THE LAB

Retail 2021 x Let’s Go!

The Boston Urban Partners Team | Jan 5, 2021

Bigs thanks to WBUR’s Adrian Ma and the team at “Morning Edition,” and Drew Karedes and Boston 25 News for featuring us in your recent coverage of Boston’s commercial real estate market. The shops, restaurants and other amenities that line our streets are a critical piece of urban life, and we appreciate the opportunity to talk about the serious ramifications of COVID-19 on our community.

Despite the great vaccination news, the troubles are not over for area retailers and restaurants. We’re hearing that sales volumes from holiday shopping were down as much as 70% year-over-year, and restaurateurs faced a December without lucrative holiday events. As one prominent operator told us about the upcoming winter, “we’ll make it, but it’s by the hair of our chinny chin chins.” And yet, in spite of the bleak statistics, BosUrban is hopeful for 2021. Here’s where members of our team see bright spots ahead:

Ann V. Ehrhart, Partner

I see the lessons that COVID has taught us positively impacting our industry in 2 ways. 1. This past cycle showed that the days of “if you build it, they will come,” are over for retail. Instances of overbuilding and under-planning retail were contributing to over saturation, rising vacancy rates, and skyrocketing deal costs. The pandemic accelerated a correction that was already in motion. As we come out of this downturn, I look forward to working with our developer clients to rightsize retail GLA, and program street level experiences that most accurately fulfill the surrounding neighborhoods’ needs and wants. 2. We facilitated countless COVID relief conversations last year. One of the few high points of these conversations came in the form of transparency; each side gained a much fuller understanding of the other’s business model. By carrying this level of transparency into the “new normal,” we will see much greater sustainability in-dealmaking, meaning more tenants making it to the end of their lease term (and renewing); a decrease in turnover, and therefore a decrease in unexpected transaction costs; and more viable retail districts.

Deniz Ferendeci, Partner, Boston Urban Places

We are all glad to have 2020 in our rearview mirrors! I keep thinking that if someone had come up to me this time last year, as I was rushing around the Back Bay, and rattled off all that would happen in 2020, I would have shaken my head, wished them luck, and went about my business. But here we are, and the next couple of years in retail will be interesting to follow. We as a society always adapt. I think about how ADA, and security changes due to 9/11 have become the norm in our designs over the last 20 years. Two decades from now, what design elements will we be able to trace back to 2020 and the pandemic? The trend that I most want to see stick around is the focus on the outdoor experience for retailers and restaurateurs. We saw code adapt quickly this past year to allow for more activities to come outside. The improvement to the pedestrian realm has been amazing, and I look forward to seeing how many of the temporary, short-term solutions get re-worked into permanent features of the built environment.

Patrick Conly, Director of Leasing, Boston Urban Partners

2020 was a grim year for retail, and don’t believe anybody who tells you otherwise. While there are many operators still fighting to stay afloat, we’ve been fortunate to have a surprising number of groups actively seeking space. With site selection, lease negotiations, permitting & design, and construction, these groups reasonably expect to open in roughly 12-18 months. Both retail and restauranteurs alike are betting on securing space in today’s softer market while planning openings in a post-COVID world. It’s been exciting to see things like: fresh, new brands who were previously priced out being able to enter the market; and ownership groups rethinking how street level space gets used in innovative ways. The creativity we are seeing now will help lay the foundation for a strong recovery.

Sean Griffing, Director of Hospitality, Boston Urban Partners

The COVID-19 pandemic dealt a fatal blow to many businesses this year, and independently run restaurants were hit particularly hard. Many say that the market was headed this way pre pandemic, and COVID-19 just accelerated the inevitable. Fortunately for restaurant operators, what has come out of all of this, is a greater understanding of their value in the community. As a result, we’ve seen the way occupancy agreements for restaurants are structured change significantly. I see this new structure leading to something of a “Restaurant Renaissance,” where restaurateurs have greater opportunity to thrive, and mixed-use landlords maximize their chances to have high quality, sustainable activation at the front door of their buildings.