Spenser Allaway, retail analyst at Green Street Advisors, participated in a video interview at Nareit’s REITworld: 2018 Annual Conference in San Francisco.
Allaway highlighted the efforts underway by retail landlords to remain competitive in the current evolving environment.
“Improving the overall look and feel of the mall is certainly key, but there needs to be just as much emphasis placed on the social offering of the mall as there is on its overall functionality,” she said.
Turning to the benefits of densification projects, which add in non-retail uses, Allaway noted that they allow REITs to shrink underproductive retail space and increase foot traffic. She said Green Street expects more of these projects in the future as REITs have been successful in finding partners to help mitigate development risk.
Allaway also discussed net lease REITs and the benefits they are seeing from portfolio diversification and more service-oriented concepts.
Looking more broadly at the retail real estate sector, Allaway said the biggest trend seen in 2018 has been the more positive overall sentiment. This reflects an improving retailer base, a significant slowdown in store closures relative to 2016 and 2017, and a healthier consumer.
“Not only are we seeing the overall narrative begin to improve but we’re also seeing actual validation by way of these digitally-native brands for the relevance of higher-end retail real estate,” Allaway said.