WEBVTT - Retail Space Seeing Store Openings Return 0:00:00.040 --> 0:00:03.600 You're listening to Bloomberg Business Week with Carol Messer and 0:00:03.680 --> 0:00:08.240 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So we 0:00:08.240 --> 0:00:10.680 did get that read on retail sales rising the most 0:00:10.720 --> 0:00:13.080 in ten months, broad based rebound. You really have to 0:00:13.080 --> 0:00:15.520 dig that into the details to understand because otto was 0:00:15.560 --> 0:00:18.759 a big part and furniture among the biggest gains. Let's 0:00:18.760 --> 0:00:21.680 talk about let's talk a little bit about US retail 0:00:21.960 --> 0:00:25.760 from a real estate perspective. Joining us now is Angie 0:00:25.800 --> 0:00:28.880 salon Ki, National director of US Retail at call Yers, 0:00:28.960 --> 0:00:33.479 the commercial real estate brokerage services firm. How are you on. 0:00:34.000 --> 0:00:36.760 Good to have you on the show. Thank you so much. 0:00:36.800 --> 0:00:38.919 It's great to be on the show with you. So 0:00:39.159 --> 0:00:41.000 just give us an update right now on how things 0:00:41.040 --> 0:00:43.319 are going around the country. We like to check in 0:00:43.479 --> 0:00:46.200 with call Yer's pretty much once a quarter to get 0:00:46.200 --> 0:00:49.239 the temperature of what's going on when it comes to 0:00:50.240 --> 0:00:52.800 commercial real estate and and and where things are. How 0:00:52.800 --> 0:00:56.080 would you characterize foot traffic and and and the temperature 0:00:56.240 --> 0:01:00.440 compared with pre pandemic. Yeah, that's a great question. Intense 0:01:00.480 --> 0:01:03.840 though the retail sector definitely has seen a nice kickoff 0:01:03.880 --> 0:01:09.080 ino and nevertheless we're still spending mostly due to the 0:01:09.120 --> 0:01:14.480 transfer of spend from services to products. Entertainment and leisure 0:01:14.760 --> 0:01:18.040 are still not back to normal. Fully, the great news 0:01:18.040 --> 0:01:21.480 that we're seeing when it comes to retail is really 0:01:21.640 --> 0:01:26.000 around the absorption. So roughly seventy six point finally in 0:01:26.080 --> 0:01:29.920 square feet of space has been absorbed since the end 0:01:30.000 --> 0:01:33.240 of one, which is the highest figure recorded since twenty 0:01:33.360 --> 0:01:37.160 What does that mean? So basically what we're seeing is 0:01:37.440 --> 0:01:41.440 UH store openings are actually outpacing store closures and it's 0:01:41.480 --> 0:01:45.240 great to see that because it's become quite dynamic. Retail 0:01:45.440 --> 0:01:52.800 has definitely morphed into traditional retail to non traditional retailers expanding, 0:01:52.920 --> 0:01:57.280 so a lot of wellness, healthcare medtail retail that we 0:01:57.400 --> 0:02:02.280 call it UM expanding into a lot of their retail developments. 0:02:02.280 --> 0:02:06.480 So you're starting to see this integration which has been fantastic. Also, 0:02:06.920 --> 0:02:14.480 is it sticky? Is it? Says? Yeah? Yeah, yeah, most definitely. Um. Look, 0:02:14.560 --> 0:02:17.640 we have all looked at, you know, convenience as being 0:02:18.000 --> 0:02:21.520 a primary factor right especially right now where we have 0:02:21.639 --> 0:02:25.000 been working remotely, working from home, trying to kind of 0:02:25.360 --> 0:02:27.960 um you know, work from home, but also you know 0:02:28.240 --> 0:02:32.480 have family and UH and and kids still sometimes work, 0:02:32.800 --> 0:02:34.840 staying at home, and going back to school. So this 0:02:35.000 --> 0:02:39.560 convergence is really starting to create a pure factor of convenience. 