Do you also see a significant shift in retailers’ real estate strategies going forward?
A lot of retail occupiers are shifting their business models. Point-of-purchase space is being repurposed to accommodate fulfillment, particularly in consumer goods. Retailers are looking for ways to create synergies with other high-traffic tenant models in their centers. Say you’re a Home Depot or a Best Buy and you’re looking at excess parking in front of your stores. You’re going to start thinking about attracting a Starbucks or a Chick-fil-A in that parking lot to bring more traffic in.
So how does that play out with the regional and super-regional malls that have been hurt during the pandemic?
Debt has to have a maturity date many years out, and equity needs to be patient. I think what we’re seeing happen with a lot of mall foreclosures is investors pushing too hard on the owner or developer, forcing them to push for a fast sale. But if equity can be patient, and if they develop sound re-tenanting strategies, they’ll have two flat years to maximize value.
What might you consider a sound strategy?
I think you’ll see a lot of removal of point-of-sale at malls and maximization of distribution. You have Amazon looking at a lot of empty Sears and Macy’s to use as distribution centers. You’ll also see developers carving off the edges of parking lots and lining the outer edges with quick-service restaurants, coffee shops, and health services.