Boston Retail Is Way Busy

“Boston was one of the few major metros to see an increase in remote work from June 2022 to October 2023, with more than 46% of office employees working fully from home late last year, based on estimates from Oxford Economics,” Marcus & Millichap wrote in a 2024 investment forecast. But retailers are not waiting for Boston’s office workers to return. Recent store openings indicate a mixed strategy: While some retailers are moving to the suburbs, others remain optimistic about tourism growth in commercial neighborhoods, encouraged by positive indicators. According to a report from the Boston Planning & Development Agency — which since has become a part of the new city of Boston Planning Department — employment, consumer spending and tourism are all rebounding or exceeding pre-pandemic levels.

Where Shoppers Are Spending Again

Rising tourism is fueling the growth of Boston’s consumer spending, according to the report. International travel through Boston has soared beyond pre-pandemic levels, while domestic travel has rebounded fully.

Consumer spending in residential neighborhoods has surged post-pandemic. According to the report, 2023 consumer spending surpassed 2019 consumer spending in Jamaica Plain, Roxbury, Hyde Park, Mission Hill and West Roxbury. “Investors looking for retail assets in areas with high growth potential could focus on one of the 12 suburbs that recently ratified high-density zoning districts encompassing a total of 83,000 apartment units,” Marcus & Millichap wrote. In December, Braintree, Brookline, Cambridge, Chelsea, Everett, Malden, Medford, Milton, Newton, Quincy, Revere and Somerville all ratified high-density zoning districts.

Commercial districts Back Bay, Fenway, Downtown and Longwood, meanwhile, have yet to fully rebound. Foot traffic has grown steadily but has not achieved pre-pandemic levels, according to the Boston Planning & Development Agency report. The city’s $9 million SPACE Grant program to fill vacant storefronts with small businesses is generating activity, though, according to Mayor Michelle Wu, who said that as of March, the number of vacant storefronts in the Downtown neighborhood declined nearly 17% from March 2023 to March 2024. The Seaport is a notable exception, outperforming other commercial districts, according to the report. Increased convention activity may be driving up spending in the area almost to the point of a full recovery, it said.

Consumer spending growth is giving retail landlords leverage to raise rents on the best locations. Asking rent per square foot reached $24.32 in the Boston metropolitan statistical area in the first quarter, up from $24.02 in the fourth quarter of 2023 and $23.73 in the first quarter of 2023, Cushman & Wakefield reported. That’s higher than the national average asking rent of $23.98. And considering only 62,090 square feet of new retail space was under construction as of the first quarter and no new retail space was delivered during the first quarter, according to Cushman & Wakefield, retailers that want to grow have limited options.

Where Developers Are Active

What projects are opening this year? Samuels & Associates’ Lyrik Back Bay opens in phases starting this summer with an elevated public plaza that stretches across the Massachusetts Turnpike featuring 35,000 square feet of retail and restaurants. When complete in 2025, the complex will house 450,000 square feet of office and lab space and an upscale hotel.

In Allston, King Street Properties expects to complete tenant work on the mixed-use Allston Labworks by the end of the fourth quarter. It will include 20,000 square feet of ground-level retail, 530,000 square feet of lab space and 35 residential units.

The transit-oriented Allston Yards also will open in phases this year. This 10.6-acre project includes residential, office and retail and one acre of community space. New England Development is developing the project with Southside Investment Partners, residential developer Bozzuto and anchor Stop & Shop.

Since fall 2021, New England Development has been redeveloping the former CambridgeSide Galleria mall into CambridgeSide with six interconnected buildings totaling 2 million square feet and including green spaces, office, lab, residential, hotel uses and 400,000 square feet of retail. The project’s latest phase will open this fall with a 14-eatery food hall called CanalSide on the site of the mall’s former food court. Thousands of square feet of lab space have replaced the property’s former Macy’s and Sears.

The final phase of Capital Group Properties’ 300,000-square-foot Maynard Crossing mixed-use development will add 22,000 square feet for Tractor Supply Co., which will open in the fourth quarter.

And 25 retailers opened in June at WS Development’s The Street in Chestnut Hill thanks to the redevelopment of an existing building that once housed The Container Store and an AMC movie theater. The Container Store relocated to another part of the center and the AMC closed, making way for WS to redesign the three-level, 90,000-square-foot space, keeping some of its original features. New tenants include Alo Yoga, Arc’teryx, Marine Layer, Reformation, Roller Rabbit, Skin Laundry and Solidcore. A cafe and a florist will open soon. And in the fourth quarter, residential realty offices will join a venture capital firm and medical practice on the third floor.

Several developments that include retail space are in planning stages across the city, including a $500 million professional soccer stadium on the site of a former power plant in Everett and the redevelopment of five acres near Fenway Park into 2 million square feet of residential and commercial uses by WS Development, Fenway Sports Group and other partners.

