While owners and developers are redeveloping, expanding and beginning to plan new developments across the Northeast, property surpluses created by the recession remain. Where are these surpluses? How will they be disposed of? Chain Store Age asked Andy Graiser, co-president of A&G Realty Partners, to talk about disposition today in the Northeast. Graiser is a property disposition expert with more than 25 years of experience with retail real estate.
Characterize surplus retail real estate in the Northeast.
The surplus is virtually non-existent in A and B locations. C and D locations, however, still have a lot of surplus. Landlords are starting to redevelop these older centers. The improved properties can attract new tenants especially with the significant demand in today’s market. So the C and D surpluses are declining — slowly.
What is the disposition process?
Each retailer requires a different strategy. The key is studying the retail business model and thoroughly reviewing the real estate portfolio — leases, markets, shopping centers and competitive real estate.
Once you understand the portfolio, you know where the values are, and you can gauge the costs involved in terminating the leases. You must also evaluate how landlords and retailers will react to opportunities presented by surplus real estate.
How are landlords and retailers reacting today?
Limited new development plus good demand from growing retailers in all sectors — and from non-retail businesses such as health care — have caused rents to rise in A and B locations. Landlords will negotiate lease terminations, down-sizes and subleases for these locations. Landlords continue to work with retailers in C and D centers. They don’t want to lose occupancy there.