07/24/2013 | By Carisa Chappell
Steven Shigekawa, managing director with Neuberger Berman, joined REIT.com for a video interview in Chicago at REITWeek 2013: NAREIT’s Investor Forum.
Shigekawa discussed resurgence in the mall space as well as other sectors that he’s bullish on.
“When we look at the fundamentals in that space they are continuing to improve. When we look at tenant sales or retail sales, those numbers are improving,” he said. “We think that the mall landlords are in a very competitive space relative to their tenants. The tenant-landlord discussion is in favor of the landlord at this point because the retailers want to add new space and they want it to be in the highest productivity malls. Those are largely owned by the mall REITs.”
Shigekawa added that the lack of new supply in the regional mall space also benefits the sector. He anticipates that the lack of new supply and increasing demand will continue over the next several years.
He said he also likes the industrial warehouse space. The sector has had three years of positive absorption and landlords have reported that leasing spreads are turning positive, according to Shigekawa.
“This is very important after nearly five years of negative leasing spreads,” he said. So we think that when you look at the renewals of leases signed in the prior periods of 2003 to 2006, we’re largely past that point. We think it will be more favorable in terms of the industrial warehouse landlords to be able to increase occupancy in their portfolio and in addition get rental rate increases.”
Additionally, Shigekawa said he believes the big story for the REIT market in the second half of the year will be centered on the recovering housing market.
“When you talk to the industrial landlords, their small space vacancy rates are improving. Much of that is being driven by strength in the housing market,” he said. “Floor and tiling contactors are often the tenants in those small spaces.”
He also said that as single-family home values increase it will have a positive impact on the retail sector because consumer confidence will grow.