Many of California’s retail spaces are still sought after by tenants, but the high-cost environment proves challenging when it comes to making actual moves – whether you’re a tenant, landlord or investor.
An Excerpt from the September 2024 issue of Shopping Center Business
John Hickman, managing director of the San Diego division for NewMark Merrill, notes that the challenges presented by rising costs impact more than just development and re-development efforts.
“The high cost to replace tenants continues to be a challenge when dealing with new vacancies,” he says. “Owners are facing significant cost pressures, which are evident with landlord work and tenant improvement allowance.
But the costs don’t stop there, regardless of whether a tenant is looking to expand or not.
“Merchant are faced with higher input costs, including rent, utilities, cost of goods and labor – and they also face margin pressure,” Hickman says. “They aren’t always able to pass through their higher costs, and some indicators are showing consumers are watching their spending.”
To be sure, today’s retail investors are definitely on the hunt for great solutions. Hickman has witnessed an increase in partnerships between shopping center owners and strategic partners that can unlock value and execute repositionings.
“There’s flurry of institutional investors pursuing fortress assets,” he says. “[They] continue to reinvest, expand and improve the quality of tenancy.”
Hickman points to Fashion Valley, Westfield UTC, Liberty Station and the Forum Carlsbad as a few examples of institutional partnerships at work in San Diego alone.
Read the full article here: https://editions.mydigitalpublication.com/publication/?m=58488&i=830091&p=30&ver=html5