Last year, more than $35 billion in commercial mortgage-backed securities loans were at risk of default due to retailers declaring bankruptcy, according to Trepp. However, the analytics firm sees positive signs in the retail industry, such as strong retail sales for the holiday season and the performance of Class A malls.
Steve Radom, developer of a new shopping center in Houston called Heights Mercantile, said he didn't go after the easy deals but rather spent time developing the concept for the new development. The property, which spans six buildings, offers cultural and local offerings, along with Lululemon and a gallery space with rotating work from the Museum of Fine Arts, Houston.
Allante Properties has sold Highland Place, a 54,557-square-foot retail location in Denver, to Denver Regional Investment Properties for $24.5 million. The property has five retail stores and 68 units in a mixed-use design.
NetCo Investments has purchased the 73,199-square-foot Colony Plaza in Ripon, Calif., from Donahue Schriber Realty Group for $5.6 million. The 10.4-acre property is 92% leased and includes a Save Mart grocery store anchor.
Smaller merchants are finding growing success by creating experiences that draw in shoppers in the age of digital shopping. "We have to go where the online guys can't go," said Jennifer McLeod, who opened the Primrose Shop in Orlando, Fla., in 2003.
Warehouse concepts including Costco and Sam's Club pioneered bulk buying, but millennials are increasingly turning to Boxed.com and Amazon Prime to stock up on staples. Warehouse retailers have been slow to adapt to digital retail and they largely cater to aging consumers, Forrester Research's Sucharita Mulpuru said.
Seritage Growth Properties has not been greatly affected by Sears Holdings' store closures, as the REIT's portfolio contains only a small number of the 103 stores being closed. Sears Holdings' master lease with Seritage allows it to terminate only 20% of its Seritage leases in any given year, and Seritage has the right to redevelop and lease the space to new tenants that can pay higher rents.