By Joshua Burd
Pop-up stores are in fact set to make a return this holiday season, but they’ll be joined by a growing number of pop-up warehouses.
Those are among the findings in a new report by CBRE that’s meant to forecast this year’s holiday trends in commercial real estate. The report also points to an expansion of mobile commerce and strength in discount retailing, as consumers continue to seek omnichannel access, value, variety and experiences.
“While online sales will continue to grow, we’re going to see an increased integration with bricks and mortar, making physical store locations — which many thought were in danger — an integral component of the ever-changing and dynamic omnichannel retail platform,” said CBRE Vice President Steven Winters, who is based in the firm’s East Brunswick office. “Retail success is driven largely by demographics, and New Jersey’s status as the most densely populated state ensures that retailers who successfully integrate their brick-and-mortar stores with online and mobile platforms will continue to flourish for the long term.”
According to CBRE, the surge of online sales during the holiday season can create instant, short-term demand for warehouse and distribution center space that they wouldn’t necessarily need during the rest of the year. Nor could they afford it, but the firm said a new pop-up warehouse model has entered the market and may provide the solution by matching owners of excess warehouse space with users that need that space on a temporary basis.
CBRE noted that the idea of subleasing extra space is not new, but services that can more easily match both sides of the transaction have emerged and offer greater transparency and fewer transaction costs to the process. Those services are only available in about 50 U.S. and United Kingdom markets, but CBRE said the early returns are promising.
The firm cited a study by Flexe, one of the early on-demand warehouse providers, which found that users that utilize on-demand flexible warehouse space to augment a single-peak seasonal inventory surge can improve warehouse utilization by almost 100 percent and cut overall seasonal warehouse and inventory costs in half.
In so-called multi-peak scenarios, in which inventory surges more than once per year, warehouse utilization improves by 40 percent and costs are cut by 20 percent to 30 percent, CBRE said.
Researchers with the firm predicted the growth in that area alongside the continued popularity of pop-up stores. The businesses, which use short-term retail leases, have “become a full-blown phenomenon this season” and are even favored by landlords for their flexibility and ability to experiment, CBRE said.
What’s more, shoppers appreciate the variety of a shifting roster of stores, the firm found, noting that several of the largest U.S. mall owners have designated space in their strongest properties for pop-ups.
The U.S Retail Holiday Trends 2017 report also pointed to continued growth of mobile commerce, or m-commerce. Citing research from eMarketer, which forecasts that more than a third of online sales this year will occur on phones and tablets, CBRE said it expects m-commerce tools to become more widespread among retailers for handling customer service, mobile marketing and facilitating sales.
All the while, researchers said they expect that discount and off-price retailers will gain additional market share this holiday season, spurring midmarket retailers to discount their prices to compete. Operators such as TJ Maxx, Burlington and ULTA Beauty gained favor during the Great Recession and have remained a reliable and sought-after tenant for landlords as other brick-and-mortar chains have faded.
“CBRE has identified these trends by examining public and proprietary data, querying our retail professionals and listening to our clients,” said Brandon Famous, CBRE senior managing director of retail advisory and transaction services and retail leader for the Americas. “We see these trends as natural steps for retailers striving to perfect their omnichannel operations for selling across all channels and to enhance consumers’ experiences in each.”