After a period of uncertainty in commercial real estate, Continental Realty Corporation is starting to see a new form of tenants emerge in the retail sector.
David Donato chief operating officer of the company, told GlobeSt. at ICSC New York 2024 mixed-use is starting to become more prevalent in the industry now. And that's not just a restaurant to pair with a Macy's store — it's expanded to outdoor space.
"We've done a pickleball deal this year. We've done IV infusion," he said.
Donato added that the landscape could change based on tenant demands and it's almost impossible to predict what they want in the future. But it's important to be prepared for change. "The marketplace sorts it out," he explained.
FINDING DEALS DESPITE UN-IDEAL CONDITIONS
While CRC has been active recently on the transaction front, Josh Dinstein, SVP of acquisitions admitted deals have been tough to come by in the high-interest rate world.
"I think opportunities for other buyers around the country, for shopping centers, is hard," he acknowledged.
"I think it's very hard to find value add partly because of getting financing. [It's] still not easy to put financing [together] for other groups," Donato added.
In December, CRC sold a 167,000-square-foot shopping center in Troy, Michigan for $25.6 million.
For acquisitions, CRC mainly looks at its local markets like Baltimore, Maryland, and Florida. It also operates properties in the Mid-Atlantic. And as always — the fundamentals are key such as the anchor of a shopping center, tenant sales, and how busy the area gets.
"There could be a lot of dead retail in a market that doesn't really compete with you," said Donato.
"If you've got the Whole Foods or Trader Joe's, whatever the story of your center is that, you can make a lot of money in any market."
Also, on the purchase front, CRC utilizes its data science team, which can help find opportunities by tracking tenant sales and foot traffic.
MIXED VIEWS FOR 2025
Going into 2025, Dinstein is mixed on the outlook of the CRE retail sector. On the bright side, he thinks there will be more appetite for investments as interest rates come down.
"Money is finally looking at shopping centers again as an institutional investment class," Donato said.
However, he did warn of one concern.
"There are many tenants out there that are on shaky footing, credit-wise, and so that could create some issues in the industry."