JLL’s Michael Hirschfeld spent an hour speaking to retail real estate professionals at the recent ICSC New York Dealmaking Conference. He gave insight to leasing fundamentals with his over 40 years of expertise of tenant representation – in case you missed it, here is our recap.
While discussing some of the basics behind lease structures, Michael provided some color commentary from on-the-street experience with some of the biggest brands on the market today. First lesson on the agenda? The importance of space and lease terms in a tenant favorable market across the U.S. Michael shed light on the importance of brick and mortar stores. The days of national store rollouts consisting of 100 or more locations are over and landlords are itching for longer lease terms. Because of these trends, Michael has seen vacancies at even the best malls across the country. Some landlords respond to this by bringing in pop-ups to these spaces. While they may not provide the best return for the landlord or retailer, it’s a relatively successful marketing move even though Michael said it’s not a real market test until a retailer makes a real commitment to a location with a real lease with a real staff – jumping in feet first!
Another strategy for success is to ensure good tenant mix. For street deals, securing a good tenant mix can be difficult because of the variety of property owners with competing goals and strategies. In some markets, people come in and buy multiple properties on the street in order to curate an ideal tenant mix to provide the ideal experience to potential shoppers.
Lastly, Michael Hirschfeld left the room with some more knowledge about the different retailers and their ability to achieve more favorable terms. The food and beverage industry has tough competition so landlords have a bit more influence in prime markets. Last week in Manhattan, Michael was overwhelmed with the dominance of F&B on the block just emphasizing the stiff competition those retailers are facing.
By: Taylor Coyne, Retail Research Analyst, JLL