NEW YORK CITY—The capital markets front is changing in the retail real estate sector. So says Adam Petriella, the Coldwell Banker Commercial Alliance (booth 536) executive vice president of capital markets. GlobeSt.com EXCLUSIVELY met up with him leading up to this year's ICSC's New York National Deal Making Conference on Dec. 8-9.
In this interview, Petriella describes the changes he's seeing, from the types of lenders to where they are interested in deploying capital. He also sheds some light on the New York City market and how he thinks the conference will perform.
GlobeSt.com: Are there any new lenders that have entered the retail sector as of late?
Adam Petriella: Well Ian, The Bank of China is making headlines, but more importantly, away from headlines are the numerous smaller commercial banks now entering the business looking to lend on various sized retail deals, and very, very aggressively I might add. Also, specialty finance companies like Ready Cap Commercial (full disclosure, we are held in the same REIT) are positioning themselves for the next three-year refinancing wave and new acquisitions. The benefit of going with one of these specialty finance lenders is the non- recourse loans, will lend to foreign nationals and not constrained by banking rules and regulations.
GlobeSt.com: What kinds of assets are getting the most interest now?
Petriella: Of most interest today are freestanding retail, strip centers and urban/street retail assets.
GlobeSt.com: Are there any retailers that lenders specifically like to see in a project?
Petriella: Successful grocers with a concept, critical mass and sustainable sales. Also, specialty retailers with good brand recognition, good credit and something that can not be potentially commoditized.
GlobeSt.com: Are people looking in secondary markets to fund retail assets, or is there not yet that much of a demand?
Petriella: Secondary markets are certainly being looked at. Again, it is all about the fundamentals in that particular market, the operator of the brand/business and the sponsor. Where local banks that like assets in their back yard and are willing to lend but hitting limits, specialty finance companies will fill the void. On larger assets with credit anchors or CTL (credit tenant lease), there are plenty of lenders who are looking at those deals.
GlobeSt.com: What makes the NYC market unique?
Petriella: Being born and raised in the Bronx, I'm glad you asked me that question! New York, though far from perfect, is always in motion, providing opportunities in business, research, academia, the arts, media, new media, technology, health care, biotech and so on. These demand generators coupled with the lowest big-city crime rate and improving schools attracts a mix of careerists, families, tourists, artists, journalists and so on. So the sheer size and dynamism of this market is unique, and the deep well of talented professionals constantly working to meet the demand is second to none.
GlobeSt.com: What are your expectations for the ICSC NYC show and how do you see the retail sector shaping up in the next year?
Petriella: This year's NYC ICSC will no doubt be the best ever. The retail sector will continue to improve, though there will be some lumpiness. The economy is picking up some steam, consumers are cautiously optimistic and choosing wisely when purchasing, but again, net net, it will be a very good year.
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