With the rise of online shopping, the future of brick-and-mortar stores may appear bleak, but Hap Stein remains optimistic.
During a talk Tuesday to the World Affairs Council of Jacksonville, the CEO of shopping center developer Regency Centers Corp. responded to retailing concerns by quoting Mark Twain:
“The reports of my death are greatly exaggerated.”
Stein has spent more than 40 years with the Jacksonville-based company founded by his parents, and he’s seen a lot of ups and downs in retail.
“Change and intense competition have been disrupting retail forever,” he said. Competition from Amazon.com and other e-commerce businesses is just the “disruption du jour.”
Store closings make headlines, but Stein said U.S. retailers opened 4,000 more stores than they closed last year. Properties operated by publicly traded real estate investment trusts are about 95 percent leased and properties owned by Regency, which develops centers anchored mainly by supermarkets, are 96 percent leased, he said.
“Most of the healthy retailers are not only expanding but also have healthy bottom lines,” he said.
“I have a lot of conviction that physical stores will remain a critical component of successful retailing.”
Regency operates more than 400 shopping centers across the country, with many anchored by successful grocery chains such as Publix, Whole Foods and Trader Joe’s.
Besides grocery stores, restaurants are also a major component of Regency properties, accounting for about 30 percent of its space, he said. That’s part of the company’s food strategy.
“People gotta eat, and people go out to eat,” Stein said.
Stein briefly mentioned Winn-Dixie during his talk at The River Club Downtown. Winn-Dixie’s parent company, Jacksonville-based Southeastern Grocers LLC, is going through a Chapter 11 bankruptcy reorganization.
After the talk, Stein said Regency has four or five Winn-Dixie stores in its portfolio. He said the company will be in a better position when it emerges from bankruptcy but still faces tough competition.
“I think they’re still going to struggle,” he said.
While Regency develops properties nationally, one Jacksonville project Stein highlighted is the Brooklyn Station center on Riverside Avenue near Downtown.
The 49,766-square-foot center is anchored by Fresh Market and includes several restaurants.
“Brooklyn Station has done extremely well,” he said.
Stein thinks some Jacksonville neighborhoods would be good spots for smaller centers like that, but he said growth has to be “smart” and city leaders need to give more consideration to the design of some projects before granting approval.
“One of the negatives to Jacksonville is it’s almost too easy to develop,” he said.
Regency has been involved with one neighborhood mixed-use project, East San Marco, which has been delayed many times since it initially was proposed more than a decade ago.
“Rents in this market didn’t justify the cost of it,” he said.
While Regency is interested in mixed-use projects like that, the company remains cautious about them.
“It is easier said than done,” Stein said.