Which Retailers Are Growing

In the first quarter, expanding retailers absorbed 92,084 square feet of space in the Boston MSA, according to Cushman & Wakefield. Vacancy improved from 4% at the end of the first quarter of 2023 to 3.5% at the same point in 2024, the firm reported. That’s significantly lower than the national average retail vacancy of 5.4%.

Boston remains a desirable location for big brands seeking to cement national presences. Google opened its fourth physical store in April, on Boston’s Newbury Street, joining locations in California and New York. And electric vehicle brand Rivian will open its first Boston area retail location at Lyrik Back Bay this summer.

Apparel and accessories brands have been signing leases, too. Uniqlo opened a store at South Shore Plaza in Braintree in May, and lingerie brand Savage X Fenty will open its first New England store at the center. Fast-fashion brand Mango opened at Natick Mall in April and plans two more stores in the region this year. In May, upscale apparel brand La Ligne opened its sixth store, in a 1,500-square-foot space on Newbury Street. At Copley Place, Spanish high-fashion label Loewe made its Boston debut with a 1,937 square-foot store in June. And Anthropologie opened at MarketStreet Lynnfield in late June. Direct-to-consumer luggage brand Monos plans to open a Boston store in the first quarter of 2025. Meanwhile, Legacy Place in Dedham will house apparel and home brand Garnet Hill’s first physical store. The 4,200-square-foot unit will open this winter.

Experiential tenants also are making a splash in Boston. The first F1 Arcade in the U.S. opened at the Seaport in April. The 15,500-square-foot space includes 69 racing simulators. Golf Lounge 18, featuring golf simulators and lounge atmosphere, opened at South Shore Plaza in May. Museum of Ice Cream will open at the Seaport this year with two floors of installations. And LOL Entertainment’s Museum of Illusions signed a lease for 9,100 square feet in the 62,000-square-foot Marketplace Center next to Faneuil Hall in Downtown. Dick’s House of Sport moved into the former Lord & Taylor at the base of Boston Properties’ Prudential Center in April, as well.

Some supermarkets are shopping for space in Boston, too. At Allston Yards, Ahold Delhaize opened a 52,000-square-foot Stop & Shop in June, relocating from a smaller space across the street. Trader Joe’s opened an 11,486-square-foot store at Copley Place in May. Wegmans, though, plans to shutter its two-level, 134,000-square-foot store at Natick Mall.

Bath & Body Works, Ann Taylor Factory Store, Vio Med Spa and Kohler Signature Store by Supply New England all have opened at New England Development’s University Station in Westwood or will do so this year. Pottery Barn Outlet, Offline by Aerie, Hollister, Gilly Hicks by Hollister and Shake Shack have come or will come this year to Simon’s Wrentham Village Premium Outlets. Other major retailers that signed leases or opened shop in the Boston area in the past year include Burlington, CVS, Design Within Reach, Dollar Tree, H&M, Harbor Freight, Panera, Planet Fitness, Puttshack, Raymour & Flanigan and RH, according to Associated Brokerage Group.

So where will everyone fit? Expanding retailers in need of larger spaces will find some rare opportunity now that Bob’s Stores is liquidating its stores. The retailer has at least four stores in Greater Boston and plans to close them by mid-July. Bob's Discount Furniture, an unrelated entity, is not closing but rather is growing. It has 177 stores across 24 states and plans to open 12 more this year.

What’s Selling

Boston retail investment sales volume reached $1.75 billion in 2023, according to ABG, but this year, transaction activity is on pace for less than $1 billion. Part of the decline is because the sales happening are smaller, less-expensive properties trading among local investors, rather than the larger deals of recent years. In the 12 months that ended March 1, 55% of retail properties sold in Boston were smaller than 5,000 square feet and more than two-thirds of retail properties sold were valued at less than $2 million, according to ABG. The firm’s analysis of 658 sales during that period found an average cap rate of 6.6%, an average price per square foot of $273 and an average vacancy at sale of 2.2%.

Supermarket-anchored centers remain popular with investors in Boston. In February, Crosspoint Acquisitions bought the 75,529-square-foot, Trader Joe’s-anchored Brookside Shops in Acton from Clarion Partners for $21 million. Marcus & Millichap Institutional Property Advisors advised both parties.

And in June, DLC acquired its first Boston property, paying $86 million in an off-market transaction for Plymouth’s Colony Place. Tenants at the 399,554-square-foot power center include Aldi, Best Buy and Dick’s Sporting Goods.

ICYMI: Saks, Country Club Plaza and Ikea

Big news happened around the long Fourth of July weekend. Here’s what you might have missed.

$7 Billion Real Estate Empire: Saks and Neiman Marcus Merger Creates Luxe Portfolio

The acquisition of Neiman Marcus Group by Saks Fifth Avenue parent HBC gives the company a trophy case of U.S. retail real estate assets in top-tier luxury shopping destination markets worth $7 billion.

Ian Putnam, currently president and CEO of HBC Properties and Investments, will manage those assets and become CEO of Saks Global Properties and Investments. He’ll report to HBC executive chair and CEO Richard Baker.

