In an enlightening interview, GlobeSt.com chatted with Matt Hammond, director of retail brokerage for Coreland Cos. The discussion focused around four main topics.
Post-Recession Neighborhood Shopping Center Evolution
Since the recession, neighborhood shopping centers have seen some evolution. Mr. Hammond touched upon the value of having strong service tenants – tenants not threatened by the internet and e-commerce. In this view, clothing tenants or stores similar to Hallmark are among those who may not be able to sustain themselves in several years. Another trend in neighborhood shopping centers deals with restaurants. Mr. Hammond suggests that landlords who forego the creditworthiness of major chains such as Chili’s and Applebee’s and instead fill their centers with trendier, more local eateries, are finding the decision to be a valuable one. These restaurants add a unique flavor to their property that consumers hungry for.
Vacant Space Absorption
Health/fitness centers and medical tenants have been the main absorbers of vacant space. Maybe not the first choice for landlords looking to avoid high tenant improvement allowances, these tenants generate steady traffic and are not threatened by e-commerce.
Discount Retailers & Neighborhood Shopping Centers
During the recession, many landlords were forced to take what they could get and make deals with discount clothing retailers such as Ross and Marshall’s. However, these deals have turned out nicely, and the recession may have washed away the stigma of having a discount retailer in your center. Discount retailer business continues to strengthen, and are a great way to add value.
Rents are rising, but so are TI allowances and build-out packages. This exemplifies an equilibrium of sorts that has been reached between tenants and landlords. Pre-recession, landlords were setting the terms. During the recession, tenants were dictating the terms. Now that we’re in the post-recession period, the deal making landscape has equalized somewhat and both parties are fairly negotiating to facilitate successful deals.