0:02:39.720 --> 0:02:42.919 If I can go to a shopping center and take 0:02:43.000 --> 0:02:45.440 my pet and have my pet, you know, go to 0:02:45.480 --> 0:02:49.640 the veterin area, the new modern that's uh concepts we're seeing, 0:02:49.919 --> 0:02:53.960 or going to a a medical um, you know, clinic 0:02:54.280 --> 0:02:57.639 at a shopping center and then go grocery shopping right after. Hey, 0:02:57.680 --> 0:03:00.520 it's all about convenience and about time, all right, So 0:03:00.720 --> 0:03:03.800 where's the dead space? Where's the space that's not coming back? 0:03:05.720 --> 0:03:07.680 So a lot of the space. So one thing that 0:03:07.800 --> 0:03:10.000 was really fascinating we were looking at some of the 0:03:10.120 --> 0:03:14.040 stats with I C, S C, and you know, overall 0:03:14.360 --> 0:03:20.120 occupancy is hovered around n UM. So the dead space 0:03:20.280 --> 0:03:23.240 that we're starting to see is going to be in 0:03:23.360 --> 0:03:26.280 maybe some of those markets where you had product that 0:03:26.480 --> 0:03:30.880 was already you know uh C and d B minus 0:03:31.000 --> 0:03:35.160 retail that really never came back regardless of the pandemic. 0:03:35.440 --> 0:03:39.200 Those are the spaces that are are still lingering out there. 0:03:39.240 --> 0:03:43.080 But we're also seeing new concepts taking some of those spaces, 0:03:43.400 --> 0:03:48.760 i e. As warehouse space, UM because there's uh, you know, 0:03:49.240 --> 0:03:53.720 there's a need in demand still for that last mile. 0:03:54.600 --> 0:03:57.920 And Jeff heard you talk a lot about health care services, biotech, 0:03:58.600 --> 0:04:01.840 uh and the idea of offering services that you know 0:04:02.280 --> 0:04:05.240 can't really be replicated online at this point. How much 0:04:05.240 --> 0:04:07.240 of an area of growth is that for for retail 0:04:07.240 --> 0:04:11.080 space right now? Oh gosh. In terms of numbers, this 0:04:11.200 --> 0:04:13.320 is just a pure estimate, we haven't really callied it, 0:04:13.360 --> 0:04:15.560 but I would say that when you look at an 0:04:15.600 --> 0:04:18.719 average shopping center that's roughly let's say, you know, two 0:04:18.760 --> 0:04:22.040 hundred thousand to three d thousand square feet, we're looking 0:04:22.120 --> 0:04:26.400 at you know, um medtail retail and medical retail coming 0:04:26.520 --> 0:04:31.640 in and probably taking you know, five of that space. 0:04:32.040 --> 0:04:35.000 So it's a pretty significant amount. Um So, the larger 0:04:35.160 --> 0:04:37.320 the square footage of the shopping center, the higher that 0:04:37.400 --> 0:04:41.000 number maybe, but that's you know, we're looking at you know, 0:04:41.240 --> 0:04:47.559 uh wellness, healthcare, um uh mental wellness. There's a lot 0:04:47.640 --> 0:04:51.880 of different concepts that are coming out. Yea, hey, listen 0:04:52.720 --> 0:04:54.920 on State, sit tire for a second. We've got to 0:04:54.960 --> 0:04:56.240 do a little bit of news, but we'll come back. 0:04:56.600 --> 0:04:59.720 Get back to Angie solon Ki's national director of us 0:04:59.800 --> 0:05:04.040 RETA Colliers. They're publicly held real estate services and investment 0:05:04.080 --> 0:05:06.719 management firm. They've got about fifty one billion in assets 0:05:06.760 --> 0:05:09.839 under management global, so they see real estate all the 0:05:09.839 --> 0:05:12.000 different verticals, and of course we're talking retail here, and 0:05:12.000 --> 0:05:13.240 that's really what I want to hit on when we 0:05:13.279 --> 0:05:15.680 come back, you know, talk a little bit about the 0:05:15.680 --> 0:05:17.200 differences between the U S and other parts of the 0:05:17.200 --> 0:05:19.480 world as we see the pandemic ceasing in some areas. 