Hospitality: Between remodeled hotels and ultra-luxury projects

1# Despite economic challenges, the sector stays active with a focus on ultra-luxury hotels. California investment targets high-end properties, while midscale declines due to short-term rentals.

2# High construction costs in Los Angeles make new developments difficult, while San Diego offers more favorable cost conditions.

3# Renovation over new build is a key strategy. Investors are upgrading existing hotels, which supports a cleaner and more modern urban environment.

4# Converting unused offices into hotels is possible, but hotel regulations, such as higher bathroom counts, make it difficult or too expensive. Office-to-retail remains more practical given technical and regulatory limits.

5# Guest experience is key. Travelers seek unique, elevated stays, especially in California, where diverse culture and entertainment matter.

6# Lifestyle changes shape hotel design. Properties now blend workspaces and leisure. Wellness remains central with yoga, self-care, relaxation, and restorative experiences.

7# Environmental concerns shape planning and agreements, especially in response to wildfire risks.

Retail: From suburban hyper-personalized stores to major malls oriented to last-mile logistics

1# Approximately 60% of consumers reportedly prefer malls to standalone stores, underscoring the continued relevance of integrated retail destinations and mixed-use developments.

2# E-commerce keeps growing. To meet this shift, shopping centers are adding dedicated pickup zones to support online orders. This infrastructure requires integration into the design and may involve additional tax and operational costs, which must be planned for. Retail is becoming both a logistics hub and a showroom.

3# Lease negotiations are evolving. While rents remain high, agreements now focus on more flexible terms that adapt to current market conditions, aiming for long-term sustainability.

4# Stronger sales boost foot traffic and enhance rental returns, creating a virtuous cycle for landlords and tenants. Agreements are now structured to ensure both sides benefit, prioritizing profitability and sustainability.

5# Consumer-centric thinking is more foundational than ever. Strategies focus on understanding customer behavior, with an emphasis on social and personalized experiences. Technology enables hyper-personalized retail experiences, from data-driven recommendations to exclusive services, strengthening customer loyalty.

6# Post-pandemic decentralization is influencing site selection as populations shift toward suburban areas, prompting retail to position stores closer to residential communities. This trend has clear implications for future project planning and forecasting.

7# A three-year forward strategy emphasizes renovation and right-sizing. The focus is on smaller, more profitable spaces rather than large footprints, despite the high costs.

3 factors in common

1# In both the hospitality and retail industries, the consumer-centric perspective is changing how developments are intended, planned, and designed. Today’s consumer seeks more than a transaction; they expect an engaging, seamless, and socially dynamic environment. Technology enables immersive, hyper-personalized experiences, such as digital keys and mobile room controls in hotels, or curated, data-driven recommendations in malls. The key takeaway is that designing for today’s consumer means prioritizing experience and personalization.

2# Building on this consumer-centric shift, mixed-use developments that blend retail, office, hospitality, and residential components are a must. They create vibrant, functional environments and more connected communities where living and working coexist. Open, integrated spaces that combine public and outdoor areas are highly valued. People are drawn to accessible, walkable environments that feel like purposeful destinations and encourage social interaction rather than just serving as transitional spaces.

3# Furthermore, these evolving environments are well-positioned to benefit from major global events such as the FIFA World Cup, NBA events, and the Olympics. They could increase visibility and foot traffic in key commercial districts, attracting tourism and energizing the hospitality market.

---

The hospitality session featured David Kuperberg (Majestic Hospitality), Dustin Peterson (The Athens Group), Ana Almada (DKN Hotels), Javier Cano (The Ritz-Carlton LA / JW Marriott LA), Krystle Fader (DyeLot), Rachael Sery (George Smith Partners), and Mary Jreisat (Shawmut Design & Construction), moderated by Dorothy Groza (CGS3). The retail panel was led by Jim Dillavou (Paragon Commercial Group), Bastian Peters (Stockdale Capital), Ray Kayacan (Regency Centers), and Jason Wilson (Unibail-Rodamco-Westfield), with John Jackson (JRM Construction Management) as moderator. To discuss the importance of placemaking and experience-driven real estate, Jeff Kreshek (Federal Realty Investment Trust), Nicholas Zaharov (DWS Group), Lemore Czeisler (Pacific Retail Capital Partners), and Derek Heeb (RDC) shared key insights, moderated by Craig Coan (Greenberg Glusker).