Latino Consumers Pave the Way for a Bright Future in Commercial Real Estate Development and the Retail Market

The Latino population is one of the fastest-growing population sectors in the United States, with nearly 3% growth each year and making up 20% of the population. As such, the Latino consumer market is one of Southern California’s most relevant retail markets, with significant opportunity for economic gain for those willing to pay attention to and get ahead of the trends attractive to that consumer.

Michelle Lagos, a real estate attorney at Allen Matkins, recently moderated a panel at Connect Retail West in Los Angeles with panelists Arturo Sneider, CEO of Primestor Development, and Carl Middleton, Real Estate President of Northgate Gonzalez Markets. They discussed the evolution of the Latino retail market and what it means for commercial real estate. Here are the top takeaways from the panel.

1. Developers Who Aren’t in the Latino Retail Market Are Missing Out

According to Sneider, the future growth of retail is with the Latino consumer. He believes developers are missing out on economic opportunities by overlooking this market. This is no surprise to Middleton, who notes how the Latino community is not a monolithic group but an upwardly dynamic population that has matured through population growth, education, and income. Like previous generations of immigrants to the United States, their children and grandchildren are becoming leaders, entrepreneurs, and taking on local political and educational roles. As incomes rise, consumer purchasing power shifts towards more discretionary spending.

2. The Latino Market Is Dynamic and Diverse

Customers in the Latino Southern California market come from three primary groups. The core shoppers are immigrants, primarily from Mexico and Central American countries, many of whom have been in the country for decades and identify bi-culturally. The second group includes their bilingual first-generation children and grandchildren who are more assimilated and live a bicultural lifestyle. The third group comprises non-Latino customers who enjoy Latino foods and culture, also known as food explorers. These three groups have one thing in common: they want an authentic experience.

3. Retailers Must Get to Know the Latino Customer

Understanding the diversity of the customers in Latino retail centers is essential to the success of the owners and developers. Sneider points to the diversity among the Latino shoppers to emphasize this point. Latino families often go out together, bringing multiple generations into a retail center. A grandmother may seek ingredients at the grocery store to make authentic tamales, while her grandchild wants to grab a meal from a chain restaurant. Finding what sells and giving customers what they ask for is essential for retailers who want repeat customers. Data shows the buying power of the Latino consumer is strong, and their loyalty is even stronger.

4. Latino Focused Retailers Look for Space that Aligns with Their Brands

In any retail market, location is still important, with tenants wanting to be where their customers live and work. However, Latino retailers pay particularly close attention to how well their brands are represented at the respective centers because connecting to their customers is just as valuable as physical proximity. This is especially important for new retailers moving into these centers. Sneider compares the Latino retail market to hospitality and entertainment, which requires extensive research and communication to identify what the community wants.

5. Latino Retail, which Remains Undercapitalized, Boasts Impressive Sales Volumes

Despite the data supporting the growth in Latino retail, capital markets are slow to react, creating challenges for securing debt and equity for projects. As Sneider points out, the issue is that it leaves investors chasing projects in higher-income demographics. “You want to be where the growth is, not where the competition is,” he adds. That is not always in the neighborhoods with the highest levels of income. Consumer demand remains high, and Latino retail centers are emerging from the pandemic boasting impressive sales volumes driving strong rental growth at these centers. Sneider notes that it is not just Starbucks Latino customers want anymore – they expect Blue Bottle and other trendy restaurants and retailers, for which the customers are willing and able to pay.

6. Building Community is a Key Component of Latino Retail

Latino retail centers are more than shopping plazas. They play a significant role in developing the communities where they operate by creating economic stability. The businesses provide jobs for people who live in the area and create opportunities to build partnerships that facilitate engagement across multiple sectors. This allows pathways to improve these communities through participation and feedback. To this point, Middleton and Sneider are currently involved in projects supporting local communities. Northgate Gonzalez Market is rolling out a grocery-anchored food hall, and Primestor Development is working on a mixed-use development combining retail and affordable housing. The future is now for those who are prepared to capture this consumer market.