During a time of record-low retail vacancy rates and steady tenant demand, many developers are finding new ways to create value in markets with tight supply. Across the Northeast and Mid-Atlantic regions, creative strategies are allowing teams to find new opportunities, even in some of the tougher and higher-barrier markets.
“Vacancy rates are at an all-time low, and there just hasn’t been much built in this sector,” says Jack deVilliers, managing director, Northeast, at Regency Centers. “You combine that with the strength of the post-pandemic brick-and-mortar retailer, especially those grocery-anchored centers, and the fundamentals continue to be very healthy.”
Understanding how market fundamentals, tenant demand and redevelopment strategies intersect can help developers continue achieving growth in the current market conditions.
Redevelopment and Re-Tenanting Continue to Support Growth
A lack of retail space continues to be a persistent challenge. However, Krista Di Iaconi, managing director of the Mid-Atlantic region at Regency Centers, notes there are still plenty of opportunities.
“There’s really a lack of quality retail space,” says Di Iaconi. “We operate in a very specific product type focused on community and neighborhood grocery-anchored retail, and demand from retailers remains high.”
She notes that her group is finding opportunities in existing shopping centers that are undermanaged. In these situations, they can re-tenant or replace an existing anchor with one that is more productive and has greater potential.
DeVilliers adds that grocery-anchored and open-air formats continue to offer strong opportunities in the retail market.
“If you’re looking at these centers, the grocery anchor is really important,” he says. “It drives the community connection, and then it’s about how you merchandise the surrounding shops to create a strong customer experience.”
Developers are also curating tenant mixes around necessity-based retail and quick-service restaurants, often supported by services that can’t be easily replicated online. “Half of our deals are food and beverage,” says deVilliers. “You’re seeing many QSR concepts such as Starbucks, Chipotle and Shake Shack, but also more service and medical uses entering the mix.”
Di Iaconi agrees that this mix has helped maintain performance through economic volatility. “Many of our centers provide essential goods and services such as grocery, pharmacy and fitness, covering all of those daily needs,” she says.
‘Boots on the Ground’ in Local Markets Offering Advantage
Moving forward, both deVilliers and Di Iaconi agree that identifying new opportunities remains a persistent challenge. However, they stress the value of community relationships and maintaining teams in the local market.
“Every town has its own process,” says deVilliers. “Having boots on the ground who know exactly how to navigate those local discussions makes a huge difference.”
Di Iaconi notes that Regency Centers’ regional teams stay in constant communication with retailers about their expansion goals, which helps her team determine where to focus next.
DeVilliers adds that maintaining a long-term perspective is important in any market. “We’re long-term owners,” he says. “When a space comes back to us or a lease expires, we want to make sure we’re making the right deals. We take our time, find the right tenants, and structure agreements that make the most sense for the long run. And that’s what continues to drive growth.”
Visit Regency Centers at ICSC NEW YORK, booth 2035 on level 3.
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