LA JOLLA, CA—Many retail tenants no longer find it necessary to pay the price premium to be in high-profile locations and shopping centers or urban markets, Newmark Grubb Knight Frank managing director Randee Stratton tells GlobeSt.com. After completing a 10-year restaurant lease on behalf of Dolce Pane e Vino at the Village at Pacific Highlands Ranch in the Carmel Valley area of San Diego, Stratton sat down with us for an exclusive interview about the retail market and what tenants are seeking.

GlobeSt.com: You represent tenants that are seeking spaces in shopping centers and mixed-use urban developments throughout California. What are they looking for?

Stratton: I specialize in a variety of tenant types, ranging from service-type tenants such as hair salons, spas and fitness centers to soft goods and restaurants. I have seen firsthand how tenant requirements have changed since social media came online. This is largely due to Facebook and Instagram followers getting daily updates on products, specials and relocation news. For example, restaurants can create buzz based on its chef, mixologist, and operating managers, who can bring their own clientele to the business. With the exception of large square footage national restaurants, a majority of my clients no longer find it necessary to pay the price premium to be at “main and main” in shopping centers or urban markets. This, in turn, changes site criteria to focus more on the aesthetics of the property, sufficient parking, local market demographics, ease of access, co-tenants and visibility, and deal points including overall rent and ownership's willingness to provide TIs.

GlobeSt.com: As an exclusive tenant-rep broker, how would you describe your relationship with shopping center owners and mixed-use developers?

Stratton: Since I exclusively represent tenants, I have an excellent working relationship with landlords and listing brokers because there is no landlord/client conflict of interest. I meet with a number of landlords on a regular basis for portfolio reviews of potential opportunities for my clients. Most of my clients are multi-unit operators and we can conform leases efficiently, which benefits both parties in the transaction. This works well with REITs as well as independent and local landlords.

GlobeSt.com: What geographic areas are growing or changing from a tenancy perspective?

Stratton: Over the last three years, there has been strong tenant activity and slow completion of new properties throughout California, especially with the usual suspects (San Francisco, Los Angeles and San Diego), bringing more competition for spaces. As we analyze specific markets for client growth, we look at vacancy percentage, rent growth and potential population growth. Sacramento and other outlying submarkets of California are now benefiting from the expansion of many retailers, and landlords are willing and able to provide better economics in those markets. With multi-unit operators, we also want to cluster their locations within the submarkets as much as possible. This gives them the ability to achieve their desired management control.

GlobeSt.com: How do you see retailers' needs changing over the next five to 10 years?

Stratton: Retailers are realizing they can adjust their square footage needs for a desirable market. They don't have to be stuck in “cookie-cutter” square footage or layout design. With the increase in rents and NNNs, especially in new developments, tenants are becoming more creative and open to ideas to make their space work for them, while remaining sustainable.