Advocacy and evolution are key to success in any business, but especially the retail real estate market during a period of significant change.
“Malls and shopping centers are constantly evolving to meet the needs of their communities, and many of those communities are seeing a shift in demographics who are looking for more non-product-based offerings such as restaurants, gyms, grocery, and experiential spaces, such as art installations, golf, and dine-in movie theaters,” says Stephanie Cegielski, spokesperson for the International Council of Shopping Centers, headquartered in New York. Success depends on adapting to the needs of the specific market where located.
“We're seeing that people shop both brick-and-mortar and online, and that brands with omnichannel strategies see success. Consumers want convenience and to shop on their own terms,” Cegielski says. “Retailers stand to benefit by responding to these changes by creating a seamless shopping experience through both digital and physical, meeting shoppers when and where they are at any given time - whether that's in-store or online.
In a significant win for retail commercial real estate, sales tax equity now applies to all retailers, whether online or physical. “ICSC led the fight for legislation that would treat the collection of sales tax equally for both brick-and-mortar and online retailers,” Cegielski says.
In June 2018, the U.S. Supreme Court upheld South Dakota's law requiring online sales tax in the case of South Dakota v. Wayfair, which applies sales tax to online sales to people living in the state. “As a result of this ruling, all but five of the 45 states with a sales tax - either by legislation or regulation - specifically adopted an economic nexus threshold similar to that in South Dakota,” Cegielski says.
Other key areas of advocacy for the retail market include Americans with Disabilities Act lawsuit reform and infrastructure improvements.
“Drive-by lawsuits have become an issue in several states due to a loophole in the Americans with Disabilities Act. There is no requirement that notice of a violation be given to a property or store owner, which means that even the smallest infraction - a sign one inch too high - is subject to litigation,” Cegielski says. “The number of lawsuits at the state level increased 33 percent from 2017 to 2018 - double the increase of the previous year.” The simple addition of a notice requirement would close the loophole, she says, and instead restore the focus on advocating for the needs of the disabled community.
In infrastructure investment, “ICSC members are key drivers for road and utility upgrades in communities across the country, contributing $391 billion annually in property and sales taxes,” Cegielski says. “They work closely with municipalities to update water, electrical, and other infrastructure to better serve the needs of consumers.”
Commercial real estate practitioners can help advocate for the industry, she says, by helping to educate their state- and federal-elected officials on issues affecting the industry.