OAK BROOK, IL—Against the backdrop of a thriving retail market, Inland Acquisitions Inc., part of the locally-based Inland Real Estate Group, had a milestone year. With total YTD acquisitions of $1.52 billion, the firm has crossed the $40-billion mark in total buys since inception, and as vice president Mark Cosenza explains in this exclusive interview with GlobeSt.com, the finish line on that milestone was crossed virtually with no help from mega-portfolio buys. Here's how he sees the market dynamics behind that record:

GlobeSt.com: How do you characterize the retail market at this point in the cycle?

Mark Cosenza: I like this question because we have a really good, well-defined cycle going on. We hit the great recession in 2008 and through 2009 the economy was truly badly wounded. REITs held their cash and sat on the sidelines, first because they weren't sure what they should do and there was no debt market to speak of. Also, of course, retailers themselves were having problems.

We saw real healing in 2010 and '11, with the debt markets coming back and the economy working its way through its struggles. By 2013, the economy found itself in good shape again as consumers came back, lending became stronger and retailers were finding their way again. Today, the economy is humming. Vacancy rates have dropped and retail centers are full, which is a very strong sign and rents are rising slowly across the retail sector.

GlobeSt.com: So based on that, what do you see for 2016, and which retail types are you favoring?

Cosenza: Based on the term in the cycle, centers are really at their best occupancy since the recession. I've actually seen a lot of positives in the interior mall world as well. The best-positioned, class A assets have really increased their occupancies. 

In terms of strip centers, class A centers are the strongest and of course command the strongest cap rates. There's a differential there within the segment, between grocery-anchored and power centers, with power centers lagging behind. 

Within the grocery-anchored segment, we continue to see a bifurcation between traditional grocers and newer models offering healthy alternatives, such as Sprouts, Fresh Markets, Whole Foods and Trader Joe's. And these certainly are trading at a premium compared to the more traditional models.  

In all, 2016 will look a lot like an extension of '14 and '15. Vacancy rates are dropping and we're in the position to continue to raise rents. And we've also seen a lot of new entrants in new markets, creating demand for new development.

I mentioned the healthy-alternative grocers. They're expanding their footprints, along with new smaller grocers such as Fresh Thyme in the Midwest. It's actually operated by the same CEO who expanded the Sunflower brand on the West Coast.

GlobeSt.com: So, against that backdrop, let's discuss your milestone year.

Cosenza: You're right in saying it's a huge milestone for our acquisitions group and Inland as a whole. Inland has been one of the top five buyers of retail since 2001. And we pride ourselves on this transaction volume because we don't do an inordinate amount of portfolio purchases. We have the capability to handle more volume on an individual transaction basis than anyone else. That's what has made the milestone such a big deal.

GlobeSt.com: Could you highlight a couple of the deals you made this year?

Cosenza: This year alone we've purchased 53 properties totaling 7.1 million square feet, for a total price of more than $1.5 billion. We're rounding out the portfolio of our most current REIT and we're concentrating on grocery-anchored centers and building upon the concentrations in markets where we currently own and operate. So we're very focused now on the REIT's life cycle.

In terms of specific deals, to highlight just two, we purchased White City Commons in Shrewsbury MA, for $97 million. The center is anchored by Shaw's grocery, which fits the REIT's strategy to a T, and the center itself is a high-quality mix of grocery, retail, restaurants and service tenants. The property was recently redeveloped by Charter Realty and is on the highly sought-after Boston Turnpike corridor. Plus, it sits directly across the lake from UMASS medical campus with a full hospital on site and a major employment hub and research park next door. 

Another major purchase this year was one of the relatively few portfolio purchases we did—Milford Marketplace in Milford, CT and Settlers Ridge in Pittsburgh, for a total price of $173 million.  Milford is anchored by Whole Foods and is also a high-quality mix of grocery, retail, entertainment and service tenants. Settlers Ridge is anchored by Giant Eagle and has a more strictly retail-focused mix. Again both properties have hit our strategic goal of acquiring grocery-anchored centers while adding to our Northeast geographic footprint. 

GlobeSt.com: And next year?  

Cosenza: In the coming year, we'll continue to purchase retail for our private capital corporation and other products that are in development within the Inland Group of companies. We're not only looking at retail. We're looking at apartments and we continue on the single-tenant retail space also. We're also buying medical office and student housing for our private capital corporation. In all, we're poised to purchase on the same level as we have this year.