Mega Retail REIT Shares Strategy

MIAMI—The shopping center space remains awash in unallocated capital, and there are relatively few high quality properties on the market as the REITs, pension funds, and private investors have become much more focused on obtaining and holding higher quality assets. So says Shane Garrison, executive vice president, COO and CIO of Retail Properties of America (RPAI).

RPAI is a REIT that describes itself as one of the largest owners and operators of high quality, strategically located shopping centers in the US. The company owns 224 retail operating properties spanning 31.8 million square feet.

In an exclusive interview, we asked him about the state of retail real estate. He told gave us his perspective on the market—and how RPAI is reacting to the market. For example, as Garrison sees it the general lack of high quality retail properties for acquisition has pushed investors to secondary and tertiary markets in a quest to place capital. But that's just where the retail story begins.

“Also, retail space is more dynamic today than it has ever been, due to generational preferences as well as technological innovation,” Garrison says. “Anchor space remains historically tight and there is currently not enough inventory to satisfy demand in the anchor category.”

With that in mind, Garrison shares how RPAI is looking to recapture those spaces currently leased by its watch list tenants where the firm has the ability to both drive shareholder value through higher rents and reduced cash flow risk in the future. Why is RPAI betting on this retail real estate strategy?

“This allows RPAI to provide the best asset offerings,” Garrison says. “We can offer configurations that allow our retail partners to be successful, whether in a neighborhood center or a mixed use lifestyle center, providing a unique tenant mix, service or both, creates a better overall shopping experience for the consumer.”