Where do we go from here? As we enter a new year, that seems to be the state of mind many are in, whether you are a buyer, seller, developer, broker, banker or architect.
As an industry, everyone is busy, but we also feel as if deals are not easy to get done. There is great restraint from all sides. Lenders are cautious. Tenants are cautious. Buyers are cautious.
I believe caution is good. When I first got started in the mid-eighties, things were booming! Office buildings were being built off the toll road—sometimes while the streets were still under construction. Apartments were going up left and right, and retail centers were being built at every corner.
However, even as a young person learning the business, I felt that things didn’t make sense. We did not know or completely understand what was driving the market—it just didn’t feel right. And it wasn’t.
We ended up with almost all our banks going under, the federal government stepping in, and spending many years figuring out how to address all the property that had been built. Some properties were poorly built, some poorly designed. It took years to work through all the problems that were created. There was no restraint. Lending became less regulated and was the gas that fueled the fire.
Today I look at the metrics in our industry and for the most part, it looks healthy—especially in retail. In the last three decades, we have never seen such limited new retail development. Our growth is fueled mainly by daily needs and services: grocers, discounters, services and restaurants.
Many of our true traditional retailers are desperately adapting to changes in consumers’ purchasing patterns. They are also struggling to understand what consumers want. What we do know is that customers want experiences, and dining continues to be the catalyst to providing those experiences.
The market has quickly caught on to that need and we continue to see more and more restaurant concepts being created. Eventually, this too will reach a saturation point, but for now, it is one of the key drivers of traffic to our retail properties.
So back to the question, “Where do we go from here?” Well, forward of course!
Mike Geisler is managing partner of Venture Commercial.
