Marcus & Millichap Celebrates Clients, Talks Retail Transformation
According to the firm’s Scott Holmes, SVP and national director of the retail group, a lot of investors are showing renewed interest in both single-tenant net lease and multi-tenant retail shopping centers.
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LAS VEGAS—GlobeSt.com was in attendance last night at Marcus & Millichap’s big client party and according to the firm’s Scott Holmes, SVP and national director of the national retail group, the main difference from this time a year ago to now is a more positive environment.
He tells GlobeSt.com that from late 2017 to early 2018 many headlines dominating the news were “the retail apocalypse” and “the end of the retail” – using negative language when describing the retail sector. Now that we’ve had a year to test the market, he says, headlines surrounding retail have become positive, just as 2019 started on a positive note.
“The 2018 holiday shopping season was one of the most successful in the last 10 years as a lot of retailers’ earnings came in positive and not as many retailers declared bankruptcy or closed their stores,” explains Holmes. “Due to these facts, we’re seeing a lot of investors with renewed interested in retail properties – both single-tenant net lease and multi-tenant retail shopping centers. Sellers have also become more realistic, and, buyers have become more aggressive in closing the gap. Overall, in terms of pricing, volume, etc., we expect the retail market to be the same, if not slightly better than in 2018.”
As for what’s in store for 2019? Holmes tells GlobeSt.com that the transformation of the retail sector into destinations featuring a blend of entertainment, experiences and services is now well underway. “Omnichannel retail, which was once little more than a buzzword, has come to fruition, with online retailers adding physical store locations just as traditional retailers refine their online presence,” he explained. “Space demand remains robust and rents have reclaimed their pre-recession levels. Limited new construction, together with the extended growth cycle that has seen the addition of more than 20 million jobs and exceptionally tight unemployment, has given rise to the reinvigorated retail sector, inspiring investors to show increased interest in the opportunities that these assets offer for both current yield and appreciation.”
Marcus & Millichap recently distributed its 2019 retail investment forecast as well, showing that the coming year holds the prospect of many positive dynamics for retail investors.
“Household wealth and disposable income are at record levels, consumer confidence remains elevated, and retail sales grew by nearly 5 percent last year, well ahead of the long-term average,” the report says. “These trends should carry into 2019, supporting sales for a wide range of retailers.”
Holmes explains that “There will assuredly be headwinds, particularly for retailers and shopping malls that have failed to adapt, but as these icons of days gone by finally surrender their spaces, new opportunities will arise.”
Some properties, he says, will face adaptive reuse, transforming into office space, residential units or community centers, but others will revive with the addition of food halls, health clubs and entertainment facilities. “Well-funded investors with a sharp eye for opportunity will lead these transformations.”
Keep checking back for more in the coming week for wall-to-wall coverage surrounding the Las Vegas ICSC RECon show and overall trends in the retail market. And check below for stories you might have missed.