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Mom-and-pop tenant leasing improving slowly

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Mom-and-pop tenant leasing improving slowly

Shopping Centers Today
Jun 13, 2020

Leasing small-shop space is still a problem for many landlords, though mom-and-pop tenants are stronger than they were two years ago, REIT executives say. “Larger national retailers are expanding, but mom-and-pops are weak,” said Kimco Realty COO Mike Pappagallo at a conference this week. “Our occupancy for stores under 5,000 square feet is in the low 80s.” Part of the problem is a lack of credit from community banks, he said. “The top 10 banks have 50 percent of deposits and are aggressively lending again. But the remainder of deposits are held by smaller banks, and they’re still back on their heels a bit.”

Landlord Equity One has a similar problem, but things are improving, said its president, Thomas Caputo. Equity One’s small-shop space is 78 percent occupied, compared with 97 percent for its shops over 10,000 square feet in size, he said. But he is already noticing a turnaround among small-shop tenants. “The atmosphere today is completely different than it was a year or two years ago,” said Caputo. “Today phones are ringing, and you’re seeing people with actual balance sheets. We’ve gotten to the point in the cycle where you can actually say no. Even at our lower-tier assets you can say no to a ridiculous proposal from a tenant, and in our top two-thirds you can say no three times and still have the tenant come back and lease space.”