REIT Retail Exit Leaves Behind Thin Buyer Pool

Phil Voorhees, EVP, CBRE National Retail Partners – West

In the last few years, public REITs and some institutional investors have pulled back their capital allocation from retail assets, leaving behind a thin buyer pool for assets priced above $35 million. It isn’t all bad news, though. The shift has opened up space for pension funds and family offices, along with other sources of private capital, to transact in the market, and this buyer pool has been bullish enough on the city’s retail market to fuel strong pricing. Last week, for example, the 195,000-square-foot Vista Village complex in San Diego traded hands for $66.2 million—according to industry sources unrelated to the deal. The buyer, CFT Vista, is a Las Vegas-based private investment firm, and a perfect example of the capital bidding on these deals.

“Since 2017, we’ve seen a pullback from the public REITs, creating an opportunity for pension funds, advisors and family offices,” Philip D. Voorhees, vice chairman at CBRE National Retail Partners-West, tells GlobeSt.com. The exodus of these capital sources has expressly impacted large retail shopping centers with price tags exceeding $35 million—which is generally the retail niche occupied by institutional dollars. “With a pullback in REIT and some institutional interest, the bidder pool for assets over $35 or $40 million gets thin fast,” adds Voorhees. “Thinking of the world as a capital pyramid, there are more investors with $5 million liquid to spend than $10 million, and more with $10 million than $20 million or $30 million.”