Leasing activity, occupancy and capital markets demand for multi-tenant retail remain strong, but interest rate hikes have brought transactions to a halt. “On the supply side, we just aren’t seeing a lot of listings out there,” says Patrick Kelley, associate vice president with Northmarq.
“There is not a lot of activity in terms of sales,” explains Ernest DesRochers, senior vice president and managing director with Northmarq. “Buyers are looking for shorter-term financing, being able to prepay with little or no penalty, and hoping to take advantage of lower rates in the next few years.”
The gap between buyer and seller expectations remains wide at the moment. Kelley attributes the lack of transactions to a scarcity of product. However, he says, “we are seeing an uptick in off-market deals. Basically, the demand is there, we just need more supply, and you’ll see an uptick in transactions.”
“Once the debt market is stabilized, I think buyers will be able to underwrite deals more confidently, and sellers will have a better idea of what their property is worth,” Kelley adds.
In the meantime, DesRochers explains that Northmarq is working with a number of owners with mortgages maturing after seven- to 10-year periods. Their long-term rates are not all that different from today’s rates, and Northmarq has been successful at executing trades and securing new mortgages on properties like grocery-anchored retail, and even unanchored retail, at similar rates.
Watch the video to learn more about what is driving retail investment trends and the factors likely to influence transactions in the near future.
This video was created as part of the Retail Insight newsletter by Shopping Center Business, a brief newsletter series leading up to the ICSC 2023 LAS VEGAS conference and including post-conference video interviews. The videos in the publication are created in conjunction with our content partners, which sponsor the newsletter. Click here to subscribe.