The current economic climate has us all thinking more about retail expansion than perhaps over the last two to three years, but real estate disposition/portfolio optimization isn’t just on simmer. There’s still plenty of action in that arena, and Chain Store Age talked with Spence J. Mehl, senior VP of New York City-based RCS Real Estate Advisors, about the latest happenings.
There was a flurry of activity with regard to bankruptcies/liquidations over the past 12 to 18 months, and yet the last 60 or so days have been strangely quiet. Are we through the worst of it?
Most retailers file bankruptcy in the post-holiday season, so it’s not unusual for the summer months to seem “quiet.” It seems as though we’ve hit bottom and are now on an upward curve, but, as always, the holidays will really be a deciding factor on whether or not we’re through the worst. If we have a flat or weak holiday season, I think we’ll see another flurry of post-holiday bankruptcies from some of the weaker players.
We’re starting to hear stirrings about expansion. Is that consistent with what you’re seeing?
We are definitely seeing retailers show interest in what I call the “super” markets—those markets that have great space available and a propensity for strength in the current economy. Solid retailers from all sectors are finding significant opportunity in these markets, and are showing particular interest in expanding into those markets where they don’t already have a presence.
Is there enough expansion activity to start chipping away at the vacancies?
Most of the quality real estate in good markets has been absorbed. But, quality real estate is always going to move. If anything is currently vacant, it will most likely stay vacant for some time.
What are some of the projects you are currently involved in, and give us an activity update?
We are actively opening up new stores for our growth and development clients and are seeing good open-to-buys. Many are still being cautious on the pro formas, but expanding where the numbers make sense. Our portfolio optimization business is also active right now. There are still a lot of retailers who need help and should always be looking to optimize what they have.