Shopping Centers Today International

JAN 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

Issue link: https://sct.epubxp.com/i/617829

Contents of this Issue

Navigation

Page 39 of 59

Off-price/value chains drive demand for open-air center space Conor Flynn, President and CEO, Kimco Realty Corp. New Hyde Park, N.Y. In 2016, value, or off-price, is going to be the sweet spot of retail. We started to see that trend occur in 2015, but it will come into focus in 2016. Most American shoppers to- day are focused on brands — but they are focused on finding the brands they want at a great deal. Off-price retailers are really the bread and butter of the open-air shopping center. T.J.Maxx and Ross are the two largest players. For a long period of time, Nordstrom Rack was really the only off-price concept that was an "offspring" of a department sto re . No w a lm o st e ve ry d e pa rt- ment store has an off-price concept, whether it's Saks Off Fifth or Macy's Backstage. These concepts are ex- panding and driving huge demand for space in the open-air shopping center sector. As we look to 2016, a lot of peo- ple are wondering where cap rates will go, especially with the interest- rate-hike buzz that continues to build momentum. In the primary markets, cap rates have been sticky, due to strong investor demand and a lack of supply, and we see that continuing into 2016. REITs are focused on primary markets, as are institutions, international investors and high-net-worth individuals. At Kimco we have been exiting second- ary and tertiary markets. By the end of 2015, our holdings were concen- trated in the key major metro mar- kets across the U.S. We also expect the small-shop space to continue to recover this year. In the third quar- ter of 2015, half of our small-shop deals were with mom-and-pop ten- ants. This was up quite a bit from previous quarters. Small businesses are what fuel a lot of the identity of open-air shopping centers. We've done a lot in terms of trying to en- courage new small-shop concepts. We also see a tremendous prop- erty revival in the open-air center sector via redevelopment. We have identified $1.1 billion that we are planning to spend on redeveloping our assets. That's where we really try to capture all the changes and trends taking place in retail and put them to work at our centers. Secondly, wellness will continue to perform. Wellness has become part of the fabric of the American shopper as well. Wellness is a big umbrella, covering a lot of things. Retailers focused on athletics will continue to perform well. Nike is coming into the open-air shopping center world. Under Armour is do- ing extremely well. But then you also have Dick's Sporting Goods and their new brand, Field & Stream. There are also wellness concepts focused on health and exercise — whether it is the Flywheel concepts or the SoulCycle, The Bar Method; all sorts of different yoga concepts; all the different gyms; whether L.A. Fitness, 24 Hour Fitness, you name it. You also have the vitamin con- cepts — and beauty retailers, like Sephora, which is now coming into the open-air shopping center to com- pete with Ulta. There are many different subcat- egories in that wellness umbrella. Then you get to the specialty grocers or farmer's markets that are focused on organics, which is a different sub- category of wellness, such as Whole Foods with their new 365 by Whole Foods Market concept. Those are con- tinuing to become a bigger focal point of people's daily routines, and retailers are responding to that. You will see more competition from the traditional grocers as they start to target those wellness categories as well. 40 S C T / J a n u a r y 2 0 1 6 "We have identified $1.1 billion that we are planning to spend on redeveloping our assets. That's where we really try to capture all the changes and trends taking place in retail and put them to work at our centers."

Articles in this issue

Archives of this issue

view archives of Shopping Centers Today International - JAN 2016