The company said that it does not plan to sell any stores and that both brands will continue to operate independently. HBC does have a history of monetizing real estate assets when the market timing is right. “Somewhere in here, there’s a real estate play — some form of monetization or synergy,” retail analyst Bruce Winder told the Toronto Star, “because HBC is a real estate company first and a retailer second.”

Green Street said eight malls have both a Saks Fifth Avenue and a Neiman Marcus store, according to The Wall Street Journal.

HBC Properties and Investments generates between $300 million and $500 million each year, partly by pruning its portfolio and by redeveloping space, Putnam told The Globe and Mail after HBC completed a series of real estate transactions in the U.S. and Canada worth $340 million in 2023.

New Owner Will Spend $100 Million Upgrading Historic Country Club Plaza

HP Village Associates added Country Club Plaza in Kansas City, Missouri, to its portfolio of high-end retail spaces. The company acquired the 1 million-square-foot property, which opened in 1923 and includes some office, for $175 million. The new owner plans to spend a further $100 million on renovations and recruitment of high-end tenants and local retailers and restaurateurs. The company acquired its namesake, Dallas’ upscale Highland Park Village — whose tenants include Chanel, Dior and Rolex — in 2009. It also owns a stake in Charlotte, North Carolina’s mixed-use Phillips Place — where retail tenants include Ralph Lauren, Peter Millar and J.McLaughlin — and, through affiliates, a downtown commercial property in Aspen, Colorado.

Ikea Tries Manhattan Again

Since 2019, Ikea has opened stores in major cities like Tokyo, Madrid, Paris and London to “bring Ikea closer to people in city centers,” said Ikea U.S. chief sustainability officer and CEO Javier Quiñones. Now, thanks to its parent firm’s stake in a new office tower, the furniture chain will have an outpost in the heart of Manhattan. Ingka Group said its Ingka Investments arm will hold a one-third stake in a 1 million-square-foot office tower at 570 Fifth Ave. being developed by Extell. The building is scheduled for tenant delivery in 2028. Ikea will own and occupy 80,000 square feet of retail space.

3 Org Updates: Related, SRS and a Law Firm Merger

Stephen Ross Will Focus on Florida

Billionaire real estate developer Stephen Ross is stepping down as chair of Related Cos.. He founded the firm in 1972. It owns about $60 billion worth of assets, including the $25 billion Hudson Yards in New York City. The 84-year-old will spend more time in Florida, where he owns both a majority stake in the Miami Dolphins and independent development firm Related Ross, which was formerly called Related Southeast. Related Ross has 125 employees and owns 3 million square feet of commercial space, a mixed-use complex and three luxury residential properties in West Palm Beach, Florida. As part of Related Cos.’ longstanding transition plan, Jeff Blau, who became CEO in 2012, will run the company with president Bruce Beal Jr., and director of international development and COO Kenneth Wong, according to The Wall Street Journal. Ross remains the single largest shareholder in Related Cos.

SRS Names Colburn President

SRS Real Estate Partners promoted Garrett Colburn to the newly created position of president. He also will serve on the company’s executive committee. Colburn currently serves as managing principal and co-market leader of SRS’s five California offices and will continue both roles in addition to his new responsibilities. He joined the company in 2012 and has served on the board of directors since 2016.

Northeast Legal Firms Merge

Former ICSC Chair David Hocker Has Died

Former ICSC chair David Hocker died July 2 at age 86. A pioneering developer and property manager, he led ICSC in 1989 and 1990, a recessionary period when retailers and landlords faced financial difficulties.

Hocker became an ICSC member in 1962 and developed his first shopping center — Wesleyan Park Plaza in his hometown of Owensboro, Kentucky — in 1964. David Hocker & Associates helped build and develop 40 shopping centers across the U.S., including 17 enclosed malls. Hocker also developed apartments, freestanding stores and restaurants and provided third-party management services for retail centers.

Hocker mentored smaller developers, enabling them to compete with larger players. “David Hocker’s commitment to ICSC over his lifetime as a retail real estate developer was all encompassing,” said former ICSC chair James Maurin, founder and past chair of Stirling. “He was my role model and a great friend. He understood that the trade association was critical to our success as private, regional developers.”

Hocker also was a strong proponent of continuing education. He earned ICSC’s Senior Certified Shopping Center Manager designation, was an ICSC trustee from 1984 to 1988 and served the organization in several roles, including State Director and Regional Vice President, before becoming chair.

Hocker never viewed fellow ICSC members as potential competitors but rather as potential collaborators, according to volunteers who worked with him. “David Hocker was a big man in all regards and a passionate supporter of ICSC and our great industry,” said Acadia Realty Trust board member and Freeman Spogli & Co. industry executive David Zoba, who served as an ICSC trustee from 2002 to 2007. “There are very few left of David’s vintage, but it was a group of true developers and entrepreneurs who cared deeply not just about their own business but also the well-being of the industry. A true friend to so many of us, he will be greatly missed.”