

Solanki's team is working with an institutional investment client in one market on how to reposition a 470,000-square-foot shopping center built in the 1950s and remodeled in the 1990s as a lifestyle center reflecting the current needs of shoppers and the community.

Retail property may be the most difficult and complicated major property type to broker, with its abundance of smaller tenant spaces and leases, and the still-unfolding downstream impacts on retailers and restaurants stemming from the demise and repurposing of regional malls in many markets, said Brandon Dobell, an analyst for investment banking firm William Blair & Associates who follows CRE services firms.

Dobell said the demise and repurposing of many malls and shopping centers has created "a whole bunch of downstream impacts on which retail and restaurant chains are going where, and I think in a lot of cases, brokering retail gets a company closer to the building owners for property management, facilities management, consulting and other businesses," Dobell added.

"Further, urbanization and work-live-play are huge multi-year trends, and retail will be a big part of that. It's good if a company can address all parts of the impact of urbanization on CRE."

"Retail is often combined with office and multifamily, which makes it even tougher to get right," Dobell said. "The flip side is, there’s a lot of space to lease, and many large chains like Starbucks, Dunkin' Donuts and Fedex Office need help in every city. Quick-serve restaurants need a lot of help siting," Dobell said.
GET IN TOUCH        Contact CoStar News Team:   News@CoStar.com

 Find us on 

Welcome To CoStar's
Industry-Focused,
Award-Winning News

Winner of three Journalism Awards from the National Association of Real Estate Editors (NAREE)

Award-Winning News