Retail Gets Out of the Box

September 21, 2009Article
California Real Estate Journal

Retail rode the economic wave that flooded commercial real estate with capital to become a favored real estate investment product type. As credit markets and consumer spending dried up, retail has become one of the most at-risk property sectors. About $30 billion in retail real estate — more than 1,500 properties — is in some state of distress nationally, making retail the No. 1 distressed property type, according to Real Capital Analytics. More retail distress is bound to come due to limited refinancing options, a stalled transactional market and ongoing fundamental challenges as more household-name retailers go bankrupt. Yet today’s market conditions may represent one of the most opportunistic times in years for retail. Formerly untouchable properties will become available in the distressed market. The shake-up among national credit tenants has opened up opportunities for growing tenants.

Retail anchors being redefined as empty big boxes present new redevelopment opportunities. Developers can look beyond the lifestyle center and ground-floor retail under residential as the cutting edge of retail development. Retail is poised to go out of the box as today’s challenges will force new creative thinking in a sector that constantly must reinvent itself. The California Real Estate Journal gathered five retail experts to discuss the latest trends in the sector.

Moderated by Editor Michael Gottlieb, the Roundtable included:

ALEX CZOPEK, southwest division real estate manager, 7-Eleven Inc.

HENRY D. FINKELSTEIN, partner, Greenberg Glusker

TOM GAST, principal, Gast Retail Group

JACK KYSER, founding economist, Kyser Center for Economic Research, Los Angeles Economic Development Corp.

FRED C. SANDS, chairman, Vintage Real Estate LL