Hunton Retail Law Resource

GlobeStreet reports that Rancho Cucamonga is in the midst of “retail transformation.” Significant population growth has resulted in both residential and retail development in the city, and further demand is expected—including in the vicinity of the Victoria Gardens Mall.

Brick and mortar retailers are rapidly diversifying checkout and payment methods to combat the erosion of sales to online channels and provide an improved shopping experience for consumers. From self-checkout kiosks, to store-specific mobile applications for payment, scan-as-you-go devices, and even ‘just walk out’ models, retailers are reinventing consumer’s notions of the traditional checkout line by going cashierless. Some estimates predict that these automated technologies could account for 35% of retail sales in the next 20 to 30 years.

The rise of e-commerce and the struggle many brick-and-mortar retail stores face is nothing new.  Customers are increasingly choosing to shop for clothes, furniture and even groceries from the convenience of their own homes. More recently, however, this shift in the way consumers shop has given rise to new types of retail stores – small showrooms and “pop-up shops.” While showrooms are not entirely new concepts, purely digital companies are increasingly opening up physical showrooms where customers can see and touch merchandise before deciding to buy, while the actual transactions often remain online. Pop-up shops – another retail store model - allow retailers (often online or seasonal retailers) to have a physical presence for a limited duration to essentially test run whether a permanent store would be lucrative.  

E-commerce and online shopping are here to stay, but the explosion of new technology and the number of resources available to facilitate online shopping is an opportunity for retailers to embrace new ideas and concepts that will increase foot traffic to their physical locations. The store-within-a-store concept isn’t new, but the type of store-within-a-store retailers have conventionally seen is changing and bringing in new business.

A local newspaper, The Desert Sun, has reported that downtown Palm Springs is in the midst of an economic revitalization. Locals have noticed an increase in foot traffic with the opening of several new stores (including Starbucks, MAC Cosmetics and H&M), and further development is planned. The city held a “grand opening” for the area in late 2017, and Palm Springs city council member Christy Holstege has even referred to a “Palm Springs renaissance.”

The Westside Pavilion—the 755,000 square foot, 1970s fortress-style mall located in West Los Angeles—has been put up for sale by its owner, Santa Monica-based REIT Macerich Co. Tom O’Hern, Macerich’s CFO, predicted that the property would likely sell within a year. And although the Westside Pavilion is facing many of the same systemic pressures that other malls are facing nationwide, those are not the only reasons the mall is up for sale.

On August 21, 2017, New York Attorney General Eric T. Schneiderman announced that Simon Property Group settled claims that it used anticompetitive tactics to prevent development of competing outlet centers close to Woodbury Common center in New York. Leases with retailers at Woodbury Common included a clause preventing the retailers from opening another location within a 60 mile radius of the outlet center—a radius that encompassed the entire New York City area. 

The Santa Barbara City Council, in an effort to combat the retail malaise on State Street in Downtown Santa Barbara, has approved a pilot program that would streamline the permit and review process for potential commercial tenants.

Retail developers continue to experiment with new concept designs for creating a shopping environment that will bring consumers back to brick and mortar. Along this pursuit to deliver a more attractive retail experience, developers of open-air shopping centers have started lobbying for relaxed open-container ordinances that would enable patrons to explore their retail districts with an alcoholic drink in tow. 

Recently, the Fourth Circuit affirmed a $31 million dollar jury award in favor of retailer Lord & Taylor for lost profits in connection with a breach of its reciprocal easement agreement (“REA”) with D.C.-area mall owner White Flint, LP. The court found White Flint’s efforts to redevelop the regional mall into a mixed-use project violated the terms of the REA under which the mall landlord agreed to maintain the site as a “first-class high fashion regional Shopping Center.”

A world of driverless, or autonomous, cars is much closer than we may think, and it will leave an indelible mark on retail real estate development, according to a GlobeStreet interview with Angelo Carusi, a principal at architecture and design firm Cooper Carry. According to numerous automobile industry experts, driverless cars will be in use and on the roads within the next 10 years.

As reported in a recent article in New York City real estate journal Bisnow, and in other recent articles in a number of publications, retail condominium units in New York City remain a desirable asset class among all players, including developers, investors and retailers.

Trading in NYC retail condominium units – typically condominium units  located on the ground floor of residential or office condominium buildings – took off over the last decade. Until then, owners and developers tended to hold onto their retail units, but started to sell off these remaining assets to pay down debt during the last downturn. Now, many developers construct the retail units with an eye toward sale or presale.

Prospective buyers of property for retail development face a plethora of issues when negotiating a purchase from a potential seller. Aside from the obvious issues of purchase price, contingencies and financing, prospective Southern California buyers are also confronting issues related to the availability of parking. As developers try to maximize their leasable footprint, there is a growing trend to look to subterranean parking, according to James W. Abbott, Jr., a broker at Realty Advisory Group in Los Angeles, California, who specializes in retail and institutional sales in the hot Venice Beach area.