CCIM Q & A
By Nicholas Leider
OPEN FOR BUSINESS
Despite a tumultuous two years , the retail sector continues to draw plenty of interest from investors . Considering the opportunities in the market , Cynthia Shelton , CCIM , senior managing director of investments and capital markets with LandQwest Commercial Orlando , spoke to Commercial Investment Real Estate magazine about what she expects in retail , where she has decades of experience .
Cynthia Shelton , CCIM
Shelton details what to expect in the retail sector in the coming months , how Florida is attracting investments in CRE , and what being a CCIM Institute instructor means to her .
CIRE : SPECIALIZING IN RETAIL , YOU ’ VE SEEN FIRSTHAND WHAT COVID-19 HAS DONE TO THE SECTOR , INCLUDING THE INITIAL SHUTDOWNS , PUBLIC SAFETY MEASURES , INCREASED REGULATIONS , ETC . TWO YEARS INTO THE PANDEMIC , HOW DOES RETAIL LOOK TO PROSPEC- TIVE INVESTORS ?
CYNTHIA SHELTON , CCIM : It was interesting that 2021 was my best year in real estate . Considering I focus on retail investments , you would think investors would have dropped out during COVID-19 , but that didn ’ t seem to happen . Retail is hot — and not just in Florida . Some of the challenges remain , like with free-standing banks , health clubs , drug stores , and some big-box stores .
We have seen banks shutting down locations because many people , even pre-pandemic , chose online banking more and more . Banks found that they didn ’ t need larger spaces in their branch locations . I read that a couple of chains have started using their branch offices to let people come in and meet clients , so these spaces are operating like a shared office space .
Similarly , some of the large chain drug stores aren ’ t renewing leases at the end of their terms , opting to instead close down or
Considering I focus on retail investments , you would think investors would have dropped out during COVID-19 , but that didn ’ t seem to happen . Retail is hot — and not just in Florida .
reduce in size . The trend in size reduction is something we will see more of ; you can do the same with a 5,000-sf store as you did with 10,000 sf before the pandemic . In general , many retailers are looking at reducing size to save on cost . Many supply-chain issues are making it harder to get products , so that ’ s one more reason why more floor space is vacant .
CIRE : GROCERY-ANCHORED CENTERS HAVE , FOR THE MOST PART , BEEN A STRENGTH WITHIN RETAIL . WHAT HAS BEEN KEY TO THE PERFORMANCE OF THESE CRE ASSETS ? IS IT AS SIMPLE AS GROCERY BENEFITING FROM SUSTAINED ( OR INCREASED ) DEMAND ?
SHELTON : In general , grocery stores or grocery-anchored retail centers continue to be strong . People need food . Yes , you can have it delivered or shop online and have it brought to the car — that was something new that COVID-19 brought about . I believe this is a positive development that may continue . But have you ever gone grocery shopping and bought something not on your list ? Sure ! Most of us have walked pass something and said , “ I forgot I ’ m out of that ,” or , “ That would be good for dinner this week .” We spend more money inside the store than if we order online and pick it up or have it delivered .
CIRE : WITHIN RETAIL , HOW HAS THE RELATIONSHIP BETWEEN TENANT AND OWNER CHANGED IN THE PAST YEAR OR TWO ? CAN YOU IDENTIFY ANY CONSIDERATIONS THAT ARE NOW MUCH MORE PRESSING THAN BEFORE THE PANDEMIC ?
SHELTON : Many landlords gave tenants relief during COVID-19 , and most tenants paid that back either with increased rents or longer lease terms . I do know many landlords will want better credit in tenants or guarantees . This could also be done through larger security deposits . Another interesting front is the potential to have outside seating or use more space to spread out more than they did prior , especially in restaurant spaces .
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COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE SPRING 2022