GlobeSt.com is providing wall-to-wall coverage of ICSC's RECon show in Las Vegas May 19-22. Retail Ticket will provide coverage of the event through the end of May, featuring pre-event articles, live video interviews on site and post-conference analysis. Contact Scott Thompson at [email protected] about how your firm can participate.
Primestor Development is one of our Thought Leader partners during the RECon show. Alan Araki, who is in charge of transactions for the Los Angeles-based shopping center owner that has its finger on the pulse of the Hispanic consumer, told us about what he is seeing in the market and what he expects from RECon this year.
GlobeSt.com: What will people be talking about at RECon this year?
Alan Araki: Clearly, it's much more upbeat, even in the last two years. There has been a subjective improvement in peoples' attitudes. This year it will be even more so because between January and today, there has almost been no bad news. The employment numbers have been steadily getting better. All of our fiscal issues are not making any headline news. There is no global headline risk. Our stock market and others are hitting new highs along with all of the housing numbers. There is really nothing out there to derail things. Generally people are still cautious and know that retailers are only seeking the best locations. If you go to Mesa, AZ, it's just different than some markets in Southern California. It's been very upbeat. Everyone wants core and Main and Main locations, and there is a lot of supply out there.
GlobeSt.com: So is it a landlord or tenant market right now in retail?
Araki: It's still a tenant market. In our development deal at South Gate in Los Angeles, we're 92% preleased, when we don't deliver the product until 2014. They know what they can pay, and you can live with that. It's not like they are just going to pay “x” dollars more just to be there. But we do have a location that is very underserved. So we have a lot of tenants fighting for the space, but not to the point where they are outbidding each other by “x” percent. But we clearly have more demand for that property because of the underserved nature of the area.
GlobeSt.com: Who are you competing with for transactions in the market?
Araki: We're clearly in the acquisitions mode and trying to build up our portfolio. It is harder to find stabilized, quality product. It's hard for us to find the existing deals that are out there and meet the metrics that we are looking for. When It does come to market, we're not finding that we're buying these existing deals at any kind of discount. Sales are usually very strong and there is national credit within the rent role, so it trades at pretty much the same cap rate at any other deal.
GlobSt.com: How is the Hispanic market holding up? I know a lot of the tenants that focus on that market are really hot right now?
Araki: From a macro view, the worst is over. A lot of it is jobs, and the worst is over for that. A Hispanic grocer location might do $800 per square foot in sales, which is great. It might have dipped down to $750. In Los Angeles, because of the density, I don't think they felt it that much. But if you go to Phoenix, they felt it worse than here. If they were doing $800, they might be down to $650. So it's all relative. They're not at the peak levels, but the worst is over for them.
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