Karen Rich, Broker, Malone Commercial Brokers
I was happy to present the Greater Portland Retail portion of the MEREDA 2019 Forecast conference last month in Portland, where we took a look back at 2018 and where retail trends are moving forward in 2019.
Locally, the retail market has remained very strong. Greater Portland numbers show a vacancy rate just slightly higher than it was a year or two ago at just over 5%. Vacancy rates in the Old Port and Downtown Portland barely register. But, that being said, if you keep an eye on trends, you can start to see some slight changes. Retail spaces in the Old Port tend to remain available a little longer than they did a few years ago. Of course, the prices per square foot are still extremely high – there are actually prices being paid in the Old Port of $48 per square foot! Crazy, I know, but typically those spaces tend to be fairly small and in the most well-located places in the City! Regardless, the retail market in the Greater Portland area remains very strong.
The Greater Portland market is comprised of the communities of Portland, South Portland, Scarborough, Westbrook, Falmouth and Cape Elizabeth. The retail report compiled by Malone Commercial Brokers tracks over 6.5M SF of retail spaces throughout this area. Of that square footage, vacancy is only approximately 365,000 SF. The Per Square Foot average price for those spaces remains high in the $15.00-$19.00 range. Yes, there are some big box stores that have remained vacant for a few years. Case in point is the former Bon Ton/former Filene’s space BUT there is talk of repositioning that type of bigger box space into other types of uses. Uses like medical office and similar that could benefit from a Maine Mall location. Certainly, the trend with big box retailers is to prototype their stores slightly smaller and use each square foot more judiciously than in the past.
The impact of a flourishing restaurant scene on retailers is self-evident. Portland, Maine (as we all know by now) was named 2018 Restaurant City of the Year by Bon Appetit magazine. I’d like to say that it put Portland on the map but the truth of the matter is that Portland has been on the map for a number of years. It may now be getting all the recognition that our beloved city deserves. Greater Portland has long been a favorite of foodies and has also become very well known for its breweries and craft beer making which has made it a “must stop” on many travelers’ destinations. When you factor in all of the new restaurants, amazing chefs, and some of our long-standing favorites that have been with us for 30 years and more, you have an exciting restaurant city that is just going to continue to become more and more popular. The success of the restaurants which helps bring many of the tourists also has significant impact on local and regional retail shops.
One of the aspects of retail that I took at look at for the retail presentation had to do with trends in retail and how retail is faring both locally and nationally and the obvious impact from e-commerce sales. The one notable and memorable quote that I came across during my research was (to paraphrase) “It is no longer an us vs them mentality” as in e-commerce vs bricks and mortars. Instead it has become important that bricks and mortars retailers adapt and create an Omnichannel Strategy for their customers. Retailers don’t really care if you shop online on their website and ship the package to your home, OR if you shop online on their website and pick up your purchase at their local bricks and mortar store OR if you come and shop in their store. Any of these three variations means you are spending your retail dollars with them! Hence the Omnichannel Strategy – offers you the option to purchase wherever you want and wherever you feel most comfortable but shop with them!
To make that shopping experience an even more positive one, retailers are developing what is called Experiential Retail. Experiential Retail is generally defined as a store in which stuff happens in addition to selling, and shoppers do things besides buying. The idea is that a retailer offers consumers a chance to buy an experience rather than just an object or service. This can be accomplished through any number of activities but typically is also linked to technology and using technological advances in apps that make the shopping experience a fun and convenient one.
The last word is, retailers need to remain flexible and willing to make changes, as well as bring in new systems as they become available. The key word for Retailers today is Adapt, Adapt, Adapt!