0:05:19.520 --> 0:05:21.720 Good point a siding, Maybe I should say, yeah, well, 0:05:21.880 --> 0:05:24.040 right now, right fingers crossed, I want to get back 0:05:24.080 --> 0:05:26.920 to our guest on g. Salon Ki. She's National director 0:05:27.040 --> 0:05:30.000 of US Retail at Colliers Uh you know them, well, 0:05:30.040 --> 0:05:33.320 publicly held real estate services and investment management firm, and 0:05:33.400 --> 0:05:35.680 she's still with us on the phone in San Francisco, 0:05:35.880 --> 0:05:37.800 and I wanted to I know you that you oversee 0:05:37.920 --> 0:05:40.359 national you're the national director for US Retail, but I 0:05:40.400 --> 0:05:42.600 want to call yours is a global operations So I 0:05:42.600 --> 0:05:44.680 want to get an understanding of what's happening around the 0:05:44.680 --> 0:05:47.320 world right now. How would you characterize the different pace 0:05:47.480 --> 0:05:52.960 that other parts of the world are leaving this pandemic hopefully, 0:05:53.000 --> 0:05:56.479 I mean, what is the data telling you? Yeah, what's 0:05:56.480 --> 0:05:59.240 really interesting is if we stop and look at the 0:05:59.320 --> 0:06:03.240 different countries in terms of omni channel, And so when 0:06:03.279 --> 0:06:08.039 we looked at the omni channel percentage change year over year, 0:06:08.080 --> 0:06:11.080 you're looking at anywhere from three to five percent increase 0:06:11.120 --> 0:06:14.960 in terms of UM countries adopting the omni channel, which 0:06:15.000 --> 0:06:19.960 in effect really is helping the overall UM consumer economy 0:06:20.000 --> 0:06:23.520 the revenues for retailers, etcetera. And what I mean by 0:06:23.560 --> 0:06:28.039 that is UM. For example, we're seeing fast food chains 0:06:28.200 --> 0:06:32.240 who are reporting revenue growth from digital orders, making up 0:06:32.320 --> 0:06:36.839 one third of some of the company's global sales. But 0:06:36.960 --> 0:06:39.320 is that so is that pandemic or you think that 0:06:39.400 --> 0:06:42.880 stuff that sticks? I think that's going to stick, because 0:06:42.920 --> 0:06:46.080 again it goes back to conveniences. So whether you're going 0:06:46.120 --> 0:06:50.719 back into the office and you're accustomed to ordering online 0:06:50.760 --> 0:06:55.800 for certain certain feed goods or fast food lunches, et cetera. UM, 0:06:55.839 --> 0:06:58.359 I think that's going to continue. So one thing I 0:06:58.360 --> 0:06:59.760 want to ask you, Tim and I. If we walk 0:06:59.800 --> 0:07:04.760 out the door of Bloomberg headquarters, there is available space. 0:07:04.800 --> 0:07:07.800 I think at least two spots across the way on 0:07:07.839 --> 0:07:11.360 the corner there used to be the container store. There 0:07:11.440 --> 0:07:14.240 was a Starbucks in our building at a Starbucks they're 0:07:14.280 --> 0:07:17.000 both gone, and the container store had a pretty big space. 