We met with many clients and industry colleagues at the ICSC shopping center convention in Las Vegas last week. Here are a few of our takeaways:
- Only a few groups said they were pencils down. Most investors are actively working to find deals, albeit with lower probabilities and increased debt costs.
- Rents for new constructions are on the rise. In order for ground-up developers to make small format QSR construction feasible in the Pacific Northwest, they need to secure rents ranging from $50-70/SF NNN.
- An eye-popping headline that has been making the rounds: A 72% decrease in year-over-year CRE sales volume from April 2022 to April 2023. Encouragingly, there is a consensus that the pace is picking up due to upward movement in cap rates in conjunction with an expected pause in rate hikes.
- While suburban retail markets are experiencing historically low retail vacancies, the substantial increase in insurance and operating expenses is impeding rent growth.
- Among lenders, life insurance companies and credit unions are the most active. Q1 CMBS issuance has declined by 79% compared to the same period last year.