Demand for Big Box Retail Space Holding Up Well, Green Street Says

Vince Tibone, an analyst on Green Street Advisor’s retail team, joined Nareit in New York for a video interview at REITweek: 2019 Investor Conference.

While there are many headwinds facing the retail sector, the biggest positive surprise over the last year has been the demand for big box space, Tibone said.

“There’s a misperception out there that off-price retailers are the only sources of demand for bigger boxes in the open-air format, and that’s really not the case,” Tibone said. He added that demand has remained “pretty broad from a wide variety of merchandising categories. That’s been a silver lining in the strip center segment.”

Tibone also said there has been no immediate impact on shopping centers from the growth of online grocery. He also noted that about half the strip center REITs that Green Street covers are pursing some form of mixed-use development strategy. Some REITs are deciding to take on all of the development risk, while others are sharing the risk through joint ventures. Whatever approach is taken, Tibone stressed that non-retail is still going to account for less than 10% of income at strip centers.