7 Takeaways from Day One of the ICSC RECon Show 2017
Changes are happening in the retail real estate industry as consumers shift their buying habits, and investors are wary of risky ventures.
According to National Real Estate Investor – these are the key takeaways from day one of the ICSC RECon Show 2017:
1.) E-commerce is not the only culprit responsible for the recent spate of closings and bankruptcies in the brick-and-mortar space. The other culprit? Boredom
2.) The changes in the supply/demand equation in the regional mall space are not cyclical, but secular
3.) The pool of private investors and 1031 exchange buyers interested in retail properties has shrunk in the past nine months
4.) There is currently a bid/ask gap in the investment sales market for retail,
5.) Property fundamentals in the retail sector overall are much stronger than the negative “chatter” would suggest.
6.) This is not a good environment for novices
7.) Hessam Nadji, CEO of Marcus & Millichap, summarized current market conditions this way: “Massive retail opportunities ahead, with a chance of disaster if you are not careful.”
In summary – retail investors need to be careful. Long term lease investments can be safe, as long as the local markets are not flooded with competitors. It is, however, critical for investors to track the annual gross income of their NNN investment tenants.
As noted in an earlier post – retail’s demise is greatly exaggerated – and grocery anchored or shadow anchored centers will be successful with strong anchors and the right tenant mix: restaurants, beauty, medical, specialized niche businesses, etc. Essentially – those successful centers will have a combination of tenants that offer services that can’t easily be ordered online with the push of a button. Location, however is also key: pitting one grocery anchor against another a block away isn’t the best idea.