Joseph Italiaander / May 26, 2021
Originally featured in our 2021 Greater Portland Market Outlook.
2020 has been an unprecedented year in every way, shape, and form. In just nine months, the COVID-19 pandemic has structurally impacted the world in ways that could not have been imagined a year ago, and commercial real estate is no exception to shifting trends.
The retail sector has been the subject of widespread concern, and there are some questions as to what this asset class might look like post-vaccine. Temporary adjustments and trends that evolved as a result of the pandemic could very well end up being permanent tactics for sheer survival.
In my observation, no trend has been more important than the increased utilization and new additions of drive-thru lanes. What was once a simple component for your run-of-the-mill fast-food establishment has now become a necessity for some of the country’s most notable brands, including: Chipotle, Starbucks and Walgreens.
Back in 2019, Chipotle announced the opening of its 100th ChipotLane, a drive-thru concept launched in 2018. It allows Chipotle’s customers to get their food via online order/pickup without having to leave the comfort of their vehicle. Fast-forward to present day: Chipotle is now experimenting with the Chipotle Digital Kitchen in select markets. This concept foregoes the option of customer dining and only features the Chipotlane and in-store pickup via online orders.
The same goes for Starbucks. I frequent the free-standing drive-thru location on Forest Avenue in Portland, and while they remain open for walk-in customers, it is simply a ghost town inside. As a result, the drive-thru is almost always at capacity (or over capacity), often with cars overflowing onto the street. On the flip side, Starbucks’ Exchange Street location in downtown Portland, which doesn’t have drive-thru access, is a great place to get a quick coffee or a bite to eat and is rarely subject to longer wait times. Going forward, Starbucks is looking for ways to add drive-thrus to existing stores, and will only seek new locations that meet this criteria.
Chipotle and Starbucks are just two examples of businesses that have come to rely on their drive-thru lanes. But they are not the only ones who can benefit from providing ease of access to customers. Banks and financial institutions are taking things a step further, as they are finding one drive-thru lane is not enough. The new prototype for banks like Camden National Bank will feature at least two teller lanes, plus an ATM drive-thru.
Best Buy is another retailer that has shown signs of strength and innovation throughout the pandemic. They have been leaders among the big box stores in the ‘curbside pickup’ category—customers place their orders online and they’re ready for pickup minutes later. You can now find dozens of Best Buy employees filling orders and running products to customers waiting in cars at their pickup lanes.
What started as a change out of necessity, I predict will become a long-term staple of retail based on convenience. Similar to the rise of e-commerce, consumers want to buy their goods in a manner that is most convenient for them, and for many goods that means not leaving their car.
If this trend is any indication of the future of retail, then I believe we will begin to see increased demand and higher pricing for shopping center outparcels and pad sites, where developers can have the flexibility of building to suit the changing needs of a variety of businesses—bank/financial institutions, fast-food (and other) restaurants, and pharmacies such as Walgreens and CVS. No doubt this trend and the adjustments necessary will require substantial investment, above and beyond the typical retail build. However, I believe that the need to provide drive-thru service and other post-pandemic amenities will be crucial to not only thrive but to simply survive.
Contact Joe today:
Joe Italiaander – Associate Broker