Gone is the so-called “retail apocalypse.” Over the past year, the asset class has made a significant comeback; CBRE states that number of total retail property sales increased by 6.1 percent year-over-year at the end of Q3 2018 — the biggest gain for the sector since 2012. Considering the current level of consumer confidence, the diversification of mixed-use space, and a relatively strong economy, retail will almost certainly continue its steady growth throughout 2019.
While this trajectory is promising for the real estate community, it’s also leaving investors and developers scratching their heads when it comes to staying competitive in the landscape. The answer? Commercial tenant data. As competition across the retail sphere stiffens, property insights are more valuable than ever. But, it’s current occupancy details that really empower users to better understand a property’s potential and maximize their retail investment strategy for the long haul. This knowledge, combined with other asset data, like structural details and transactional history, arms investors and developers alike with the comprehensive insights they need to perform evaluation and secure more advantageous investments directly with decision-makers.
The Evaluation Equation
Investors and developers know that when it comes to opportunity evaluation it’s — quite literally — all in the details. In an industry that leans on dense information and multiple moving parts, it pays to be detail-oriented, especially in asset evaluation. Surface-level information, like location and size, are undoubtedly beneficial, but digging deeper into a space can eliminate any uncertainty associated with a retail deal. Access to tenant data only ensures this.
Robust commercial real estate technology, like Reonomy, harnesses tenant insights to help professionals find retail properties and unearth precise, associated technicalities that might otherwise slip by the wayside. With the click of a button, investors and developers can search specifically for retail spaces in their area using exact tenant names or more broad classifiers, like NAICS and SIC codes — saving time and allotting a grander scope of properties to explore.
When analyzing which opportunities are lucrative, local asset saturation and competitive analysis are important components to note. Data-backed platforms, like Reonomy, allow investors and developers to gauge potential performance based on what other tenants are leasing in a specific region. For example, a developer looking to build an outlet mall in Monmouth County, New Jersey can evaluate local competition by searching via the NAICS code “Men’s Clothing Stores ” and “Women’s Clothing Stores.” Seeing that there are more than 150 clothing stores in Monmouth County, including the Jersey Shore and Jackson Premium Outlets, this developer might want to explore other regions that are less saturated. Or, they can dive into details to see which brands aren’t in the area that might be potential tenants to bring in. This elevated view of the market and its tenant base enables more strategic decision-making.
Reonomy also allows professionals to dive deep into any property’s tenant structure, including the actual name of tenant business, its employee headcount, date founded and property manager on record. When leveraged with other asset-related information, like total lot area or square footage, the price of its last sale and the name of the owner, investors are armed with a holistic view of the retail asset and its aptitude.
So, maybe an investor wants to pad their portfolio with stable, secure triple-net lease tenants. With general market knowledge combined with the right technology, investors can look for these types of spaces and confirm their lease details with the brands they uncover. From there, they can leverage accurate owner and property manager contact information, like email addresses and phone numbers, to confirm lease details and see if it is worth pursuing further.
This extensive combination of physical, transactional, ownership and tenant information provides the 360-degree view an investor or developer needs to decide whether or not the property at stake is a lucrative retail opportunity in the long run.
Perfecting the Pitch for Bigger Wins
The key to maximizing a strong retail investment or development strategy also lies in the ability to leverage tenant information when connecting with property owners. Such rich occupant and property intel also sets the stage for better negotiation down the line. The more an investor or developer knows about a retail space prior to interacting with an owner, the more tailored and personalized their pitch can be.
By applying the same tenant-related insights uncovered in evaluation, commercial real estate professionals are equipped to customize their pitches to wield more compelling business cases. Knowledge of current tenants helps point to yield indicators, like triple-net lease potential and passive income opportunity that should be leveraged in negotiation. Professionals can also access an owner’s entire portfolio to evaluate other similar opportunities that may be of interest. So, rather than approaching property owners blindly, investors understand a property and the owner’s entire portfolio beforehand.
For example, maybe an investor finds a few big-box spaces that would be ideal for multi-tenant renovations. Using the tenant and portfolio details sourced earlier, this investor could completely transform their pitch; rather than saying “I’m interested in buying your space, let’s have a conversation,” they can leverage nuances to say something more compelling, like, “I see you currently own three Best Buy locations that are over 60,000 square feet. It looks like two have been in your name for the past 10 years — would you be interested in selling these soon?” Simply pivoting with personalization creates a more persuasive pitch that opens the door to new retail opportunities.
As the retail industry continues to climb, investors and developers need a surefire way to find, evaluate and secure new deals. Property insight backed by tenant data elevates insights to new heights and fortifies retail strategies with the intel needed to make more-informed decisions. Combined, tenant information, property details, transactional history and contact information equips commercial real estate professionals with the holistic view needed to support a stable, successful retail strategy.
— This post is sponsored by Reonomy, the largest commercial real estate database in the U.S., which facilitates prospecting processes for commercial real estate professionals with ownership information for more than 50 million commercial assets. The company offers a vast array of validated property and market-level data, including tenant intel, collected continuously and delivered via easy-to-use web-based software and data APIs. Founded in 2013, Reonomy is headquartered in New York. For more information, visit www.reonomy.com or call (646)-882-6260.