0:07:17.040 --> 0:07:19.080 I mean, there's a lot of open spots as you 0:07:19.120 --> 0:07:23.040 walk around, and that's just our block. So help me 0:07:23.120 --> 0:07:26.240 out regionally, you know, Tim was just asking you a 0:07:26.240 --> 0:07:30.440 global perspective question, but I do wonder it does feel 0:07:30.440 --> 0:07:32.440 like there's some really rough spots when it comes to 0:07:32.480 --> 0:07:34.800 retail and real estate. And then of course there's the 0:07:34.800 --> 0:07:37.560 American Mall across the way that continues to kind of 0:07:37.600 --> 0:07:39.440 figure out its way. I mean, that's kind of a 0:07:39.480 --> 0:07:42.920 special case, but it's been a special case with a 0:07:42.960 --> 0:07:47.400 lot of you know, years of tough times. Sure, sure, no, 0:07:47.600 --> 0:07:51.280 I would definitely agree that in certain markets where we 0:07:51.320 --> 0:07:56.760 have uh, you know, dense urban um you know areas, 0:07:57.000 --> 0:07:59.600 those areas definitely are we're going to see a slower 0:08:00.280 --> 0:08:05.840 growth back to you know, higher occupancies, et cetera. But 0:08:05.920 --> 0:08:08.480 the positive news on that is that although we are 0:08:08.480 --> 0:08:12.440 seeing these vacancies in various sizes, we're starting to see 0:08:12.800 --> 0:08:17.680 the retailers coming back to tour these markets. So what 0:08:17.720 --> 0:08:19.560 we're seeing is that they're coming in, they're touring the 0:08:19.600 --> 0:08:23.080 markets because they're ready to start staging and identifying space 0:08:23.600 --> 0:08:28.120 to reopen um. It may most likely be a different concept. 0:08:28.160 --> 0:08:30.960 It might be a larger or smaller concept. It might 0:08:31.000 --> 0:08:35.959 be you know, that container storm might convert into multiple stores. 0:08:36.240 --> 0:08:40.400 But we are seeing tour activity from retailers start to 0:08:40.480 --> 0:08:44.520 peak up again, and this is from global brain. So 0:08:45.000 --> 0:08:48.000 I'm wondering about the permanent shift that we see on 0:08:48.040 --> 0:08:52.480 the other side of this pandemic. What fundamentally changes when 0:08:52.520 --> 0:08:55.240 it comes to commercial real estate, when it comes to occupancy, 0:08:55.280 --> 0:08:58.720 when it comes to who and what is occupying these spaces. 0:09:02.040 --> 0:09:04.880 So I would say from a forecast perspective, there are 0:09:04.960 --> 0:09:09.120 still those outside influences, right, and that means, you know, 0:09:09.240 --> 0:09:12.760 when we start to see you know, the inflation UM 0:09:12.800 --> 0:09:18.079 margins for retailers UM starting to creep back up if 0:09:18.120 --> 0:09:22.040 they're not normalizing hopefully by by um, you know, the 0:09:22.080 --> 0:09:25.800 summer of this year. But we're also starting to see UM, 0:09:25.840 --> 0:09:30.199 you know, retailers take some of the capital that they've 0:09:30.280 --> 0:09:33.760 harvested UM and as you probably have seen some of 0:09:33.800 --> 0:09:37.959 the you know call it top um, you know, piered 0:09:38.040 --> 0:09:42.480 retailers are definitely starting to take their capital that they've 0:09:42.520 --> 0:09:48.800 harvested and put it back into either remodeling stores, making 0:09:48.880 --> 0:09:53.240 stores more efficient operationally, where they're you know, looking at 0:09:53.360 --> 0:09:56.320 the point of sale where it's directly done by the 0:09:56.360 --> 0:10:01.080 consumer themselves. Uh So there's new technolog AG NEWS systems 0:10:01.080 --> 0:10:03.960 that are starting to come back in and be deployed, 0:10:04.360 --> 0:10:07.880 and through that effort, we will start to see the 0:10:08.000 --> 0:10:13.640 opportunity for retailers to basically take on more retail but 0:10:13.760 --> 0:10:16.600 maybe at a smaller footprint, or they're going to be 0:10:16.720 --> 0:10:20.720 more operationally more