One prominent trend ICSC RECon attendee Shahin Yazdi is seeing includes a continued shift toward showrooming. The principal and managing director of George Smith Partners tells GlobeSt.com that retailers such as Nordstrom Local, b8ta, Bonobos and Tesla are focused on showrooming their interactive product displays, which he says bridge the touch-and-feel gap that is unavailable from online purchases.
Another trend he is taking notice of is a strategic increase in temporary retail tenants. “As the experience economy continues its focus on new, exciting environments, retail owners are taking note, often arranging a dynamic line-up of non-permanent retail offerings that change throughout the year to accommodate both new and returning guests.” The result, he says, is exciting for consumers, and yet can be complex for capital markets.
“Financing retail projects in this environment requires strong in-place relationships and a clear business plan that demonstrates the property's viability within its local market,” he tells GlobeSt.com. “Today's lenders are looking for a deep level of detail to thoroughly understand each retail project's location, tenant mix, rollover risk, tenant credit and remaining lease terms, co-tenancy clauses, and most importantly health ratios (occupancy costs, comprised of rent + CAMs, divided by tenant sales).
By communicating each of these elements thoroughly, today's lenders can recognize a Sponsor's ability to execute, and subsequently realize the value in financing retail transactions.”
His biggest take away from the ICSC RECon conference last week is that sponsors are having a hard time finding deals that make sense. “The investor pool for retail assets has increased significantly over the last few years thus cap rates have decreased.”
Check back with GlobeSt.com in the next week for more from our wall-to-wall retail coverage surrounding the Las Vegas ICSC RECon show last week including exclusive discussion with attendees on trends in the market. Also, take a look below at stories you might have missed.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
