Maybe a coffee shop, perhaps a Chinese takeout, or even a dry cleaner. In places like Manhattan, it has long been the case that, invariably, there’s at least one street-level retail offering at an apartment building. Among residents and investors, multifamily buildings with that something extra in the form of onsite retail are highly coveted. For those calling these properties home, convenience and community are part of the allure. Who doesn’t want to be able to grab a couple of necessities from the market downstairs and chat up a neighbor in the process?
But now mixed-use properties, larger in size and more diverse in amenities than those seen at the address of, say, a walk-up in SoHo, are popping up across the country. The live-work-play concept’s rising popularity, particularly in urban areas, stems from the growing desire among workers and multifamily residents alike for premier accommodations in the middle of it all. Developers behind these new or refashioned destinations have to create a “play” segment that appeals not only to office dwellers and residential tenants but to the surrounding community. In essence, retail is the bait for achieving those occupancy levels that translate into a property’s success. You really do have to please everybody, and determining the most effective retail offerings for a mixed-use office and residential property has become a science that centers on technology.
Mixed-use building owners and managers have to discern the day-to-day wants and needs of the potential office and residential occupants if they want to use the property’s retail segment as part of the lease-up courtship. A bevy of technologies provide insight into a project’s target audience, and mobility data is just one of them. Mobility data provides key insight into the patterns of the people who will be the property’s retail customers by analyzing foot traffic. Mobile pinging data supplies the details of where pedestrians go and where they came from, allowing the user to build a profile of area consumers’ habits. If a notable percentage of people in the area are stopping by the gym before work in the morning, you’re going to need a fitness center as one of your retail occupants. If a sizable segment of the gym crowd prefers facilities with yoga studios, then line up a fitness center that offers yoga classes and then some as one of your retail tenants. Mobility data can be particularly useful when creating the retail roster that a mixed-use developer will use to help lure pre-leases for the project’s office and residential segments.
Lifestyle segmentation analytics, or psychographics, is another tech option that furnishes enhanced data on individuals in a particular market, again giving landlords a leg-up on how to better serve their demographic. Psychographics delve into the attitudes, interests, daily habits, hobbies and purchasing patterns of individuals in a designated area. The technique is especially handy for landlords and retailers at mixed-use destinations, as both seek successful placement at a property and a vast majority of that success centers not on the residents or the office tenants, but on the community. The consumers outside the mixed-use property are a retailer’s bread and butter.
“The ability to attract groups from under-retailed centers that might be close by, other office towers, local residents, event centers–those are always incredibly beneficial to retail tenants, especially restaurants that are in central business districts. They really are what make the difference for retailers to be a viable business,” Lee Jackson, Senior Vice President, Digital Solutions, with JLL, said.
While retailers may serve as catnip for the residential and office tenants of a mixed-use asset, they can’t rely on the property’s occupants alone to sustain their existence. An eatery that is all the rage among the tenants but proves unpalatable to the neighborhood at large is destined to fail–and there goes one of the selling points in the office and residential leasing process.
You have a brand-new office and residential property in a desirable location and retailers from every corner of the sector will want to be a part of it. With workers coming and going and residents afoot at all times, mixed-use properties provide the onsite retail tenants with a built-in customer base. However, landlords have to determine if the retailer that is so eager to join the lineup is an appropriate fit for the property’s retail mix. In the pursuit of finding the proper retail mix, landlords also avail themselves of lead and lease management platforms. Like the crème-de-la-crème of dating apps, lead and lease management platforms provide a wealth of detail on the match seekers: the landlord seeking the right retailer and the prospective retailer seeking the best location.
The lead and lease management technology is akin to a property-specific marketplace for the landlord and prospective tenant. A lead and lease management platform’s inventory management capabilities cull a building’s existing vacancies (where they are located at the property or where they sit in relation to other tenancies for example) and provide extensive details about the available spaces, from square footage information to videos of the suite.
“You’re providing a better prospect ecosystem which is leading to more options to look at and compare and contrast on how you can use and utilize the space,” explained Jackson. “[Landlords] are using this to qualify leads, to make a better prospect experience and it’s really allowing them to better place the right tenants at their properties.”
The platform allows the landlord to show off, and it allows the hopeful retailer to do the same. Retailers can use the system to provide a range of information, from a website address to a business profile pamphlet, thereby selling themselves to the landlord in a highly efficient and comprehensive method. Those browsing for retail space can use the platform to express interest, make inquiries and even submit offers for the space.
For the developer of a new mixed-use project, getting a robust retail lineup in place to entice prospective office and residential tenants is a key method of landing pre-lease agreements. However, there’s life after lease-up. Once a project reaches completion, or if a landlord of an older mixed-use property simply needs to find a more effective retail mix, tenant communication platforms come in handy. Tenant communication platforms allow for a multitude of digital interactions between property management and tenants and, in terms of communication between management and the office and residential tenants, it can prove vital in the creation of a tailored retail roster.
“You can survey residents and office occupants to get that insight and information directly from the users of the space,” Jackson noted. “You can gauge your community so you can make it a two-way opportunity for communication that the landlord hasn’t always had.”
And keeping in mind that the retailers at mixed-use properties are tenants too, tenant communication technology also allows retailers to highlight their value proposition by incorporating their products and services into an ecosystem that is directly connected to the office and residential tenants.
While mixed-use landlords have a bevy of tech tools at their disposal to craft a retail component that caters to the very specific needs and wants of office tenants, residents and locals, there are no guarantees. Technology doesn’t act on its own, the plethora of information that these platforms offer is of no use if it’s not incorporated into an actionable plan.
The deployment of technology for tenanting retail is nothing more than a great idea without proper implementation and widespread adoption. Achieving the most successful retail combination at a mixed-use property is dependent on the participation not just of the landlord and its property management contingent, but the residents and the office tenants as well.
“The adoption rate is often the metric that is seen as success or failure, and implementation is always the biggest challenge,” Jackson said. “I think when groups struggle with getting these tools deployed, it can fail, for sure.”
At mixed-use residential and office properties, the residents want retail offerings that they can come home to and enjoy or utilize to make their lives easier. Office dwellers seek retail accommodations that not only make the workplace a desirable place to be but also help maintain that life balance by allowing them to check off obligations on their personal “to-do” list while at the job. In the end, there is no perfect retail element of a mixed-use property, but a profitable retail component can help make their locations both more desirable to renters and more valuable to buyers.