MIAMI—Vacancies are scarce in prime retail properties. Has potential for success peaked due to low space supply? We tackled that issue in part one of our exclusive interview with Don DeWoody, a principal at Avison Young in West Palm Beach. (Click here if you missed it)
In part two, we're diving in to a few more issues vital to retail real estate: What areas are ripe for development and why? What are retailers looking to do to grow in the meantime? What are developers going to do with the assets that have laid dormant for the past couple of years?
GlobeSt.com: What areas are ripe for development and why?
DeWoody: Markets where there are strong absorption rates or currently low vacancy levels, limited supply, solid demographics, and high barrier(s) to entry. These pockets exists within various metropolitan areas of Florida, however, new development will still be primarily end user or tenant specific type of development.
GlobeSt.com: What are retailers looking to do to grow in the meantime?
DeWoody: Most of the active national retailers are highly sophisticated companies that have experienced previous market corrections so they understand the current financial climate. Bricks and sticks expansion takes time and is a long-term commitment.
Although many would like to accelerate growth plans, there is a high level of discipline. They are not going to press and make bad decisions for the sake of growth. It's important that they engage in fairly strong outreach programs to create awareness of their real estate needs, and align themselves with the right advisory team to assist them in executing a well thought out development plan.
GlobeSt.com: What are developers going to do with the assets that have laid dormant for the past couple of years?
DeWoody: The first wave of what you'll see is redevelopment in prime areas. It's deceptive to the eye, but you can have an asset that needs a lot of aesthetic work to the façade, etcetera, but has the potential to be a trophy asset because it's in the right area. Retailers are the driving force behind renovation and redevelopment and their willingness to participate in a financial model that works for landlords is making redevelopment viable.
Stay tuned for part three of this interview, where Dunwoody will discuss how supply and demand is playing out from investor's perspective and the emerging trends he sees in the retail real estate space.
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