LOS ANGELES—Vacancy rates for retail properties are finally dropping, but with no new retail development, tenants are finding limited options for growth and expansion. To delve into the complex retail leasing market, we sat down with Wilson Retail—formerly known as Wilson Commercial Real Estate—SVP Shauna Mattis to talk about what retail tenants are doing to find new opportunities, how brokerage teams are staying ahead of the curve and what we can expect from the retail leasing market in the year to come. Here is what she told us:

GlobeSt.com: What are your goals and expectations for the ICSC Western Division conference?

Shauna Mattis: Vacancy rates are averaging between 2%-3% at most of the properties within our portfolio. This is significantly lower than four years ago when rates were as high as 15% in some markets. Even though the market has tightened, we're remaining relevant to our clients at this conference by focusing on targeted tenant meetings that will enhance property perception and value. We work closely with our landlords to create a strategic marketing plan for each property and then use conferences such as ICSC's Western Division as an opportunity to conduct face-to-face meetings with these targets. Some of our enhancement activities include long-range planning whereby we focus on upgrades to the existing tenant mix (Fullerton Crossroads, replacing Rite Aid with Joann's Fabrics) and other plans focus on filling existing vacancies (Granada Village, working with Regency to obtain 100% occupancy at a center with long history of substantial vacancy). Our strategies incorporate the goals and objectives of our clients as well as our knowledge of key tenant activity to ensure successful lease-up and/or re-population.

GlobeSt.com: How has leasing a retail property changed over the past five years?

Mattis: Five years ago, the retail market was significantly softer than it is today. Our focus was to understand the competition within our market and work with active retailers to ensure they understand the competitive benefits of our location within the trade area (we secured Buy Buy Baby at Commons at Temecula when there were several options available within the market). In 2014, our focus is to ensure we better understand the competition outside of our market and the motivations for new store development of the different retailers we work with (Granada Plaza, attracting DMV for the former Albertsons). For example, we have found some retailers are now focused on reducing their radius restrictions between locations in an effort to increase market presence within targeted trade areas, while other retailers are more focused on expanding their brand into new markets to create broader consumer awareness. Understanding the motivations of these active tenants allows our team to be “forward thinking” and increases our chances of securing a deal for our clients. 

GlobeSt.com: What is key to securing tenants in today's market when tenants typically have multiple choices?

Mattis: Tenant's do not necessarily have multiple choices within a market any more.  As vacancies have been absorbed, options within a given trade area have been reduced. The key to securing tenants today has more to do with opportunity and timing. Motivations for retailers can vary significantly between the number of stores to open within a given year and sales projections for a geographic trade area. Understanding the motivations of the retailers allows our team to structure deals that benefit both parties. 

GlobeSt.com: What characteristics or attributes are key for a successful retail broker or brokerage team?

Mattis: Communication and accountability are extremely important! If a client is not always aware of the actions/efforts on their behalf, they will assume their property is not being worked.  Our team establishes strong communication approaches with our clients.  We ensure our plan is in line with their goals and objectives and then provide consistent communication in a format they desire. This creates opportunity for feedback and redirection if necessary.  By providing this level of communication and accountability, our firm has been successful in retaining clients for several years.  We take great pride in the number of referrals our clients have provided Wilson Retail Group over the years (RPAI referred Inland American). 

GlobeSt.com: How will the Southern California retail leasing market differ in 2015 from 2014?

Mattis: We believe vacancy rates will continue to compress during 2015 although at a slower pace due to lack of inventory.  Subsequently, rental rates will continue to climb upward.  The result will be new developments underwritten in outlying areas to support future growth.   Redevelopment projects in the in-fill areas will be more prominent to satisfy the retailers' requirements for new store growth.