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Grocery-anchored shopping centers remain the preferred asset type among institutional real estate investors, even as other types of retail are gaining in popularity. The challenge for the buyers is that few class-A grocery-anchored properties are being offered for sale, brokers say.
The idea that J.C. Penney could benefit from spinning its real estate holdings into a stand-alone REIT has gotten a lot of media attention this week, but REIT analysts say it’s a dead-end.
Real estate investors are coming to the realization that they need to become more flexible if they want to acquire regional malls while the market remains favorable for new deals, according to industry insiders. This week’s announcement that Macerich Co. will sell four of its malls may be the first clear indication that buyers are now willing to look beyond primary markets in pursuit of yield.
In the age of showrooming and multiple struggling big-box chains, retail landlords and managers have been increasingly looking at entertainment and restaurant tenants to take up spaces left over by large-format traditional retailers. The logic goes that while a Best Buy or a Barnes & Noble store may be taken out by Amazon, movie theaters and restaurants are more immune to online competition because they offer an experience that can’t be duplicated online.
The frenzy of meetings and cocktail parties is over. And most of the 33,000-plus attendees of ICSC’s RECon 2013 have gone home tired, but satisfied.
Conditions for the retail real estate have settled into a groove. Fundamentals have ticked up. Capital markets continue to loosen.
Spooked by lackluster forecasts for holiday sales growth, U.S. retailers cut one- and two-year store opening plans in August, according to the National Retailer Demand Monthly report produced by RBC Capital Markets. The change involved less than 300 planned stores on a national basis.
Recent announcement by Barnes & Noble founder Leonard Riggio that he no longer plans to buy the retail portion of the business has industry pros concerned. While the country’s last remaining big-box bookseller is nowhere near its final days, many in the retail industry were hoping the buyout would disentangle Barnes & Noble’s core business from its money-bleeding Nook venture and allow the company to find a winning formula for its stores with help from private money.
The country’s largest coffee chain seems intent on building a veritable food and beverage empire, complete with tea stores, juice bars and cafes that serve alcohol in addition to its core coffee offerings.
With reports swirling that J.C. Penney Co. executives might be about to announce a new round of layoffs at the company headquarters, some in the retail real estate industry are questioning whether store closing announcements are not far behind. After all, it’s been more than a year since former Apple exec Ron Johnson took over the reins at the department store chain, and the results so far have been dismal.
While demand for retail space may not be back to pre-recession levels yet, both domestic and international companies are once again investing in new concepts. These range from fast fashion powerhouses to furniture sellers to hybrids that sell everything under the sun.
