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Retail Real Estate

Walmart to Double Small-Format Expansion

Walmart recently announced it will double the number of small-format stores it plans to open in the U.S. this  year. The company now plans to open about 300 such locations, up from the 150 it announced last October. It will increase its capital spending by about $600 million to fund the additional expansion.

Walmart Express in Chicago (source: Better Cities)

Walmart’s small-format concepts include Neighborhood Markets and Walmart Express. At around 40,000 sf. and 15,000 sf respectively, each is substantially smaller than a typical Supercenter which are about 185,000 sf. Walmart CEO Bill  Simon said the decision to accelerate the  number of smaller stores will fuel growth as the company enters “the next generation of  retail.”

Evolution in Walmart Store Size (source: ULI)

Evolution in Walmart Store Size (source: ULI)

Target also recently announced plans for a smaller format concept store in Minneapolis and has tested urban format stores in several cities, but thus far has not expanded the concepts as aggressively as its competitor. Both companies are increasingly looking to urban locations for growth.

Walmart’s foray into smaller, urban format locations is in some cases Continue Reading

Real Estate Trends, Retail Real Estate, Twin Cities Real Estate

Target to Test Small Format “Express” Store Concept

A New York Times article yesterday broke the news that Target has signed a lease for its smallest store ever. The 20,000 sf retail space is in an under-construction mixed-use development in the Dinkytown neighboorhood of Minneapolis. This summer, Target will roll out its first “Target Express” store at the site. At about a tenth the size of a typical Super Target, the Target Express will be the first of kind, and will feature a mix of grocery, pharmacy, and basic home goods.

TargetExpress

 

The experiment with smaller stores is part of an effort by Target to have a bigger presence in urban areas. According to John Griffith, Target’s vice president of property development, Target wants to remain convenient as more people decide to live in cities rather than suburbs. Mr. Griffith pointed out that many shoppers “grew up with a Target experience. Now, they show up at their cool little bungalow they’re redoing, they’re close to downtown, and yet Target is a little bit of an effort to get to.”

The location was chosen in part to capture on the surround University of Minnesota student market. However, Target also wanted something close to theird downtown Minneapolis headquarters, which will allow the company to easily monitor and experiment with the new concept prior to rolling out additional locations.

Target is somewhat late to the game in introducing a smaller urban format store concept. Major competitor Wal-Mart opened is first small-format “Wal-Mart Express” in 2011. It has since opened a handful of smaller-format stores that experiment with a variety of sizes, ranging from 40,000 sf “neighborhood markets” to a 3,700 sf location near the University of Missouri. Until now, Target’s smallest format has been CityTarget, stores that range from about 80,000 to 125,000 square feet.

Real Estate Trends, Residential Real Estate Index, Urban Planning

America in 2013: ULI Releases Survey of Views on Housing, Transportation, and Community

A new report from the Urban Land Institute highlights the influence that growing demographic groups in the U.S. (in particular Millenials) will have on reshaping urban growth patterns. The America in 2013 report found that housing, transportation, and community preferences among growing demographic groups will likely spur more development of compact, mixed-use communities with good transit service. The report is based on a nationwide survey of 1,200 adults.

On the whole, the survey suggests that demand will continue to rise for infill residential development that is less car-dependent, while demand could wane for isolated development in outlying suburbs. The survey found that among all respondents, 61 percent said they would prefer a smaller home with a shorter commute over a larger home with a longer commute. Of the three major generations in the report, Millenials (or Gen Y) – the largest generation and the most  diverse – is the generation that is likely to have the most profound impact on land use. Numbering 80 million and generally not yet fully immersed in the housing and jobs markets, Millenials have yet to fully make their mark on the urban landscape through their preferences for things such as mixed-use development, proximity to shopping and dining, and walkability.

A majority of American who plan to move in the next five years want proximity to shopping, work, and activities (Source: ULI)

A majority of American who plan to move in the next five years want proximity to shopping, work, and activities (Source: ULI)

Sixty-three percent of Millenials said they plan to move in the next five years, along with 63 percent of African Americans, 54 percent of Latinos, and 56 percent of those currently living in a large city. The survey found that these groups prefer good transit, short commutes, diversity in housing choices, and mixed-use communities. According to ULI, these different demographic cohorts are all growing in number, and together are creating a significant market shift toward compact, mixed-use development that is different than the types of land uses that were built to meet the demands of previous generations.

Other key survey findings noted by ULI:

  • The appeal of homeownership remains strong: Seventy-one percent of all respondents said buying a home is a good investment, despite the recent housing crisis and associated decline in home values.
  • Half of those with no access to buses and trains were dissatisfied by this situation.  Fifty-two percent of the population said that convenient public transportation was important.
  • Safety and high-quality schools are the most sought-after community attributes: Ninety-two percent of respondents ranked neighborhood safety as the most important attribute; good schools ranked as the second highest at 79 percent.
  • Having space and proximity are equally important: 72 percent of the survey participants said having space between neighbors is a priority; yet (somewhat contradictorily) 71 percent placed a high value on being close to employment , schools, and healthcare facilities.

Check out the full report here.