In some of retail real estate’s darkest times have come some of its greatest accomplishments — and hope for an even brighter, more cooperative future. Even as the COVID-19 pandemic that has swept the world has compelled ShopCore team members and customers into varying degrees of isolation, the company’s leaders and team have concentrated on forging greater ties with their communities, retail partners and the industry itself, said Luke Petherbridge, president and CEO of ShopCore Properties.
“The pandemic has compelled much of the country into a belief we at ShopCore have always had,” said Petherbridge, himself sheltering in place with his family. “Value, convenience and being local are key. Because we operate grocery-anchored community centers, that bodes well for ShopCore, our projects and all of necessity retail.”
About two-thirds of ShopCore’s tenants have remained open during the pandemic, he reported, including 89% of its restaurant portfolio (offering takeout and delivery). The company has been focused on providing assistance to retailers, especially “mom-and-pops,” including a Curb Collect program that helps them deliver orders directly to shoppers’ cars. The company also has purchased 40,000 face masks to assist the smaller retailers who can’t purchase such items in the needed volume.
Many of these programs likely will continue after the crisis passes, Petherbridge observed, as shoppers could remain wary of too much personal contact for some time, or simply appreciate the convenience of not leaving a car with children in tow, other errands to run, or because of limited mobility. ShopCore also is looking at adding more outdoor seating to accommodate social distancing at some of its properties for greater comfort.
Ever since much of the U.S. was ordered to shelter in place, retail property owners and managers have been inundated with requests for rent relief from nonessential retailers forced to close their doors. ShopCore is no exception, though, as Petherbridge observed, the company’s focus on grocery-anchored retail kept most of the doors open at its centers. (Even the company’s sole enclosed center — and only property in hardest-hit New York City — The Shops at Skyview Center, hosts shoppers at its supermarket and BJ’s Wholesale Club.)
The credit tenants have been paying rent,” he reported. “For those suffering a financial hardship, we’re trying to be flexible about payments and defer some of the rent.”
The crisis also may accelerate the millennial generation’s return to the suburbs, he noted. Now that companies know that most employees can work from home, many may opt to live a bit further from a crowded downtown or forego long commutes on mass transit in favor, literally, of more space. This could favor suburban retail.
Tenants are adapting to the current normal, and will continue to do so, despite current economic headwinds as consumers become more conservative in their spending. Petherbridge predicted that restaurants will remain challenged with unemployment high and wage increases lower, even after capacity restraints ease.
“We had been more mindful that people weren’t always going to be earning 3% or 4% wage increases forever,” he said. “We said: let’s have the right combination of value and services.”
But people will continue to eat out and should return to fitness tenants for their social aspects. The 252 residential buildings owned by ShopCore’s sister company LivCor (where Petherbridge also is CEO) shuttered all amenities, including the building gyms, in response to the pandemic.
“People are desperate to have them back,” he said.
Retail leasing remains strong, he reported, and ShopCore remains committed to offering services and other necessity retail, especially those that offer value. The pandemic and resulting economic strife have seen shoppers trade down to more affordable and necessity retailers, and Petherbridge says that is likely to continue. In addition, the company is sending out 150 video brochures of its redevelopment projects (One Colorado in Pasadena, California, Downtown Palm Beach Gardens in Palm Beach, Florida and Encino Courtyard in Encino, California) to prospective tenants.
Communication also has been critical during the pandemic. ShopCore is an affiliate of global real estate owner/manager Blackstone Group, and Petherbridge has been in contact with the company’s experts around the globe as they emerge from the pandemic shutdown.
“Social distancing, while very important now, won’t be here forever. This crisis will pass, and humans’ desire to be social will come back,” he said. “If there is some kind of silver lining in this, our sector has been enhanced. I do believe retail is always growing and adapting.”