Retail: The Touch-and-Feel Gap

Who are the most prominent retailers focused on showrooming and why? Shahin Yazdi, principal and managing director of George Smith Partners, gives us his thoughts and talks more retail trends and ICSC RECon takeaways.

One prominent trend ICSC RECon attendee Shahin Yazdi is seeing includes a continued shift toward showrooming. The principal and managing director of George Smith Partners tells GlobeSt.com that retailers such as Nordstrom Local, b8ta, Bonobos and Tesla are focused on showrooming their interactive product displays, which he says bridge the touch-and-feel gap that is unavailable from online purchases.

Another trend he is taking notice of is a strategic increase in temporary retail tenants. “As the experience economy continues its focus on new, exciting environments, retail owners are taking note, often arranging a dynamic line-up of non-permanent retail offerings that change throughout the year to accommodate both new and returning guests.” The result, he says, is exciting for consumers, and yet can be complex for capital markets.

“Financing retail projects in this environment requires strong in-place relationships and a clear business plan that demonstrates the property’s viability within its local market,” he tells GlobeSt.com. “Today’s lenders are looking for a deep level of detail to thoroughly understand each retail project’s location, tenant mix, rollover risk, tenant credit and remaining lease terms, co-tenancy clauses, and most importantly health ratios (occupancy costs, comprised of rent + CAMs, divided by tenant sales).

By communicating each of these elements thoroughly, today’s lenders can recognize a Sponsor’s ability to execute, and subsequently realize the value in financing retail transactions.”

His biggest take away from the ICSC RECon conference last week is that sponsors are having a hard time finding deals that make sense. “The investor pool for retail assets has increased significantly over the last few years thus cap rates have decreased.”

Check back with GlobeSt.com in the next week for more from our wall-to-wall retail coverage surrounding the Las Vegas ICSC RECon show last week including exclusive discussion with attendees on trends in the market. Also, take a look below at stories you might have missed.

https://www.globest.com/2019/05/28/marketing-to-niche-demographics/

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