{"id":1004714614,"date":"2024-05-23T01:51:00","date_gmt":"2024-05-23T09:51:00","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004714614"},"modified":"2024-05-23T05:24:00","modified_gmt":"2024-05-23T13:24:00","slug":"icsc-las-vegas-special-report-retail-belle-of-the-ball-once-more","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/icsc-las-vegas-special-report-retail-belle-of-the-ball-once-more\/","title":{"rendered":"ICSC Special Report: Retail’s the ‘Belle of the Ball’ Again"},"content":{"rendered":"
\"A

ICSC Las Vegas was held from May 19th to May 21st, 2024. Image by Fotios Tsarouhis<\/em><\/p><\/div>\n

The doyens of the retail real estate world struck a sunny tone on the sidelines of ICSC Las Vegas this week<\/a>, with several telling <\/span>Commercial Property Executive<\/em> that the sector is healthier than it has been in years.<\/span><\/p>\n

\u201cThis is the first time people are saying ‘optimistic’ without putting \u2018cautious\u2019 in front of it,\u201d Kristin Mueller, president of JLL’s Retail Property Business, told CPE.<\/em><\/p>\n

Mike Sladich, regional managing director for the Commercial Investment Sales team in Northmarq’s Atlanta office, pronounced the sector \u201calive and well\u201d, recalling that \u201cretail, a few years ago, was kind of a bad word, and now it’s the belle of the ball again.\u201d<\/p>\n

\u201cThe retail fundamentals, in terms of retailer performance and retail real estate, could be at one of their best points in history,\u201d said Daniel Taub, national director of Marcus & Millichap’s Retail Division and Net Lease Division. \u201cYou have now been experiencing 10-plus years of very little to no net new development; therefore, existing retail real estate has become more valuable, because there’s less new product. The consumer has continued to do what they do best: two-thirds of GDP is consumption.\u201d<\/p>\n

Sun Belt states continued to dominate discussions. \u201cThat’s where the population is, and we’re all about people,\u201d said Mueller. \u201cRetail follows rooftops.\u201d However, she added that the demand for retail properties remains robust nationwide.<\/p>\n

\n

READ ALSO<\/strong>: Street Retail Surges Toward Full Recovery<\/a><\/p>\n

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\u201cThe Sun Belt is easy to sell because people are moving there, there’s just a lot of growth,\u201d Sladich told CPE<\/em>, who noted that retail is booming across the U.S. due to high demand and low unemployment.<\/p>\n

Still, \u201coccupancy and rent growth are amazing\u201d in the Sun Belt, according to Ryan Ash, vice president of development at Vestar. The firm’s primary growth-focus markets are West Texas, California, Arizona, Utah and Colorado, with Vestar particularly focused on the Phoenix metro. \u201cArizona is the one where the population has exploded,\u201d said Ash. \u201cThat\u2019s really where we see growth right now.\u201d<\/p>\n

Education, health care and revitalization<\/h2>\n

Retail\u2019s approach to anchor tenants and how to organize properties is evolving, with new assets incorporating all types of grocery, entertainment, education, health-care and life science uses.<\/p>\n

\u201cWe’re becoming much more diverse through our leasing efforts,\u201d said Mueller, whose firm has developed lifestyle centers with various kinds of anchor tenants, including athletic facilities.<\/p>\n

As much as real estate is a business that follows major trends and money, new opportunities can often arise from the needs of downtown areas undergoing revitalization.<\/p>\n

\u201cWhat we love to do is go into underserved communities and bring in quality essential goods and services,\u201d Cary Lefton, CEO of Agora Realty & Management, told CPE<\/em>. North Las Vegas, Nev., home to several Agora projects, is exactly that kind of municipality. \u201cWe saw that there was a tremendous void in the northeast valley of this southern Nevada area.\u201d Agora initially redeveloped a retail center in the city and eventually acquired property owned by the local government to develop further projects.<\/p>\n

\u201cOur tenants were doing three times the national average\u201d at the initial property, said Lefton, \u201cand we were thrilled that our tenants were doing so well, but the city was also thrilled that we turned around a blighted center and made it vibrant, and new and thriving.\u201d<\/p>\n

Agora\u2019s public-private collaboration with North Las Vegas\u2019 government allowed the firm to meet city needs, like more access to health care, employment and education, Lefton said. \u201cThey shared with us what they would like to see, and there was a lack of health care, there were still additional needs for essential goods and services.\u201d The company is also partnering with a state university on a satellite campus in the area.<\/p>\n

