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KLNB’s Menick: Online retailers boosting brick and mortar

Marc Menick, president of KLNB, discusses the retail market in Maryland's major metro areas. (Photo courtesy of KLNB)

Marc Menick, president of KLNB, discusses the retail market in Maryland’s major metro areas. (Photo courtesy of KLNB)

(Click here to listen to the interview.)

Online retailers are finding growth opportunities in an unexpected place: the traditional brick-and-mortar retail store.

After years of dire predictions about the future of actual stores, Marc A. Menick, president of KLNB, said even online behemoths, such as Amazon, realize they need physical spaces to reach more customers.

Below is a condensed version of a telephone interview with Menick, who is based in Washington, that’s been edited for clarity.

Adam Bednar: So, let’s start broad. What are some of your general observations about how the retail (sector) is performing in the (Maryland) metro areas right now?

Mark Menick: Quite honestly, we’re feeling at KLNB… really good about where the market is in the Washington D.C., Baltimore area. We’re primarily known as a retail firm, but we’ve actually got a lot of brokers… that specialize, in office, industrial, and warehouse. And we’re seeing a nice boost in all those disciplines.

And a lot of it, counter to what the press is saying, that the doom and gloom of online has for bricks and mortar, we’re seeing that a lot of our successes are coming because of (online stores needing retail).

(Online shopping is) a disruptor in the market place that is causing a lot of shifts, and in a lot of ways those shifts, at a granular level, for us as a company, are good. That means people are moving around, and need space, and need real estate experts to fill the space.

But it’s also exciting, as a consumer, because you’re seeing retailers waking up, some that have been asleep at the wheel for a long time, and waking up and trying to figure out how to capture the dollar of the consumers… I think the pendulum has really swung.

I think people are realizing that even online retailing can’t stand alone as simply just online retailing, or its growth is capped without the presence of brick and mortar.

Amazon is proving that in everything that you’re reading about them, and their purchase of Whole Foods to get closer to the consumer, and their opening of their small format, sort of, bookstores.

They just opened one in Bethesda. (It’s) another way to get closer to their consumer, and allow their consumers to maybe bring products back, and get them to shop for more products.

I feel like the internet taking over retail now has been talked about, I feel like 15 years, and the concern seems to have shifted… from concern to opportunity.

AB: That’s really interesting, and I’m thinking about it as I’m sitting here in my Warby Parker glasses that I bought at the store.

MM: Right. Warby Parker is the perfect (example). There are more and more Warby Parkers of the world that have realized that they have a tremendous presence online. ‘But now what? How do we grow?’ And the way to grow is to get out there on the street.

AB: So is there any specific product sector that do well with this? Is it clothing retailers? Is it, like we said, eyeglass places? Anything like that?

MM: Apparel is really starting to figure it out, too.

There’s a brand called UNTUCKit. UNTUCKit was just an online presence, and now is opening stores, and Suit Supply is another one.

The apparel guys are figuring it out later than maybe some other categories, but they’re starting to now realize and figure it out.

We’ve seen that clients of ours, and just retailers in general, are forging alliances with Amazon, and having stores within store. I think Kohl’s, and Best Buy, and Sears, they’re all forging alliances with Amazon.

My general sense is everybody is waking up and figuring out this, they all ran out in the last 10 or 15 years and got a huge online presence because that’s what everybody’s talking about. “You gotta be online, you gotta be online, you gotta be online.”

And everybody’s done that, and they’ve done a good job of it. Now everybody trusts the internet and ready to buy on the internet. But I feel they’re all running back and recognizing the value of bricks and mortar stores to complement that online, to grow (their business).

AB: I just saw a report that some of these big box places are doing really well in some of the suburban D.C. markets, particularly in the College Park area of the world.

MM: Right. We’ve seen that there’s been closures. Circuit City. Linens ’n Things. hhgregg. We’ve seen this year after year, wave after wave, retailers that are liquidating and going out of business. But this area has done an exceptional job of absorbing those and we’ve had a large part filling those spaces with a lot of our clients, such as Sprouts (Farmers Market), and Total Wine, TJMaxx. TJMaxx is in tremendous growth mode.

A lot of these off-price retailers seem to be thriving in this market place. TJMaxx is a great example of them.

AB: I did a story recently about (Ellsworth Place) in Silver Spring that recently traded for $92 million, and (buyer GT Realty Corp.) had TJMaxx as an anchor tenant way up (in the announcement). So, they wanted it known that place had a TJMaxx in it.

MM: That asset you’re talking about in Silver Spring has a large entertainment component to it to. I think they took the entire top floor and made it into a Dave & Busters.

And I know that the Peterson Cos. in Gaithersburg is adding a Dave & Busters to their RIO Washingtonian development. So these entertainment uses are another category that are proving you can’t do everything online. The consumer wants an experience, and places like Dave & Busters have been doing a good job of filling a lot of these larger vacancies as well.

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