Kensington Real Estate Group

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Leaders Discuss What Makes the Retail Segment Tick

Marcus & Millichap hosted its annual Southern California Commercial Real Estate Forum on Jan. 28 in Los Angeles. More than 450 investors, owners, developers and other principals gathered to hear insight shared by industry leaders in the retail, office, industrial and multifamily sectors.

Chris Hite of Kensington Real Estate Group and Coreland Companies was among the panelists featured in a mid-day session, “Open-To-Buy: Trending Retail Inventory & Valuations.” The panel, moderated by Marcus & Millichap Vice President/National Director Bill Rose, focused on what’s next for developers, tenants and consumers. Sharing leasing statistics and investment sales trends, all were in agreement that CRE indicators point to accelerating growth in the Southern California retail sector.

Low crude oil prices, low interest rates and employment gains position the greater Los Angeles area among the Top 10 metros in terms of vacancy rates job recovery, shared Rose.

However, panelist Dirk Van Wyk, Vice President of Asset Management of BIG Shopping Centers, cautioned that there are still various at-risk retail categories, including electronics and shoes, that impact regional shopping centers.

Howard Sands, Managing Director and Founding Principal of Corporate Capital Group, shared that we still suffer from an ’inventory issue.’ “There is a lot of demand, but very little supply.”

When asked by Rose if now is the time to push rents, Hite shared: “we are still seeing weaker sales growth among mom-and-pop tenants because job and wage growth has been tepid. However, our teams have made renewals a top priority because there are various means of creating value, in addition to pushing rents.”

“Rates are not everything. Negotiating rates in return for a longer-term deal might be a better play for key tenants. Renegotiating CAM caps or working to eliminate exclusions can be equally valuable. Negotiating any other beneficial additions or deletions from leases – anything keeping you from being able to lease space – creates value.”

“I believe that we don’t negotiate to lease space, we negotiate business opportunities,” shared Carl Middleton, Senior Vice President of Northgate Gonzalez Markets. “We can do that today, but we couldn’t do that mid-recession. Today I can take a much more big-picture view and take a risk on an aspiring asset.”

For a recap of the event, visit: http://mmlosangelesforum.com/.