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Real Estate - Commercial

Service, Niche Retailers On Rise

By Cece Nunn, posted May 19, 2017
Lori North works with a client at her Paradigm Hair Studio space in Sola Salon, which is expanding to Mayfaire Town Center. (Photo by Chris Brehmer)
As local commercial broker Jack Kilbourne puts it, “It’s hard to get your dog groomed online.”

The comment is indicative of a retail trend some brokers expect will continue as a result of the ongoing prevalence of e-commerce and the pending demise of older retailers like Kmart.

New retail development on the way to the Cape Fear region is increasingly being leased by service and niche retailers as others find ways to adapt.

In Kilbourne’s case, a new shopping center he’s working on in Leland, Westgate Marketplace, features a PetSense, a pet food store that offers pet grooming and products not readily available in Wal-Mart and national chain grocery stores.

PetSense, along with Cricket Wireless, Miyabi Junior Express Japanese hibachi restaurant, Complete Coastal Dentistry, Charlie Graingers hot dog, brisket and barbecue restaurant, and Ganey, Byrd & Dunn (GBD) Insurance Group, were the first tenants to be announced for the 31,600-squarefoot Westgate Marketplace, which was more than 50 percent leased before a groundbreaking ceremony in April.

“I think all of our tenants so far that we’ve put in there are going to be somewhat resistant to the pressures of online commerce,” said Kilbourne, a broker with Maus, Warwick, Matthews & Company who is in charge of leasing for Westgate Marketplace.

Recent tenants announced for new space in Mayfaire Town Center, where national electronics and furniture retailer hhgregg was holding a going-out-of-business sale this spring, include Sola Salon Studios and Hand & Stone Massage and Facial Spa.

Andy Johnson, owner of the Hand & Stone Massage and Facial Spa franchise coming to Mayfaire Town Center, said leasing 2,500 square feet of the center’s new space made sense because of the condition of the Wilmington market and the ongoing demand for the service.

“It’s a growing business and Wilmington’s a great market that hasn’t been tapped yet, so I was real excited to be able to get there and introduce the brand,” Johnson said.

The 5,600-square-foot Sola Salon Studios at Hanover Center opened in 2014 and includes 28 studios that hair stylists, nail technicians and aestheticians lease for their businesses. The Mayfaire location will be 6,000 square feet with 30 studios and 34 chairs, Kutrow said.

“We plan to open at the end of June, and some people are going to move from Hanover to over there. I’ve got some people already signed up to go to Mayfaire,” Kutrow said in March. “I always have interest. I get calls pretty much every day” from people interested in opening their salon in Sola.

In general, retail is not what it used to be, said Garry Silivanch, broker in charge at Wilmington-based Eastern Carolinas Commercial Real Estate

“Omni-channel retail” is one of the new buzz phrases in the retail sector, Silivanch said. Though the meaning and spelling can vary a bit depending on who you ask, “omni- channel retail” is generally defined as a retailer that successfully takes advantage of multiple channels, including online shopping.

“There are developers out there running around looking at big vacant industrial buildings, old malls and turning them into omni-marketing channels depending on what cities they’re in,” Silivanch said.

A perfect example of omni-channel, Silivanch said in a recent email, is a lease ECCRE is currently working on for a retailer that specializes in greeting cards. The retailer has an online component that offers embroidering on business gifts, including leather briefcases, portfolio holders and other items.

“They also have a laser-etching service that burns into different types of wood, fabrics, pens etc. … This unique service now accounts for 35 percent of their sales so they are expanding, but again this is service-related. Retailers are thinking out of the box and inventing new ideas to draw sales,” Silivanch said.

As that is happening, restaurants, chiropractors, eye doctors, dentists, salons and myriad other businesses are some of the tenants du jour in new shopping centers.

“You need the service type stuff you can’t do online,” Silivanch said.

But that doesn’t mean, in ECCRE partner Nicholas Silivanch’s view, that new retailers, who are expanding to new markets rather than being part of the spate of store closings some older companies are experiencing, aren’t shopping for space.

ECCRE has been working on a project off Market Street where a 63,000-square-foot Academy Sports + Outdoors, a chain new to Wilmington, is under construction and will sit next to a 20,000-square-foot building for additional retail.

“You’re always going to have a new retailer come and replace the previous retailer,” Nicholas Silivanch said, “And you’re going to get concepts that are finally going to realize they no longer need 200,000 or 100,000 square feet.”
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