By Nicholas Leider
HOW RETAIL RESPONDS
As retailers find their footing in 2022 , opportunities abound in a sector that faced plenty of challenges during the pandemic .
EXCLUSIVE SUPPORT FOR COMMERCIAL INVESTMENT REAL ESTATE PODCAST IN 2022 COMES FROM
Whether it ’ s increasing outdoor dining or reducing density in offices , high-traffic areas that are a part of everyday life have permanently changed due to the pandemic . This isn ’ t inherently a positive or negative — commercial real estate professionals will play a significant role in determining the ultimate value of these alterations .
Examining what various commercial real estate sectors can expect in 2022 and beyond , Dan Spiegel , managing director at Coldwell Banker Commercial , discusses the retail market ’ s prospects in the wake of the COVID-19 pandemic . While shutdowns and public health restrictions have made life difficult for some retail sectors , demand for investment properties looks to remain strong . Spiegel also emphasizes the available opportunities for CRE professionals who can think creatively and find new solutions .
CIRE : AS WE HEAD INTO 2022 , WHERE DOES THE RETAIL SECTOR OF COMMER- CIAL REAL ESTATE CURRENTLY STAND ?
DAN SPIEGEL : If we can say we are in the post-pandemic era , I think the retail market is still shaking out . I know in the Chicago area where I live , some of the restaurants that went vacant are now replaced by new versions of restaurants . You ’ ll start to see some retail come back — but there are also areas of retail that are just gone or have transformed . From the demand side , there ’ s still some question marks as to where we ’ re headed into next year . Markets change , and I expect demand will return , as long as the consumers are back .
On the investment side , there are definitely opportunities in commercial real estate in the retail segment . It ’ s not uniform across the country or across all product types , but some product types such as net-lease , freestanding retailers are in high demand . Grocery-anchored shopping centers are also in demand . At the same time , places like regional malls are still struggling , which I expect to continue into 2022 .
CIRE : WITH RETAIL DEMAND HOPEFUL- LY STARTING TO RETURN , IS THAT A POSITIVE SIGN FOR COMMERCIAL REAL ESTATE INVESTORS LOOKING FOR AN OPPORTUNITY IN THE SECTOR ?
SPIEGEL : If you are the owner of a retail center , for example , you ’ re looking for that tenant who is going to come in and drive traffic — so not just pay rent but also drive traffic to your center . And as I mentioned , not all retail is contracting . Some areas have struggled and will continue to struggle . But there are new segments , too — for example , the veterinary care business . Everyone ’ s got the pandemic puppy , right ? The demand for veterinary care has exploded across the country over the past 18 months . Also , if you ’ re in a state where cannabis is legal , that ’ s another entirely new type of retail use that wasn ’ t around in many places , say , 24 months ago . That will fill up some retail spaces . As tenants fill up the vacant spaces , the property owners are pleased , and it drives returns for investors .
CIRE : YOU ALLUDED TO RETAIL BEING A MIXED BAG AS FAR AS THE IMPACT OF COVID-19 . ARE THERE SPECIFIC THINGS YOU SEE IN STRUGGLING MARKETS THAT WILL NEED TO BE TACKLED IN ORDER TO BOUNCE BACK ?
SPIEGEL : If you ’ re a grocery-anchored center , a hardware store , or any kind of essential service that did not slow down during the initial stage of COVID-19 , you are certainly still strong . But at the same time , in those grocery-anchored centers , it can be a challenge to find the right kind of other tenants . Some uses are still a bit uncertain — if it ’ s a fitness center or a restaurant , for example . It ’ s still a challenge to find users to fill up that last 10-15 percent of a retail center . Different parts of the country have been impacted by COVID-19 in different ways and have reacted with different rules and regulations . There is still some variation that , as an owner
6
COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE WINTER 2022