{"id":1004714196,"date":"2024-05-21T01:13:16","date_gmt":"2024-05-21T09:13:16","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004714196"},"modified":"2024-05-26T22:28:05","modified_gmt":"2024-05-27T06:28:05","slug":"icsc-2024-interest-rate-driven-with-a-twist","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/icsc-2024-interest-rate-driven-with-a-twist\/","title":{"rendered":"ICSC Special Report: Interest Rate-Driven With a Twist"},"content":{"rendered":"\n<p><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"450\" data-attachment-id=\"1004714204\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/isic-panel-2\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/05\/ISIC-panel-edited.jpeg\" data-orig-size=\"600,450\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"ISIC-panel\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/05\/ISIC-panel-edited.jpeg?w=600\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/05\/ISIC-panel-edited.jpeg\" alt=\"ICSC panel\" class=\"wp-image-1004714204\" style=\"width:400px\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/05\/ISIC-panel-edited.jpeg 600w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/05\/ISIC-panel-edited.jpeg?resize=300,225 300w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><figcaption class=\"wp-element-caption\">Panelists discuss macroeconomic challenges at ICSC. <em>Image by Fotios Tsarouhis<\/em><\/figcaption><\/figure><\/div>\n\n\n<p>Weathering inflation and high interest rates were important themes during the first day of ICSC\u2019s 2024 conference in Las Vegas. While recent inflation has been troubling the retail sector, there are some positives to limited, short-term price hikes.<\/p>\n\n\n\n<p>\u201cThe positive of inflation from the investor perspective is that it does tend to increase rents,\u201d said Karly Iacono, senior vice president with CBRE. \u201cSo if you have increasing net operating income, you have higher rents at your property.\u201d<\/p>\n\n\n\n<p>However, the quick pace of inflation has kept some costs rising quicker than rents can, negatively impacting property owners. \u201cThe cost of capital is going up faster than rents are going up, so you really have a situation where a lot of properties are losing value,\u201d added Iacono.<\/p>\n\n\n\n<p>\u201cInterest rates are very high, there&#8217;s not a clear exit\u201d for owners who may want to divest their properties in the current climate, mentioned Iacono, who, like many conference attendees, remains bullish on retail. \u201cThe fundamentals are phenomenal. It&#8217;s really just a limitation of the capital markets.\u201d<\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-cyan-bluish-gray-color has-alpha-channel-opacity has-cyan-bluish-gray-background-color has-background is-style-wide\"\/>\n\n\n\n<p><strong>READ ALSO:<\/strong> <a href=\"https:\/\/www.commercialsearch.com\/news\/why-cres-high-rate-environment-presents-opportunities-for-some\/\">Why High Interest Rates Present Opportunity for Some<\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-cyan-bluish-gray-color has-alpha-channel-opacity has-cyan-bluish-gray-background-color has-background is-style-wide\"\/>\n\n\n\n<p>\u201cBroadly, we&#8217;ve seen credit spreads come in for most property types of late, which should help offset some of those interest rate increases,\u201d said Vince Tibone, managing director &amp; head of U.S. industrial and mall research at Green Street.<\/p>\n\n\n\n<p>\u201cEverything is interest rate-driven, right now,\u201d added Iacono. \u201cWhen your debt is not accretive to purchase, you&#8217;re then relying on an all-cash buyer or relying on seller financing, so it&#8217;s a very difficult time to get deals done that don&#8217;t pencil in a positive cash flow manner.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consumer focus<\/h2>\n\n\n\n<p>Inflation\u2019s impact on retail is about the effect it has on shoppers as much as its influence over various aspects of financing.<\/p>\n\n\n\n<p>\u201cIt&#8217;s all about the consumer,\u201d Tibone pointed out. \u201cI think inflation is really pressuring the sales of certain retailers.\u201d Even so, high-end retails in particular are doing very well. \u201cSure, we&#8217;re seeing some pullback from luxury sales, but that\u2019s inevitable\u201d given the spike in luxury spending during the COVID-19 pandemic.<\/p>\n\n\n\n<p>One of the biggest impacts inflation has had on retail is how much money prospective shoppers have to spend, added Bryant \u201cBo\u201d Okoroji,\u00a0founder &amp; managing partner at Steerpoint Capital. \u201cAs a mall owner, inflation is hitting the pockets of our consumer, our shopper.\u201d Tenant health and how retail renters are being impacted by inflation is also of concern, Okoroji continued.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-cyan-bluish-gray-color has-alpha-channel-opacity has-cyan-bluish-gray-background-color has-background is-style-wide\"\/>\n\n\n\n<p><strong>READ ALSO:<\/strong> <a href=\"https:\/\/www.commercialsearch.com\/news\/street-retail-surges-toward-full-recovery\/\">Street Retail Surges Toward Full Recovery<\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-cyan-bluish-gray-color has-alpha-channel-opacity has-cyan-bluish-gray-background-color has-background is-style-wide\"\/>\n\n\n\n<p>\u201cWe&#8217;re seeing a lot of activity still with the discount stores,\u201d observed Iacono, which she notes is part of a general trend of consumers trading down. \u201cYou can have Dollar General, Family Dollar, Dollar Tree still opening upward of 1,000 stores a year, which is wild when you think about their market penetration already.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Investing in mall space<\/h2>\n\n\n\n<p>While consumers trade downward, mall spaces have become reliable investments. \u201cThe enclosed mall space is probably one of the finest opportunities in our space currently,\u201d reasoned Okoroji. \u201cIf you really look at the risk profile of these assets and where they&#8217;re trading at, you&#8217;ll realize that you&#8217;re buying assets that have 100 to 150 tenants, but 70 to 80 percent of these occupants are publicly traded and you understand what they\u2019re borrowing capital at.\u201d<\/p>\n\n\n\n<p>Tibone agreed. \u201cHigh-quality malls is one of the most attractive investments in all of commercial real estate.\u201d<\/p>\n\n\n\n<p>Lenders may also agree, if Okoroji\u2019s experience is any indication. \u201cWe focus on high-yield assets,\u201d Okoroji said. \u201cWe&#8217;re starting to see lenders come into our space that were all previously in alternative asset classes, office and whatnot, and now are looking at retail as a place to place their capital.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>During the event&#8217;s first day, panelists weighed in on the retail sector&#8217;s investment landscape.<\/p>\n","protected":false},"author":3154,"featured_media":1004714197,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,21783,23891,21742,21749,51037],"tags":[32789,39052,33018],"class_list":["post-1004714196","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-investment","category-national","category-latest","category-retail","category-trends","tag-cbre","tag-green-street-advisors","tag-icsc"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>ICSC Special Report: Interest Rate-Driven With a Twist - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Speakers at the 2024 ICSC conference 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