As a nation, and a world, of retailers watch for any and every sign that the economy is improving, there are plenty of experts that express cautious optimism that a turnaround is in the making.
Chain Store Age talked with Ivan L. Friedman, president and CEO of New York City-based retail real estate advisory firm RCS Real Estate Advisors, about the indicators he is seeing that support an economic lift in retail real estate.
CSA: The news is filled with mixed signals about where we are in terms of an economic rebound. Are there indicators that retail real estate is rebounding?
Friedman: I would say retail real estate is cautiously rebounding. We’re seeing the moderate to upscale retailers opening stores at a much slower rate than we’ve seen in past years. They are gradually returning to the market and being very selective about their real estate. On the other hand, value retailers are robustly opening stores and continue to expand because they’re seeing the highest levels of comp sales increases. Since the end of 2009, they have been taking advantage of the good real estate that’s out there at good prices and the willingness of landlords to consider reasonable rents.
CSA: What are the most telling indicators of the current state of retail real estate and how would you summarize where we are right now?
Friedman: Right now, outlet centers have stronger comp sales than traditional malls. The outlets are getting more interest from retailers looking to expand. Landlords are raising rents in the outlet locations to try to offset the lack of interest they’re getting for traditional mall spaces. I would say that where we are right now is in a holding pattern. Until we see how the holidays go, we won’t really know where we are or where we’re headed.
CSA: What should retailers be focused on for the rest of this year and first quarter 2011?
Friedman: Retailers should be focusing on their renewals. This continues to be an opportunity to optimize occupancy costs for any remaining portion of their po