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WASHINGTON -- Retailers are slowly moving back to Main Street to diversify their storefronts, according to findings from the 2007 National Retail Federation (NRF) Retail Real Estate study conducted by AMR Research.
The study, which surveyed 43 retail real estate executives, represents the retail industry as a whole, not supermarkets specifically.
Retailers plan to have 11 percent of their stores in urban street-front locations by the end of the year, compared with eight percent last year. To compensate, companies have cut back slightly on their number of mall and strip mall locations (44 percent this year vs. 48 percent last year). The survey also found that retailers are continuing to move toward lifestyle centers, with nine percent of company stores in that format compared with eight percent last year.
“Urban storefronts are beginning to play an increasingly important role in retailers’ real estate strategies,” said Carleen Kohut, NRF c.f.o. and the manager of NRF’s Real Estate Executives Council, in a statement. “Throughout the country, traditional main streets are being revitalized to include an assortment of new retail shops, from department and clothing stores to coffee shops.”
When determining the best location for a store, four out of five retail real estate executives said that demographic information is the most important. Half of respondents cited other crucial factors, including evaluating competitive information (51 percent), traffic patterns (49 percent), and geographic factors like the existing and future population (49 percent).
Though the real estate industry remains extremely competitive, one-fourth of retailer respondents said they take more than six months to sign a contract once a site has been approved. This is due to the complexity of the business and their desire to do extreme due diligence, according to NRF. On average, retailers said they screen 10 potential sites for each one that is approved. About one-third of stores are owned, while the remainders (64 percent) are leased.
After a contract is signed, retailers said it takes an average of three to six months if the store is part of a remodel or new construction. A ground-up project often takes more than twice as long, with the majority of retailers acknowledging that those projects often take more than 12 months.
The 2007 NRF Retail Real Estate study will be released in its entirety at NRF’s Annual Convention , Jan. 13-16, 2008 in New York City.