Retail’s Newest Benefactor

Defying the odds and the expectations, brick-and-mortar retail is doing well out of the pandemic. Its apparently strong fundamentals have in turn drawn the attention of more investors willing to put skin in the game. Meanwhile, tech continues to wobble when it comes to occupying office space. Google has put up a ton of square-footage for sublease.

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— Tom Acitelli, Co-Deputy Editor

Retail's Latest Lifeline? Equity.

Sure, retail has weathered multiple market disruptions. E-commerce, anyone? Pandemic lockdowns? Whatever its resiliency in the past, experts say it will now likely need to lean heavily on equity investments to spur deal activity amid today’s economic headwinds. Lenders and finance brokers who gathered at the annual ICSC conference in Las Vegas late last month expressed confidence that many retail properties, particularly shopping centers with grocery stores as anchor tenants, are better positioned than other commercial real estate sectors in a higher interest rate environment with generally healthy cash flows. However, increased borrowing costs from rising interest rates in a tighter lending environment, with many banks now on the sidelines, mean that retail landlords will need to find equity to finance development deals or refinancings.

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Google Puts 1.4 Million Square Feet of Silicon Valley Office Space Up for Sublease

One of the kings of Silicon Valley is cutting down on the amount of office space it uses and putting a chunk up for sublease as part of a larger effort to cut costs. Alphabet-owned Google is subleasing at least seven office buildings near its headquarters in Mountain View, Calif., according to multiple media reports, which cited brokerage marketing materials. The combined properties total about 1.4 million square feet of office, research and development space, and land in Mountain View, Sunnyvale and Moffett Park, and are available through as late as August 2031. Google’s total footprint in the San Francisco Bay Area spans about 31.1 million square feet. “As we work to ensure that our real estate investments match the needs of our hybrid workforce, we’re ending leases for a number of unoccupied spaces,” a Google spokesperson said in a statement.

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