Retailers Crave Better Real Estate Options

This year, retailers have shown insatiable demand for high quality, well-located real estate, but there is dramatically limited supply. Over the last two decades, the prevailing narrative was that the U.S. was “over-retailed,” and a “retail apocalypse” was upon us, and very little new space was built. These market conditions are fueling our strategy to urbanize shopping centers, malls and office campuses with the right mix of uses and modernized retail formats. Our retail partners are telling us we can’t build it fast enough.?

Having fully recovered from the pandemic, retailers are looking to significantly grow their real estate footprint and are competing for the small amount of Class A space available. Well-located Bed, Bath and Beyond stores have been a bellwether for this trend, with multiple replacement tenants lining up to take the vacated space. We are seeing this firsthand with our former Bed, Bath and Beyond space at Annapolis Town Center.

In the mixed-use category, we’re experiencing highly positive sentiment around physical stores, which have proven critical to retail sales strategies. Consumers have consistently shown a strong desire to shop in engaging, experiential environments where they can socialize and enjoy human interactions – the kinds of places we are proud to own and operate.?

Across our national portfolio of 16 properties, we serve more than 1,050 tenants and have seen a 10% increase in retail rents over the last two years. In the first half of 2023, our leasing team achieved significant milestones with 24 new leases signed, adding 100,239 square feet of space, and 76 lease renewals, covering 494,513 square feet.?

Our leasing velocity demonstrates our commitment to growth and our strong partnerships with retailers. We did deals with brands including: Victoria’s Secret at Alliance Town Center; The Shade Store at Annapolis Town Center; North Italia, Mango, Intimissimi, H&M, and Louis Vuitton at Galleria Dallas; Warby Parker at La Palmera; Lush at Saddle Creek; and Alo Yoga, Jo Malone, and Local Public Eatery at Market Street Woodlands.

This year is proving to be one of the strongest for retail real estate in our company’s history, as tenants are willing to pay top rents to be in our centers. We expect these positive trends to continue, as supply is likely to remain constrained for years.?

Perhaps the biggest opportunity in front of us is the mixed-use urbanization and redevelopment of well-located office campuses, shopping centers and malls. We are actively executing on plans to develop and redevelop more than 7.7 million square feet of commercial space, with additional projects in the pipeline. We see this as a generational opportunity, particularly in markets with the strongest demographics and deepest retail voids. These markets include Atlanta, Austin, Charlotte, Dallas, Fort Worth, Denver, Houston, Las Vegas, Miami, Fort Lauderdale, West Palm Beach, Nashville, Orlando, Phoenix, Raleigh-Durham, Salt Lake City, San Antonio, Tampa and the D.C. Metro.

As one example, we are planning an exciting redevelopment of Lincoln Square, a sprawling and dated shopping center in Arlington, Texas. Our plan is to transform the 45-acre property into a mixed-use gathering place for the community and modern gateway to Arlington. The new Lincoln Square will be a magnet for top retail concepts.?

We look forward to sharing more news about Lincoln Square and other projects in the months ahead. Stay tuned, better real estate options are coming.