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As retail becomes more experiential, many cities' annual restaurant sales outpace annual grocery sales. Dine-in theaters, fitness centers and experiential anchors are often part of an ideal tenant mix, Endeavor vice president of leasing Adam Zimel said at Bisnow’s Annual Austin Retail: Around The Retail Experience event yesterday. Restaurant, healthcare and service retail are surging, while soft goods have somewhat fallen out of favor.
A reputable anchor used to get a project financed, but now landlords want as few anchors as possible, Whitestone REIT chairman and CEO Jim Mastandrea said.
But lenders and investors aren’t as savvy — or comfortable — with anchor changes. Few lenders will finance a spec project without 50% pre-leasing, Lincoln Property senior vice president Wes Babb said. But there’s an opportunity to change the future of retail if lenders are willing to get comfortable financing gym, theater, bowling alleys or other atypical anchors.
And tenants are wising up about what lease terms benefit them financially. Mastandrea has seen many tenant reps pushing for decade-long leases, rather than three or five years, to lock in low rates and negate inflation.
We'll have more coverage of Bisnow's Austin retail event, including expert commentary on taxes, staffing shortages and lease terms in our next issue. Stay tuned!
Update: Jan. 25, 6:08 CT: A previous version of this story included details taken out of context and have been removed.
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