{"id":1004635478,"date":"2022-12-15T03:39:10","date_gmt":"2022-12-15T11:39:10","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004635478"},"modified":"2022-12-28T06:24:16","modified_gmt":"2022-12-28T14:24:16","slug":"sizing-up-retail-real-estates-prospects-at-icsc","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/","title":{"rendered":"Sizing Up Retail Real Estate’s Prospects at ICSC"},"content":{"rendered":"

Where is retail real estate headed? At ICSC<\/strong>\u2019s annual New York City convention last week, the picture that emerged was both complex and promising. Observations from a variety of industry professionals confirm that predictions of brick-and-mortar\u2019s demise were premature. And contrasted with the impression that some categories of retail real estate were on life support, or worse.<\/p>\n

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Retail real estate professionals talk deals at ICSC’s annual event in New York City. Photo by Paul Rosta for CPE<\/p><\/div>\n

Demand for many retail property categories is proving to be remarkably resilient<\/a>. Overall, the retail sector has achieved positive absorption for eight quarters in a row, stretching back well into 2021.<\/p>\n

Standout categories range from neighborhood and community centers to strip centers and power centers, which have all demonstrated strong absorption \u201cat a time when there\u2019s very little new supply,\u201d noted Brandon Isner, head of retail research at CBRE<\/strong>, during the two-day event at Manhattan’s Javits Center. Retail space deliveries reached record lows in 2020 and 2021, and those records are on track to be broken again in 2022.<\/p>\n

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READ ALSO<\/strong>: What\u2019s Ahead for Retail This Holiday Season<\/a><\/p>\n

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Retailers, owners and consumers are grasping an important truth about the complementary nature of retail channels. \u201cWhat we\u2019re all realizing is that e-commerce and brick and mortar are not at war with each other. They work together to make each other better,\u201d Isner observed.<\/p>\n

2022 surprises<\/h2>\n

Some of those professionals reported encountering the unexpected during the past year. \u201cThe biggest surprise we\u2019ve experienced has been that there\u2019s no slowdown,\u201d said Terry Ohnmeis, a director at Cushman & Wakefield<\/strong> specializing in retail leasing and tenant representation. Much of that is stemming from a supply-demand imbalance: \u201cThere hasn\u2019t been enough new product coming on the market to satisfy the demand for quality.\u201d<\/p>\n

Restaurants are behind much of the demand for new space in the Ohio markets Ohnmeis serves, primarily the Cincinnati metropolitan area, Columbus and Cleveland. He estimates that about 50 percent of the deals he\u2019s arranged this year involve restaurants, up from 20 percent a year ago. Suburban locations with strong visibility, strong traffic flow, patios and grocery stores or other reliable anchors are in especially high demand.<\/p>\n

Nevertheless, current conditions also call for operators to demonstrate prudence, attendees said. In some retail categories, the number of potential tenants is dwindling, making it all the more challenging\u2014and necessary\u2014to be selective. Tenants and retailers have higher expectations for owners\u2019 investment in the property, observed Matthew Harding, CEO of Levin Management<\/strong>.<\/p>\n

\u201cYou really have to evaluate the terms of the deal,\u201d he advised. Operators should be \u201ca little cautious in terms and about the investment you\u2019re making.\u201d A key consideration is whether the prospective tenant has sufficient staying power to justify significant improvements and other expenditures, he said.<\/p>\n

Going upscale<\/h2>\n

At upscale properties, high-end retailers are driving the demand for expansion. \u201cLuxury is still robust,\u201d observed Rosalind Schurgin, CEO of The Festival Cos.<\/strong> \u201cEveryone wants to be closer to the consumer\u201d\u2014and that is creating demand for space at lifestyle centers that are closer to the consumer than regional malls. Demand is also emerging for personal services related to beauty and health, she added.<\/p>\n

Consumer demand for high-end products remains undeterred by inflation, and that\u2019s spurring pent-up activity at the upscale town centers operated by Steiner + Associates<\/strong>. In the Columbus area, for example, \u201cAspirational luxury space was untapped before Covid,\u201d noted Spencer Jordan, vice president of leasing. \u201cWe\u2019ve been seeing a huge explosion of growth in openings at higher price points to expand (luxury retailers\u2019) footprints.\u201d<\/p>\n

Lease terms are also evolving to provide owners and retailers more flexibility. \u201cKickouts are becoming more common as retailers need 10 years to amortize costs but need flexibility if the store isn\u2019t performing,\u201d Spencer reported. The latest twist is that if the store reaches the specified sales target at any time during the specified period\u2014the first four years, for example\u2014that qualifies as meeting the target. Should sales fall short afterward, the tenant has the right to exit the lease.<\/p>\n

Continuing a years-long trend, Class B and Class C malls continue to be a weak spot for the retail sector, but also offer potential upside, contends Ronald Goldstone, executive vice president at Farbman Group<\/strong>. \u201cI think there are going to be opportunities (to) reposition vacant retail malls,\u201d he predicted.<\/p>\n

Goldstone cited the $1 billion plan to demolish much of Lakeside Mall in Sterling Heights, Mich., a Detroit suburb. The proposal calls for a mixed-use community encompassing residential, office, retail, hotel and park components. In October, the city council approved a memorandum of understanding for the project with the mall\u2019s owner, Lionheart Capital<\/strong>.<\/p>\n

Too often, though, outdated or inflexible zoning creates hurdles that discourage potential projects. For underperforming or past-prime retail assets to gain a second life, the public sector must do its share. \u201cCreativity is the name of the game,\u201d Goldstone said. The chances for successful redevelopment increase dramatically \u201cwhen the community is in front of it, rather than waiting for the developer.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Insights gleaned from a wide range of professionals during this annual New York City event.<\/p>\n","protected":false},"author":445,"featured_media":1004635480,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,23891,21742,21785,21749,51037],"tags":[32789,32799,47861,33018,37394,34049],"class_list":["post-1004635478","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-national","category-latest","category-property-management","category-retail","category-trends","tag-cbre","tag-cushman-wakefield","tag-farbman-group","tag-icsc","tag-levin-management-corporation","tag-steiner-associates"],"acf":[],"yoast_head":"\nSizing Up Retail Real Estate's Prospects at ICSC - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"At ICSC's annual New York City event, dealmakers shared insights into the prospects for retail real estate in 2023.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sizing Up Retail Real Estate's Prospects at ICSC\" \/>\n<meta property=\"og:description\" content=\"At ICSC's annual New York City event, dealmakers shared insights into the prospects for retail real estate in 2023.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2022-12-15T11:39:10+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-28T14:24:16+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/12\/ICSC-photo_Dec7_800x600.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"600\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Paul Rosta\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/\",\"name\":\"Sizing Up Retail Real Estate's Prospects at ICSC - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/12\/ICSC-photo_Dec7_800x600.jpg\",\"datePublished\":\"2022-12-15T11:39:10+00:00\",\"dateModified\":\"2022-12-28T14:24:16+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/ed97e8245f278ce01a7b951f706152af\"},\"description\":\"At ICSC's annual New York City event, dealmakers shared insights into the prospects for retail real estate in 2023.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/sizing-up-retail-real-estates-prospects-at-icsc\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/12\/ICSC-photo_Dec7_800x600.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/12\/ICSC-photo_Dec7_800x600.jpg\",\"width\":800,\"height\":600,\"caption\":\"Retail real estate professionals talk deals at ICSC's annual New York City event. 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