Investors’ Appetite for Retail Assets On the Rise
Investors recognize that retail centers are a crucial part of their portfolios.
It is an exciting time to be involved in retail real estate, especially if you are a seller or owner of such an asset. Investors are bullish on this segment of the market especially as leasing and other fundamentals show sound growth.
This year there are a large number of retail investment opportunities coming to market, Ryan Ash, Vestar Project Director, tells GlobeSt.com. GlobeSt.com spoke with Ash at the recent ICSC event held in Las Vegas.
“We have seen investors recognize best-in-class retail centers as a crucial part of their portfolio and the demand for these assets is as strong as it has ever been,” he says. Leasing activity has been a crucial part of this investor pull, Ash adds, noting that its team executed a record-breaking number of leases last year across its 30 million square foot portfolio. “This has led to record high occupancy at our centers in conjunction with our tenants experiencing record sales that exceed 2019 levels.”
Rents are also on the rise in no small part due to the relative lack of construction in recent years, Daniel Katz, founder and managing partner at KPR, noted in an ICSC session.
“There is a big appetite for retailers to grow,” he said. “If you have good retail, you have been able to push rents incrementally across the portfolio.”
Katz also pointed to the volume of product coming to market in terms of deal flow, saying “NOI growth is really going to hold true.”
The average deal has traded at a 6-cap, according to Brandon Svec, national director of US Retail Analytics of CoStar and another ICSC panelist. “We are expecting some cap rate expansion but we are also looking at a very high growth environment for retail as it stands today. That will help offset cap rate expansion.”