Chase on Spaces: Is retail dead? A view from the Treasure Valley

The Boise Mervyn's store closed along with the rest of the chain. It was replaced by Kohl's. Photo:  Caldorwards4  via Wikimedia Commons.

The Boise Mervyn's store closed along with the rest of the chain. It was replaced by Kohl's. Photo: Caldorwards4 via Wikimedia Commons.

Over the past few years, JC Penney’s, Macy’s, Sports Authority, and many other big name brands (including Idaho’s own Coldwater Creek) have announced store closures and bankruptcies. If you listen to the media, it may sound like retail is heading to the graveyard. The truth is, they are partially correct.

When having this conversation, I’ve repeatedly heard Amazon is to blame for the closures and bankruptcies mentioned above. Although it’s true that the emergence of shopping, “By clicks rather than bricks,” has put a good-sized dent in the bottom line of retailers, we cannot blame everything on the convenient online merchant. Traditional retailers have themselves to blame due to overbuilding in the retail sector. The United States has the highest amount of retail square feet in the world at 23.5 square feet per person. This is a huge lead when compared with the next 2 highest countries of Canada (16.4 square feet per person) and Australia (11.1 retail center square feet per person). This, combined with the changing consumer purchasing trends is the cause for so many retailers shutting their doors.

An interview with Chase Erkins of Lee & Associates Idaho

So what is next for these regional shopping malls and big box power centers that have suddenly lost their Sears, Barnes & Noble, Hastings or Sports Authority? They are being forced to adapt.

Lifestyle centers and experience-based retail have become the new trend. Developers are creating a model to appeal to the masses, where anyone can come to, “Dine, work, shop and play.” Here in the Treasure Valley, The Village at Meridian is a perfect example of this because not only are there various restaurants and retailers, but also a spa, gym, movie theater and park.

Local retailer D&B Supply is replacing a former Hastings/Sports Authority combo in SE Boise

Local retailer D&B Supply is replacing a former Hastings/Sports Authority combo in SE Boise

Although it will be expensive for existing large retailers to change with the times, it seems they are finding ways to make the transition smoothly. For example, when Hastings permanently closed last October it brought quite a few large vacancies to the Treasure Valley. These have all been filled by other retailers such as D&B Supply, Ace Hardware, and soon an Idaho Pizza Company among others. In a supposedly dying retail climate, merchants such as these have not only thrived but expanded. They have seized the opportunity to cut their costs and fill these vacancies, rather than build a new location in this difficult construction climate.

Large shopping malls, however, will potentially be a more exciting story. Developers will be faced with the challenge of a 60,000 square foot anchor disappearing, and needing to not only refresh and remerchandise, but focus on enhancing the consumer experience. This is where breweries, sit down restaurants, spas, gyms, bowling alleys, grocery stores and food halls will have the opportunity to fill the gap for people looking for social interaction and a better dining experience than the typical mall chain restaurant. Another Treasure Valley example of this adaptation is the 40,000 square foot former Sports Authority space in Nampa being converted into the CircusTrix Air Sports and Recreation Park.

While these changes can pose a challenge to the large shopping mall corporations, I find myself excited to see what may happen to these places in the future. Along with the future of self-driving cars and improved public transit will come interesting development opportunities. An asphalt parking lot has the potential to become a mixed-use development of office, retail and multifamily that will bolster the performance of its interior shopping mall.

In conclusion, retail is not dying. Simply, retailers are in a learning phase of figuring out how to progress with omnichannel solutions. On a national trend, vacancies are slightly up and rent growth as well as new construction is slowing. However, in the Treasure Valley retail development is moving at a steady pace. We’ve developed 282,478 square feet of retail over the past 4 quarters, vacancy rates have remained flat, and over the same period asking/quoted rental rates have seen a slight decrease (according to CoStar’s Mid-Year 2017 Market Report).

An interview with Chase Erkins

Chase Erkins is a commercial real estate agent for Lee & Associates Idaho. He is based out of the historic Hoff Building and works in the booming commercial real estate sector in SW Idaho. In coming months, Chase will be writing a sponsored column for BoiseDev called Chase on Spaces. But first, an introduction:  

  • What first got you into the commercial real estate space?

Real estate has always been an area of interest for me, I grew up in a small town in southern Idaho where my parents and grandparents owned land and property, and a few family members are real estate agents as well. I was feeling bored with the everyday routine of my previous banking job and looking for a change when I was introduced to my current broker. The commercial sector had never been on my radar, but I saw it could be a good fit for me and decided to jump in.

  • What are some areas you specialize in?

The areas I enjoy the most are office and retail sales/leasing, and multifamily sales. The diversity of these property types bring all different types of client needs that make each day interesting and something to look forward to. Starting out in the business though, I wanted to do everything and learn my strengths along the way. I found there is something about each product type I enjoy, and I always look forward to the variety and flexibility to serve clients in every area.

  • You've said you are passionate about getting value for your clients - how do you go about that?

Every type of client has a different set of needs that help me add value to their experience. For Landlords and Sellers, when it’s time to sell or do succession planning I will underwrite their property, keep them in the know of what is happening in the commercial real estate market, and effectively market their properties for sale and/or lease when the time is right. For Buyers and Tenants, it’s important to help them understand the market and advise them on their next move, then work with them through the due diligence process to make sure the property is the right fit for them. Aside from that, there are some small, simple things I make sure to do that add to a client’s experience. Returning phone calls quickly, arriving on time and keeping a high level of professionalism are examples of what I do to ensure value.

  • What is your favorite project you've worked on?

I’ve had the pleasure of working on a lot of great projects, but the one that stands out the most to me was a purchase of a Taco Bell in Southern Idaho, where I assisted a client through the process of using his IRA as part his financing source. This was a unique transaction that kept myself and everyone involved on our toes until the successful day of closing. This was a big win for my client, who ended up making a much better return on his retirement money than he was in his previous IRA investments.

  • You are a fixture in downtown Boise - what is your favorite part about the city's core?

There is so much to love about Boise, especially Downtown Boise, it’s tough to choose. I’d have to say it’s being able to walk down 8th Street at any time of the day and expect to see a friend or familiar face walking along the street or enjoying a meal on a patio. I’ve learned to leave early for a Downtown meeting if I’m planning on walking, to allow some time for some quick side conversations!

  • When you're away from the office, what keeps you busy?

When I’m not in the office I enjoy spending time with my family and friends. Going to the park, swimming pool, biking, golfing, taking part in community events and going out to eat are frequent occurrences.

Maker your plan BEFORE disaster strikes your business

Photo courtesy Lee & Associates

Photo courtesy Lee & Associates

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