Is the best defense a good offense for retail properties?
Daily, we watch retailers compete for consumers’ ever precious dollars. Some tried and true brands such as Home Depot emerge as winners from the recent battles in our economy. And some newcomers such as Five Guys Burgers and Fries, have a magical season of growth.
Retailers are what drive demand for retail building. In the first quarter, the retail market began to see a lot of maneuvering on the part of property owners.
Vacancy rates increased slightly from 8.3% to 8.6% countywide for centers 50,000 square feet and larger.
Average asking lease rates decreased marginally from $2.55 to $2.53 per square foot, per month.
It’s up to property owners to produce a strong offense in courting tenants to fill their vacancies.
Although the era of rent relief negotiations has slowed, some tenants still are trying to negotiate below-market rents and loads of concessions. Landlords that have a strong defense are maintaining their properties at premium levels, in-creasing marketing and promotional programs and offering leasing incentives
like initial free rent and tenant improvements to attract blue chip players for the long haul.
Marketing is key. With the downsizing of in-house staff for many buildings, brokers and property managers are being called upon to assist even more in the leasing efforts.
The single-tenant, net-leased investment market for retail remains strong and capitalization rates are showing signs of improvement.
Schillne is a first vice president in the Anaheim office of CB Richard Ellis Group Inc.
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