‘Experiential Retail’ Increasingly Serves as Hot Topic for Real Estate Companies

Article originally posted on CoStar on January 9, 2019

Mentions of Trend Rapidly Rise in Industry Documents

LEFT TO RIGHT: Document Type illustrates the types of documents in the real estate sector that referenced the term 'experiential retail' from Jan. 2, 2017, to Jan. 2, 2019. Sector chart shows the use of the term for the real estate subsector versus others. Chart 3 (Region) shows where the use of 'experiential retail' is most prevalent. Data provided by Sentieo, a financial research platform.

LEFT TO RIGHT: Document Type illustrates the types of documents in the real estate sector that referenced the term ‘experiential retail’ from Jan. 2, 2017, to Jan. 2, 2019. Sector chart shows the use of the term for the real estate subsector versus others. Chart 3 (Region) shows where the use of ‘experiential retail’ is most prevalent. Data provided by Sentieo, a financial research platform.

Even in this new year, “experiential” is likely to remain the buzzword for the retail industry. And the hot topic has sparked exponential interest in the real estate world, as well.

Experiential retail is the term for activities — such as dining, exercise, theater, and services such as massages and hair styling — that can’t be done online, so they draw a consumer to a mall or shopping center.

Sentieo , a San Francisco-based financial research firm, tracked and analyzed the use of the term “experiential retail” in documents such as securities filings, press releases, presentations and transcripts for public companies globally. And the references have soared.

The number of documents mentioning “experiential retail” for all public companies from 2016 to 2018 has increased by almost three times, jumping from 187 to 549, according to Sentieo’s data. And the use of the term has risen at an even greater rate for real estate firms, about four times, from 66 to 292, during that same period, Sentieo found.

“Directionally, it’s a pretty big jump in documents,” said Nick Mazing, Sentieo’s director of research.

Real estate firms accounted for about 47 percent of the documents that talked about experimental retail in 2018.

The commercial real estate industry’s interest in experiential retail isn’t likely to abate anytime soon, as brick-and-mortar continues to compete with ever-growing online sales, according to Mazing.

“We do not have enough data to see what is happening in 2019 so far, though we anticipate that interest in experiential retail will continue to increase in 2019 especially as malls and other retail properties continue to reinvent themselves in the new era of growing online share and large-scale store chain closures,” he said.

Mazing provided several examples of big announcements last year regarding experiential retail. He cited Simon Property Group’s press release last May when the nation’s largest shopping mall operator said it was investing $4 billion to update and add lifestyle elements to a number of its properties, including Phipps Plaza in the Buckhead section of Atlanta as well as the King of Prussia mall in Pennsylvania.

“Landlords have to carefully manage their portfolios to make sure that there’s enough traffic [in stores], and the way to get traffic now is by offering things that are not available online, whether it’s Ulta with hair salons on site, whether it’s movie theaters, whether it’s dining,” he said. “This is really reflected in who talks about experiential retail and how much it really has increased, because that’s where the industry is moving towards. That’s the broad overview of what seems to be happening.”

Simon Property Group was one of the North American companies in the real estate sector that had the most documents using the term experiential retail, according to Sentieo. Others included Howard Hughes Corp., RioCan Real Estate Investment Trust and Pennsylvania Real Estate Investment Trust.

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