Shopping Centers And Strip Malls Across America Have Become Quite Predictable

The Lempert Report
January 30, 2018

The question is whether a grocery store can save them from extinction.

National Real Estate Investor spoke with Joseph McKeska, president and co-founder of Chicago-based Elkhorn Real Estate Partners, a division of New York based A&G Realty Partners which provides advisory and investment services to grocery-anchored landlords. He told them that the uncertainty of e-commerce has started to sink in for investors in grocery-anchored shopping centers. “I think there’s certainly more unease in the marketplace today than there was two or three years ago, as investors have begun to realize there’s going to be more disruption in grocery retail than people realized.”   

They write that McKeska says while the acquisition of Whole Foods by Amazon has some wondering whether grocery delivery or click-and-collect services will become the norm, there are some categories within the sector that will likely remain immune to such influence. “If you’re talking about fresh foods, fresh prepared foods in particular, you’re going to see a much smaller impact,” he notes. 

The real estate investors they spoke with almost unanimously agree that e-commerce competition will not eat up significant market share in the grocery sector. Instead, they believe the focus has been on the rise of specialty and discount grocers, which has led to less store growth among traditional grocers. 

McKeska notes that disruption is happening through different channels, including the expansion of home meal kit solutions, as well as specialty retailers.  

What stunning to read however is that none of these pundits actually talked about the shopper, or the shopping experience, and that is what we believe is the issue and problem for shopping centers. Eataly and others have proven that you can create a formidable food experience and people will come.