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In 2017, diminished retail tenant pool will hurt even the strongest projects: Expert

In the shopping center industry, the pendulum is slowly shifting to favor tenants, says Cushman & Wakefield's head of research Garrick Brown in the firm's fourth-quarter market report.

 

Still, he says, there remain wide variations in terms of shopping center demand at the local level based on class, type and size.

 

Neighborhood/community centers, with their core tenancy rooted in grocery or drug store anchors and mostly food or service related inline users, are going to be far less impacted by 2017’s wave of closures than will any other shopping center type.

 

Unanchored strip centers may not feel much of that pain either, although this product type (in the absence of an anchor “draw” tenant) can be volatile, especially if it is not in a premier location. Power/regional and lifestyle centers will likely feel some impact, but the bulk of this year’s anticipated closures are likely to hit mall properties.

 

"Bear in mind that regardless of shopping center type, retailers that are reducing their store counts are generally closing Class B and C locations," he says. "The landlords of Class A or trophy properties will not experience even close to the same impact from these consolidations. Regardless, just as a rising tide lifts all boats, the opposite is true as well. A diminished pool of tenants is bound to impact even the strongest projects, but these will still be the projects that garner the most market demand in 2017 and beyond."

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