Optimism in the retail real estate industry might be up, as evidenced by the mood at last week’s ICSC New York National Conference, but that doesn’t mean that vacancies across the retail real estate landscape are necessarily getting filled.
“No one’s lighting the world on fire at the moment,” said Neill Kelly, president of DJM Realty, a Gordon Brothers Group company that disposes of vacancies left by big chains.
The Northeast can be an exception. A lot of chains want to be in the area because it is hard to secure locations, but there are some roadblocks ahead of them. Some firms realize that once they find a vacant location, it is tough to secure others, and there is little reason to expand unless you can manage a significant footprint. Meanwhile, once they do find a site, companies start to realize that the costs, especially real estate taxes, are burdensome compared to other parts of the country.
“You’re only going to come up here there is an opportunity to get a critical mass of locations,” Kelly points out. “It’s not like a deluge where it’s a complete buyers’ market.”
But some chains, like Chick-fil-A, are able to make it work as of late, he says.
Until there is some kind of resolution in Washington with the fiscal cliff and other financial matters, we are not likely to see another large wave of retailer expansion, says Kelly. “As long as this continues, no one is going to be able to plan for the future.”