Among Agora\u2019s North Las Vegas projects was a medical office building, representative of an asset class that has begun to play an increasingly prominent role in retail.<\/p>\n

From community colleges to charter schools, educational institutions are becoming a focus for developers, said Mueller. And it’s the same for health-care assets.<\/p>\n

\u201cI think a trend across our portfolio is bringing in more health and wellness tenants,\u201d Ash agreed.<\/p>\n

Even prior to COVID-19, there had been a trend toward the opening of more urgent care centers. \u201cWe’ve seen that be wildly successful and almost every one of our properties now has an urgent care,\u201d said Ash, noting that the advent of telemedicine and small-format general practices is influencing the trajectory of medial retail space.<\/p>\n

In Newark, N.J., education is already a major part of life in a city where renewal efforts are drawing in younger residents and more entrepreneurs. Home to one of Rutgers University\u2019s campuses, as well as the New Jersey Institute of Technology and Essex County College, Newark aims to help local residents open businesses even as it welcomes new investors, and many of the efforts are associated with the arts.<\/p>\n

\u201cWe work very closely with the mayor and with the city hall to make sure that everybody, residents and business owners alike, are benefiting from all the investment and development that is happening,\u201d said Marcus Randolph, CEO of Invest Newark. \u201cWe really honor the people that are already here, but we want you to join the community.”<\/p>\n

New ground-floor retail has been an important part of the city\u2019s retail landscape as more residential properties have come online. In turn, retail opportunities have emerged as parts of Newark have grown. \u201cIt’s a growing community, it’s going to need amenities and services,\u201d said Randolph.<\/p>\n

Staying location<\/h2>\n

\u201cRetail has been as battle-tested as any asset class, between the creation of Amazon, the internet and e-commerce shopping, and COVID,\u201d said Taub. \u201cIt has weathered and probably come out on the better side of all of those.<\/p>\n

The past few years have ensured that physical retail spaces are here to stay, said Taub, even if they need to be reconfigured, something many stores have begun to do.<\/p>\n

Sladich agreed, saying \u201cpeople don’t want to be just completely sedentary and have everything delivered to them\u2026 there’s some stuff people want to go and touch and feel.\u201d<\/p>\n

Macro concerns<\/h2>\n

Concerns over monetary policy impacting investing remained a constant theme throughout the conference. \u201cThere’s still a lot of dry powder out there,\u201d said Sladich. \u201cThere’s a lot of cash chasing deals. It’s definitely not a capital issue per se, it’s more of just a need to get financing.<\/p>\n

\u201cThe investor demand, whether it’s private capital or institutional capital, is bountiful,\u201d said Taub. \u201cThat’s not an issue in the equation.\u201d However, the volatility in the capital markets remains a top factor in the number of transactions. \u201cThe volatility in the capital markets and the cost of capital have created an impasse on the bid-ask spread between sellers and buyers and sellers are loath to sell, because they’ve got a high performing asset class, there’s demand on the leasing side, they’re getting rent growth, properties are cash flowing.\u201d<\/p>\n

In the current climate, developers and property owners have been dealt the best hand, said Taub. High-performing assets mean that, in many instances, owners do not need to sell. However, demand for quality retail assets remains high.<\/p>\n

\u201cSellers are not in a situation, for the most part, where there’s a force behind them that is making them have to become a seller,\u201d said Taub. \u201cThey’re deciding in many instances to be a seller if they can achieve a certain amount of pricing. The good thing is that there’s plenty of capital from the demand side that wants to invest in retail because of the long-term sustainability that we’ve been witnessing.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The tone in Las Vegas was upbeat as attendees talked about the economic landscape, strong demand for assets and opportunities in urban renewal.<\/p>\n","protected":false},"author":3154,"featured_media":1004714619,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,37753,21783,1593,23891,21742,1601,21749,51973],"tags":[52409,52408,32796,34836,50380,35655],"class_list":["post-1004714614","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-research-center-finance","category-investment","category-las-vegas","category-national","category-latest","category-phoenix","category-retail","category-southwest","tag-agora-realty-management","tag-invest-newark","tag-jll","tag-marcus-millichap","tag-northmarq","tag-vestar"],"acf":[],"yoast_head":"\nICSC Special Report: Retail's the 'Belle of the Ball' Again - 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