5Qs for Phillips Edison's Bob Myers on the pulse of grocery-anchored centers
Bob Myers knows more about grocery-anchored centers than, perhaps, anybody should.
The president of Phillips Edison & Company, which owns and operates more than 300 centers nationwide, has spent a quarter century developing and curating neighborhood centers, and the business has never been better.
Chain Store Age spoke with him at ICSC New York to get an update on retail’s widest-ranging asset category.
Bob, grocery-anchored centers were one of the most active asset classes in retail real estate during the pandemic. Still the same?
Yes. We’re still in one of the strongest environments for leasing that I’ve seen in 25 years in the business. We had retention rates of 90% last quarter with renewal spreads of 22%, so it speaks to the health and profitability of the retailers. Demand has been through the roof. There’s a lot of demand.
So space is very tight, we’re guessing.
We don’t have much vacancy left. Our overall occupancy is 97.7%. Our anchor occupancy is 99%. We have pricing power. We have leverage. What uses do we want in? What retailers do we want in? We will still, however, continue to see fast casual, health and beauty, and med services being very active in this space.
How’s the development pace in new neighborhood centers?
We don’t expect to see any new development coming in for another eight years. But merchandising drives real estate valuations and cap rates. So the key thing is, what’s recession proof? For every fast casual restaurant that closes, there are one or two in the wings waiting for it.
Visits to grocery-anchored centers were especially brisk during the pandemic. Has traffic slowed down at all with people back at the office?
You will continue to see this migration from urban to suburban. Retailers want to be close to the neighborhoods. Close to the customers. The grocer brings in traffic and other tenants reap that benefits.
So what tenant classes are you focusing on?
It’s services, it’s medical, it’s fast casual and health and beauty that will be at the center of our merchandising efforts. Guests come in for groceries and, while they’re at the center, they may want to get a workout, grab a smoothie, get a haircut... that’s a win.
