From Immediate Space Filling to Quality Experiences: Key Observations from ICSC

Kennedy Wilson Brokerage’s Jaysen Chiaramonte explores the current state of retail at ICSC Las Vegas.

LAS VEGAS—At the ICSC Las Vegas conference, Jaysen Chiaramonte, Senior Associate at Kennedy Wilson Brokerage, shared his observations on the current state of the retail market, noting that “it’s an interesting time for retail right now.” From the demand for immediate space filling to the rise of location-specific operators, and the movement towards quality experiences, Chiaramonte tells GlobeSt.com.

He discussed the existence of a duality between vacancies and opportunistic tenants. Ownership groups and landlords are grappling with the need to fill vacant spaces, and their urgency varies, he says. Some are eager to fill space immediately, while others adopt a more patient approach. This dichotomy, he says, has led to a diverse range of offers, including requests for high tenant improvement allowances. “Some tenants are exploring multiple options to see what sticks, while others have specific criteria and are willing to pay a premium for prime locations.”

Chiaramonte also highlighted the challenges associated with first-generation spaces, primarily due to the high cost of build-out and the availability of capital. The approval process for these spaces is time-consuming, and tenants are only willing to consider such spaces if they offer exceptional terms or if they receive favorable deals from landlords, he says, adding that the high barrier to entry makes securing first-generation space a difficult task in the current retail landscape.

Amidst the complexities of first-generation spaces, second-generation restaurants in prime locations are in high demand, he says. These spaces, relatively turnkey and capable of quick openings, have become the hottest property types in the retail market. Smaller retail footprint spaces are also gaining traction, attracting mom-and-pop and location-specific operators rather than large corporate entities. However, he says that these tenants face the challenge of visualizing the potential of a space since they lack the experience to envision its future appearance after necessary renovations.

Chiaramonte also predicts a shift towards quality in the retail market noting that successful businesses are those that offer unique experiences, enticing consumers to venture out of their homes. Restaurants, in particular, he says, are thriving as people seek memorable dining experiences. However, there is a finite amount of high-quality space available, and the capacity for rent affordability by business owners remains a limiting factor.

Stay tuned for more coverage from the May ICSC Las Vegas event from GlobeSt.com, including exclusive insights from attendees. Also, check out the related stories already posted below on the subject: