TUSTIN, CA—Today the focus in retail real estate is on quality, and sometimes that means that less is more, Coreland Cos.’ SVP Matt Hammond tells GlobeSt.com. As the industry continues to evaluate what works and does not work in terms of retail development, it has become evident that smaller parcels of more usable space in “A” and ‘B’ locations will generate higher rents in the long run. We spoke with Hammond in advance of ICSC RECon in Las Vegas about how this model works and the issues and opportunities surrounding smaller retail parcels.
GlobeSt.com: How does the concept of “less is more” work for today’s retail space?
Hammond: We have moved way beyond the time when owners tried to maximize land value by incorporating as much retail gross leasable area as possible into shopping-center developments. Today the focus is on quality, and sometime that means that less is more.
An ideal example is a property in Orange County that was challenged by a 16,000-square-foot vacant building within a fitness-anchored shopping center. We knew that attracting a single-use retail tenant for the as-is space would be difficult. A smaller building that could better-accommodate food uses would generate three times the interest and twice the lease value. Ownership took the risk, demolished the 16,000-square-foot building and will soon be opening an 8,200-square-foot pad to house some of the top QSRs in Southern California.
GlobeSt.com: With so many neighborhood shopping centers competing for tenants, how do you know when to take the risk of redevelopment?
Hammond: We are over-retailed in many areas and, quite frankly, there are a number of older sites that need to be completely re-thought, not just re-tenanted. It’s about taking a hard look at your center…