One of the big plots at ICSC's RECon show has been the search for tenants.
Some retailers are out looking for, but the rate of expansion is nothing like what it was at the market's peak. The pace of absorption means that it will still take a while to fill all the empty space that does exist. Moreover, most tenants are only interested in class-A space. There are fewer inquiries for class-B and class-C assets and the outlook for those properties remains murkier.
But I did stumble across one intriguing bit ofwhen sitting down with Matthew Bordwin, co-president of GA Keen Realty Advisors. Last week, the firm was retained to assist in the marketing and disposition of 41 leased properties across 21 states operated by Metropark – a high-end clothing company that filed for bankruptcy earlier this month. Overall, the firm had 70 locations and 29 of the leases were rejected and returned to landlords. Keen is running an auction on the leases this week. Bids are due tomorrow and the auction will take place on Thursday.
Incredibly, all 41 leases up for grabs are now taken. And amid the inquiries, Australian retailer CottonOn has come through with an aggressive play. It has an agreement in place to take 33 of the leases. CottonOn is a 20-year old retailer that operates more than 600 stores nationwide. According to its site, in the U.S. it currently operates 46 Cotton-On stores, one Cotton-On Body store and one Rubi shoe store. So grabbing 33 leases would represent a huge expansion for the firm.
In addition to CottonOn, another retailer has a deal to take the other eight leases up for grabs.
It means that less than a week after gaining the assignment, all 70 Metropark leases will be resolved--29 to landlords and 41 to other retailers. The auction still has the possibility of changing the mix. Regardless, every spot will be spoken for. If it's a barometer of the retail real estate conditions, it means that the market is in a much, much better position to absorb retailer closures and bankruptcies than it has been in some time.
The one caveat to that is that Metropark had spots in a lot of very, very good malls. So there are a lot of desirable locations in the mix--leases at Ala Moana Center, Mall of America, Garden State Plaza, Roosevelt Field, Houston Galleria and other big-time centers are all on the table. So aggressiveness in this auction dovetails with the broader notion that class-A space is in demand.
Still, I'd take this as a hopeful sign that the business is continuing to recover.