optimized, so they're letting they're able to 0:10:20.760 --> 0:10:25.320 start reinvesting capital in more that omni channel approve. So, Angie, 0:10:25.440 --> 0:10:28.800 I'm just thinking about our audience UM in terms of 0:10:29.360 --> 0:10:32.440 investors thinking about the real estate real estate space, I 0:10:32.440 --> 0:10:35.880 do think, you know, we've all expected some real fallout, 0:10:36.200 --> 0:10:38.880 significant fallout because of the pandemic, but it does seem 0:10:38.920 --> 0:10:42.880 like there's been a reallocation and somehow for the most 0:10:42.920 --> 0:10:46.240 part getting through. What do you think our investment audience 0:10:46.320 --> 0:10:49.440 needs to understand about what you are seeing when it 0:10:49.480 --> 0:10:54.080 comes to US retail space in particular. Yeah, I would 0:10:54.080 --> 0:10:56.920 say that from a capital market's outlook, from an investors 0:10:56.920 --> 0:11:00.240 investors are actually coming back into the retail space UM, 0:11:00.280 --> 0:11:04.120 and we're actually seeing that, you know, in UM based 0:11:04.120 --> 0:11:07.559 on fourth quarter sales and this is actual sales of 0:11:07.640 --> 0:11:12.640 shopping center that the fourth quarter actually accounted for a 0:11:12.720 --> 0:11:18.160 roughlyent of total sales for the year, and that for 0:11:18.240 --> 0:11:21.600 the year's sales total about was eighty four billion dollars. 0:11:21.640 --> 0:11:25.200 So we're actually forecasting pretty strong and ay growth in 0:11:25.200 --> 0:11:29.079 the next five years from a retail pricing perspective, UM 0:11:29.080 --> 0:11:33.439 reaching somewhere in the range of five in two. It's 0:11:33.480 --> 0:11:37.960 possibly going to be the largest increase in value since UM. 0:11:38.080 --> 0:11:42.240 Of course that's oriented in around grocery anchored shopping centers. 0:11:42.480 --> 0:11:45.880 But we're going to continue to see that optimism come 0:11:45.920 --> 0:11:47.960 back and that starts that will start to come back 0:11:48.000 --> 0:11:51.160 in terms of the urban core retail market. In addition 0:11:51.200 --> 0:11:53.840 to that, we're also seeing a lift in loosing activity 0:11:54.320 --> 0:11:57.319 in retail overall. Andy, what are the shifts that you're 0:11:57.320 --> 0:12:00.160 seeing when it comes to where people are working. You're 0:12:00.200 --> 0:12:02.320 just talking during the break about Eric Adams, the mayor 0:12:02.320 --> 0:12:04.280 of New York, telling people that it's time to come 0:12:04.320 --> 0:12:07.080 back to work. UM in thirty seconds, are what are 0:12:07.120 --> 0:12:09.760 the patterns that you're seeing in the US in different cities. 0:12:11.280 --> 0:12:13.959 I would say that in UM some of our kind 0:12:13.960 --> 0:12:18.199 of more lax cities were masked mandates to come down 0:12:18.360 --> 0:12:21.120 or much more relaxed. I would say those cities have 0:12:21.559 --> 0:12:26.120 um actually seen a very accelerated momentum when it comes 0:12:26.160 --> 0:12:29.680 to retail easting, and retailers are moving into those markets 0:12:29.679 --> 0:12:33.480 i e. North, the North or sorry southeast, UM in 0:12:33.559 --> 0:12:36.320 central region, UH, in areas where it's a little bit 0:12:36.360 --> 0:12:40.240 more you know, mass mandated, we definitely are seeing a 0:12:40.360 --> 0:12:43.800 very slow reaction come back in those cities. All Right, 0:12:43.840 --> 0:12:45.800 we gotta run, Andie, thank you so much to Angie 0:12:45.800 --> 0:12:48.160 Solanki over Collier is joining us on the phone.