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Biggest Change for Retail, Real Estate? No, It's Not Amazon

Driverless Cars Will Have Major Impact on Commercial Real Estate, Industry Consultant Says
January 24, 2018
The biggest game-changer for retail and real estate in the next decade probably isn't what you think it is, insists Beth Azor, a longtime South Florida broker, owner and industry consultant.

"Driverless cars will be the biggest disruption in real estate ever, way more than what Amazon has done," Azor said Jan. 23 at a retail seminar in Plantation, FL sponsored by the Building Owners & Managers Association (BOMA) of Fort Lauderdale and the Palm Beaches.

Self-driving cars will change the way consumers live, turning long, mundane commutes into productive time spent outside the office, she said. That, in turn, will impact where residential developments are built because it will be easier for people to live farther away from their jobs.

Azor also predicts Uber and other ride-sharing services will mean that consumers won't be owning as many cars. Fewer cars on the roads will reduce the need for parking lots and garages, which Azor sees as prime retail redevelopment opportunities.

"It's going to be fascinating to see what happens," she said.

  Related News: The Future of Autonomous Driving is Coming Down the Road Fast with Major Implications for Real EstateJUNE 14, 2017  |  MARK HESCHMEYER

Azor previously was president of asset manager Terranova Corp. in South Florida and now is owner of Azor Advisory Services. She owns five shopping centers, brokers deals, and consults with and trains industry professionals.

During her hour-long BOMA presentation, Azor told attendees that the popular "retail is dying" narrative is false, an assertion supported by a new report from Fung Global Retail & Technology, a retail think tank.

While total U.S. store numbers declined in 2017 for the first time since 2009, total in-store sales increased, according to the report. What's more, occupancy rates at open-air centers and super regional malls (centers of at least 800,000 square feet) "proved resilient."

Despite the perceived popularity of online shopping, nearly 88 percent of all U.S. retail sales were made offline in 2017, according to a Fung Global estimate of U.S. Census data.

"We think that store-based sales growth is likely to strengthen in 2018 amid accelerating total retail sales growth," the report said.

Still, Azor said the retail industry's focus has changed and now includes meditation rooms, activities and experimentation.

Activity-based retail has replaced goods-based retail, with merchants now needing to provide an experience to make brick and mortar stores a viable alternative to e-commerce.

Capital One has a coffee bar in some of its locations, including one in Delray Beach, FL, while a newly-opened Restoration Hardware in West Palm Beach has an in-store restaurant.

Azor expects meditation rooms will be the new Starbucks, popping up on most street corners in response to millennials taking the emphasis on physical fitness to the next level. She also advises shopping center owners to boost sales by increasing the "dwelling time" for patrons -- and that includes adding music, benches, Wi-Fi and on-site events.

"In the world of disruption that we are in ... I think we have to try things," Azor said.

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