2013's Best and Worst Retail Markets

MIAMI—It's been said—time and time again—that retail follows rooftops. With the multifamily revitalization bringing more rooftops to cities large and small over the next five years, what does that mean for retail? We've been talking with Glenn Cohen, CFO of Kimco, about various aspects of the retail real estate market.

In part one of this series, we asked Cohen what he sees as the biggest challenges retail real estate owners face this year, and his view of the economy through the commercial real estate lens. In part two, we're diving into his certainty—and what he sees as the biggest opportunities in the market. In this third segment, we asked Cohen which markets are likely to perform best—and which are likely to perform worst. We also asked him why. Read on and see if you agree.

GlobeSt.com: What markets are likely to perform best and why?

Cohen: The markets that will perform the best will continue to be those with high barriers to entry. These include the New York metro area, the Mid-Atlantic area, and the Dallas-Houston-Austin market. Others include coastal cities in northern and Southern California and the southern part of Florida. Major metro 24-hour cities that have increased population growth and an improving job market will do best.

Discount and dollar stores will continue to do well. A tremendous number of new stores in this category are projected to open in 2013. The well-run supermarkets will continue to perform and probably prosper, even though it's a very thin margin business. The grocery business is extremely competitive and requires great adeptness at operating the business, and having the right product mix and the right service for the customers, so again the customer is the key to the market.  

GlobeSt.com: What markets are likely to perform worse and why?

Cohen: Markets that have been challenged in the past will remain challenged, such as Las Vegas, Reno, and New Mexico. The Arizona market is starting to see some progress, but is still challenged. Unemployment is elevated, as is underemployment, so the employment situation will need to improve to drive further recovery.