REAL ESTATE NEWS

Over the past couple of years — high inflation has forced consumers to be more conscious about spending — leading to a volatile retail market. However, retail real estate owner Centennial is seeing a recent surge in activity after Black Friday and as the Holiday season continues.

"The sales are just incredible, and the traffic was equally incredible," Paul Kurzawa, president of Centennial told GlobeSt. at ICSC 2024.

"I think that just shows really strong consumer propensity to get out there and spend. Even despite inflation and higher cost of goods, consumers are getting out there and spending which is really good, because it shows that [they are] feeling good about the economy, they're feeling good about themselves, [and] the jobs market. That translates to really strong retail."

During the fourth quarter, Black Friday, in-store shopping grew by 0.7% year-over-year, while online spending soared by 14.6%, according to a report from MasterCard.

Right now, Kurzawa is noticing "continual" investment in experience-based retail, which focuses on creating engagements with consumers. The activity there has been spread through a range of assets, from food and beverage shops to restaurants. Another thing that's rising is first-market retail, in Kurzawa's view.

"I think there's little bit more acceptance and investment that's going in for landlords and developers to find those first market concepts, to really differentiate their assets in each of their markets," he said.

SECONDARY MARKETS SHINING

The surge in retail activity is strong across the map for Centennial, which operates assets in 17 states. Particularly, Kurzawa highlighted the strong performance of its The Summit Birmingham mall in Alabama.

"Birmingham is a very stable market from the standpoint of what it is, but the asset performs really well."

Plus, he added that retail strength remains in some other secondary markets too.

OPPORTUNITIES AS CENTENNIAL IS IN A STRONG POSITION FOR 2025

Heading into 2025, Kurzawa feels his company is in a "strong position" to grow and add to its portfolio thanks to the demand from the holiday season. One big opportunity in the current state of the market for Centennial is to reinvest and improve its existing assets.

"Change the experience of the center," Kurzawa said. "Create a better experience that connects with guests."

Kurzawa said his real estate firm has redeveloped a few assets including one in Chicago and another in Santa Ana, California.

Some other opportunities for Centennial are introducing new concepts to the market, and creating engaging environments for guests.

The right type of offline retail has proven it could work in the post-pandemic world. It's similar to the trend in office, as Class A, Trophy mixed-use and highly amenitized products, tend to drive the most traffic. It's an experience that e-commerce can't replicate, leading to an opportunity still for brick-and-mortar.

Source: GlobeSt/ALM