a mix of repositioning the property,
enhancing its curb appeal, and then aggressively recapturing and releasing underperforming space, capitalizing on our relationships to bring in much stronger retailers
and transform the property.
McNELLIS: We like to buy and renovate
old centers. They’re hard to find because
they’re usually overpriced, but when we
do, we’ll buy an old center with, let’s say,
an empty box, a closed 100,000-foot
Kmart, and subdivide it into three or four
smaller users. That would be our typical
value-add play. There are boxes from
10,000 to 150,000 feet littering the country. If you can figure out an adaptive reuse
for those, you can do well, assuming you
buy it right.
AYGOREN: How much longer do you
see this cycle lasting and what do you
anticipate for the short term?
IFSHIN: There’s no major overbuilding
and no major rise in interest rates coming.
Yes, rates are going up, but I don’t see a
major increase unless the economy starts
to perform a hell of a lot better, or some
major tax bill comes through that adds trillions to the deficit.
ROSE: We’re always going to consume.
The population is continuing to grow and
we will always have to have necessity-based
retail. Between now and 2050, there’s an
estimated 100 million new people in the
country, either being born or immigrating. The demand and push will be there.
The remainder of 2017 is going to be
interesting. The market has something
like 40 million square feet of mall-depen-dent, large-box vacancies projected. New
retailers want to open, but they’re not saying they want to open in regional malls.
AYGOREN: We’re coming up to ICSC
RECon, which you all regularly attend.
What were the biggest concerns you
saw raised at last year’s event, what’s
changed since then and what do you
think are going to be the biggest talking
points this year?
TANZ: The majority of the retailers that we
met with last year did not raise concerns,
but instead were highly focused on expand-
ing on the West Coast, specifically looking
to lease space in grocery-anchored shop-
ping centers in the primary markets. We
expect that to be the focus again this year.
IFSHIN: Our view is enough already about
e-commerce. We just want to focus on the
business. Nobody has ever sold groceries
on the Internet and done anything but
lose their shirt, right? And Amazon has yet
to make money selling shirts online, too,
for the record.
We have a longer backlog of new lease
deals than we’ve ever had in our entire existence. Deals have taken forever because a
lot of retailers have cut a lot of staffing overhead. So they’re slow on docs, but our leasing volume does not suggest the death of
brick and mortar retail. Quite the contrary,
it suggests that we’re exceedingly healthy.
We’re very bullish about fundamentals and
tenant demand because there is very little
to no new development.
McNELLIS: I absolutely agree that the
grocery business will hardly be affected by
the internet. And as to the hard and soft
goods retailers, yes, some are failing, but
we’re rapidly coming to a middle ground
where the pure-play Internet retailers are
opening store locations, and the pure-play bricks and mortar retailers have an
online presence. The distinction between
the two types of retail will vanish in a
ROSE: Retail concepts will always evolve,
whether it’s a big box format or an enclosed
regional mall. But whatever the iteration,
the real estate remains good. Developers
and investors are smart enough to see that
they are buying the location, not necessarily
the retailer. ◆
Retail Power Panel
continued from page 28
Retail concepts will
always evolve. The real
estate remains good and
developers and investors
are smart enough to see
that they are buying the
location, not the retailer.”
Marcus & Millichaps
1 Yardi Systems, Inc.
3 Sior Society of Industrial
5 Marcus & Millichap
11 NAI Global
15 CCIM Institute
19 Bellwether Enterprises
27 CBRE Group Inc.
31 CIBC World Markets
33 Hanley Investment Group
42 PNC Financial Services
45 Northmarq Capital
47 Pyramid Hotel Group
49 University Of Southern
C2 Rockefeller Group
C3 RealShare Alm Events
C4 Fidelity National Title
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