A Detailed Look at the Multi-Tenant Retail Space
In our EXCLUSIVE talk with Stan Johnson Co.’s Ryan Roedersheimer, we learn what makes multi-tenant retail a good option for net lease investors looking to expand or diversify their single-tenant portfolios.
In our exclusive talk with Stan Johnson Co. associate director, Ryan Roedersheimer, we learn about all things in the net lease space, including an uptick in private investors, single-tenant versus multi-tenant, what subsets are performing well and more.
GlobeSt.com: What is an interesting trend you’re seeing in the multi-tenant retail sector?
Ryan Roedersheimer: In just the past few years, we’ve seen an uptick in private investors that were focused solely on single-tenant retail branch out and expand into multi-tenant product at a more rapid pace as they chase yields. It’s seemingly a natural progression, but prior to about 2015, it was perhaps a bit less common for the private investor segment. As it relates to retail assets specifically, familiarity is why most investors can make the transition from single-tenant to multi-tenant with confidence – the general rules apply to both product types. Of course, there are nuances that will play a role, but if one understands retail and the economic drivers of a location, the investor has a solid foundation to build from and they’ll be able to expand their focus successfully.
GlobeSt.com: What makes multi-tenant retail a good option for net lease investors looking to expand or diversify their single-tenant portfolios?
Roedersheimer: Investors can enjoy better yields and diversification wrapped up into one investment. Not only can they mitigate the risk if one tenant happens to vacate or go out of business, but lease terms are often shorter in multi-tenant properties which may offer an opportunity to push rents higher or replace them altogether. Additionally, when the right mix of tenants comes together in the same center – the combination of a women’s fashion retailer, a jewelry store, and a shoe store, for example – they can leverage each other to drive sales. This creates ‘stickiness’ to the location and opportunities to increase value for all parties. In other words, when a retailer is able to drive value from its neighbor, it increases the chances of the tenant’s longevity.