Marketplaces Industry professionals expect a robust year for dealmaking in 2024 — if interest rates will just cooperate. “When liquidity eases, our sector will be on fire,” said Karly Iacono, senior vice president of the Investment Properties Group for CBRE Capital Markets. “We’re artificially constrained by interest rates. Both debt and equity are looking favorably on retail.”
Fundamentals were the strongest they’ve been in years as 7,500 Marketplaces Industry professionals converged at ICSC NEW YORK this week, leading to flush times for owners of top properties, who are seeing sustained income growth and climbing rents. “There’s a great balance of supply and demand, and the range of users is as broad as I’ve ever seen,” said Brixmor president and CEO Jim Taylor.
Retailers are spending money on physical stores instead of chasing online sales like they have in past years, said Kimco Realty president and chief investment officer Ross Cooper. “Occupancy is at an all-time high,” he noted.
Still, high interest rates are keeping the transaction market at a relative standstill and are stalling what new construction is planned. “It’s great if you’re an operator, but the challenge is when you’re trying to buy, sell or be a broker,” Iacona said. The gap between seller and buyer pricing expectations is wide but tightening, according to Madison Marquette head of retail research Meghann Martindale. “Debt is expensive for everyone. It’s affecting volume.”
But demand is getting stronger from institutional buyers like offshore funds and private equity, said Walker & Dunlop executive vice president and capital markets head Susan Mello. Retail property, particularly freestanding fast-food restaurants, is gaining favor among commercial mortgage-backed securities investors. Life insurance companies are interested in grocery-anchored retail and some power centers, too, she added.
Two examples of institutional capital powering up for 2024:
By Brannon Boswell
Executive Editor, Commerce + Communities Today
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