Retailers Respond to Consumers Changing Habits
The Metro Detroit retail market posted an overall vacancy rate of 6.0%. Asking rental rates in the fourth quarter were $13.17 per square foot and net absorption is positive with 553,111 square feet absorbed in the fourth quarter. The market improved in 2017, but not by drastic measures when compared to the fourth quarter 2016; vacancy was at 6.5% and asking rental rates were $12.61 per square foot.
Having recovered from the Great Recession, 64.7% of consumers report having more money to spend this year compared to this time last year. In 2017 and in the coming year, retailers will continue to reshape their business model in response to consumers’ changing buying habits, wants and needs. Entertainment, experience and variety are what consumers look for these days. Food, theater, entertainment, restaurants and retail experiences with ambiance and amenities are at the center of our focus which means the traditional model of selling will change. With the average consumer utilizing more than five channels for shopping, compared to four channels used in 2011, retailers will have to work harder to earn every dollar spent by consumers. Failure to adapt will put retailers on the wrong side of the “open for business” sign. Successful retail outlets will use stores to connect and inspire consumers, be engaged in social media activities to influence buyers, improve upon the online experience with easy to use website and mobile formats, and take advantage of digital magazine and catalog publications. Demand in Detroit and other downtown markets continue to drive redevelopment and new development across most sectors, it will be interesting to see who adopts the new mindset and finds success in this competitive landscape.