household needs. When the recession hit, a lot of consumers
moved down to that type of a discount component. We see the
competitiveness of their locations and the product that they’re
offering lasting for a very long time.
RITTER: Mark, do you feel pressure from dollar stores?
MILLER: Definitely. We try to restrict them when possible; for
instance, we don’t allow them to sublease our vacant space anymore. They’re going to find it difficult, at least, to find second-generation space because a lot of it is controlled by grocers or
drugstores and we’re not going to allow them into the mix.
We have special, store-brand products that are competitively
priced with the dollar stores. In certain instances, we’re offering
things like produce, sandwiches—in more urban areas, depend-
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ing on demographics. It’s a great way to bring in
customers. So dollar stores are obviously competitors. When they start selling drugs, it’s going to be
a whole different ballgame.
RITTER: Paul, DDR has completed a couple
of pretty high-profile acquisitions. How hard
is it to find these opportunities?
FREDDO: That’s a great question. Clearly, the competition is fierce today. It’s very difficult to compete
with pension funds or foreign investors. There are
opportunities though, and it’s all about taking a
creative approach and having a platform that can
capitalize on off-market deals prior to them hitting
the street. Our platform, consistently executing
upon our stated goals, makes us a preferred partner. That opens up doors to more opportunities
like the transaction we recently announced for us
with Blackstone. So, it’s really about finding those
opportunities where you’re not competing with
money that is willing to invest at cap rates with
significantly more risk than we are.
RITTER: Where do you see the industry
headed in the next year? What changes do
you think we’ll see?
FREDDO: What we’ll continue to see is the strong
retailers getting stronger. We’ve seen this over the
past few years, where best-in-class retailers continue to take market share. The biggest challenge, as
much as change, is how retailers will find creative
ways to meet their growth needs and demands.
There’s clearly a lack of new product, and you
can’t sit back and wait for the next box to liquidate.
No single bankruptcy or a few new developments
are going to move the needle significantly.
The question is, how are the retailers that have
that top-line need for new sales and expanding
their footprint going to meet those demands?
That’s going to be one of the fascinating things to
watch next year. You’ll hear a retailer talk publicly
about there being plenty in his pipeline, but then
you get the guy privately, and it’s, “I don’t know
where I’m going to find the stores I’m supposed
to deliver.” It’s going to be very interesting to
watch how this unfolds in the coming year.
TOMLIN: Obviously, we would love to continue to
help all of them find locations, as would all of us,