The world of physical retail is undergoing intense change. Trends like experiential retail and sustainability are taking hold, forcing retailers, developers, mall operators and owners to adapt quickly.

The impacts of these trends were the main subject of discussion at CenterBuild 2019. Held late last year in Phoenix, CenterBuild is a premier summit of leading professionals who are involved in planning, designing, developing and constructing storefronts, commercial spaces and shopping centers.

Milrose's own Alfonso Cava, Regional Director of Sales, and Jaclyn DiRenzo, Senior Regional Sales Manager, attended and led their own roundtable sessions. Here's what they talked about and learned at CenterBuild 2019.

Landlords: The real drivers behind sustainability?

Sustainability is a central theme of the 21st century, and while other industries have made significant progress toward environmental and social goals, retail has been among the latecomers.

Hopefully that's all changing as more retailers embrace sustainability to win over conscious consumers and build their brands. However, as Jaclyn explains, there are many drivers and factors that play a role in bringing sustainability to retail spaces. These include developers, designers, city planners, landlords and the retail end-users, as well as their respective green visions and actions.

This all came up during her roundtable: "Setting the precedent for a more sustainable future in retail." Some of the key moments included:

• Discussing the Massachusetts Net Zero Code, a proposed addition to the state's stretch energy code that would require new buildings to generate as much energy as they consume. Also, Boston's mayor is planning executive action to require such status from all new city-owned buildings.
• Hearing from an attendee who works at a Boston architectural firm that is proactively using more eco-friendly structural materials in the design process.
• Listening to landlords explain the steps they've taken to make buildings more green and achieve compliance with environmental standards, like installing LED lighting, wastewater management systems and green roofs.
• Examining the role of technology, like smart building controls, to track and limit carbon footprint or reduce energy use.

Sustainability is still a growing concept, and surprisingly some of the pushback has come from retailers themselves. Being the end users, retailers ultimately want the most cost-effective point of entry. And since sustainability measures can be costly, retailers' financial and brand goals might conflict. That said, some retailers leading the way in sustainable design include Patagonia, Ikea, and Stella McCartney, and others are starting to look at the entire supply chain and embrace more of the circular economy focus; Nordstrom Local, Patagonia and The North Face have all incorporated product end-of-life options within their retail stores.

Other challenges to driving sustainability in retail included:

• Lack of familiarity with sustainability and related technologies.
• Heavier upfront investment costs for systems.
• Changing local laws and regulations.

That said, Jaclyn also mentioned that most in attendance agreed there's a massive opportunity for sustainability done right. Millennial and Gen Z consumers are increasingly using sustainability as a spending criterion. However, it's going to take a combined effort by developers, designers, landlords and retailers to make ESG work in the industry.

Experiential retail booming, but challenges exist

Just like with RECon 2019, experiential retail dominated the discussion at CenterBuild. It was also the subject of Al's roundtable: "Reconciling Multifunctional Spaces — How to deal with the advent of 'Social Halls.'"

Experiential retail and social halls blend commercial space with other features and uses. According to Al, fundamentally it's a way for businesses to engage consumers who are more focused on the experience than the transaction. Or, it can be a means for incubating entrepreneurship, innovation and networking.

In real life, experiential retail may look like an art supply store having an espresso bar or a studio dedicated to painting lessons. Consumers have a chance to touch or test products, as well as connect with the brand or participate in the community. Social halls might take the form of a makerspace that offers coworking areas, technological resources, educational programs and manufacturing equipment.

Some mixed-use developments combine all such elements, giving consumers and workers a singular place to shop, play, connect, build, learn, and eat and drink. As more retailers and employers introduce physical experiential elements, city planners are also taking notice of how such efforts can spur regional economic growth and job creation.

However, Al noted one of the main challenges to experiential is that municipal building codes and zoning regulations haven't kept pace. While some localities — such as Stamford, Connecticut — have addressed the advent of social halls, the nature of multifunctional use can cause problems elsewhere. Consider the steps needed to install cold-food storage and light manufacturing equipment in a retail space or shopping center that previously needed only branded signage, shelving and basic infrastructure. The permitting process can be complicated, and developers must further comply with health codes for food preparation and OSHA safety standards for workshop hazards.

There are four main categories of challenges that attendees and Al discussed:

• Leasing: Retailers are focusing on creating exclusive experiences, meaning they require less space. This can impact how they meet square foot requirements for zoning, as well as owners (who have more space to lease).
• Entitlement: Entering a city with no specific zoning resolutions for multifunctional use can be a major obstacle, as the development of such amendments can be time-consuming.
• Building code/fire code: Reconciling the occupancy classification of a multifunctional space can be difficult.
• Construction: Diverse features require diverse permits and a string of red tape that can hamper construction.

Despite these challenges, Al said the conversation was positive and focused on solutions for the future of experiential retail.

Looking ahead to retail's future

Al and Jaclyn greatly appreciated their CenterBuild audiences for showing up and engaging on such important topics.

Milrose looks forward to reconnecting on these topics at ICSC RECon in May. And as retail evolves, the need for a trusted advisor to guide your team through code, zoning and permitting challenges grows.

Upcoming retail project? Milrose can help you avoid delays and get into your space and operating as soon as possible.