May 7th marked the third annual CP Exchange, held this year in Seattle’s distinctive Fremont neighborhood.
This exclusive client event, hosted by Capital Pacific, brought together commercial real estate’s most active retail owners, investors, and developers throughout the Northwest, for an intimate conversation on emerging trends in retail real estate.
Located in the hip industrial space of the Fremont Foundry, the evening began with an energetic cocktail hour. Afterwards the group settled into the atrium for a panel-led conversation moderated by Sean Tufts and Michael Horwitz of Capital Pacific.
Steve Berndt | Albertsons-Safeway, Inc
Stuart Tanz | ROIC
Bryce Phillips | EVO
Bryan Jaffe | Cascadia Capital
The Northwest Investment Real Estate Market & Where Trends Are Heading
Our panel members agreed that investors currently have little regard for the life cycles of real estate, and remain very bullish about the real estate market. Even though interest rates may rise in the future, Stuart Tanz does not see cap rates being very sensitive to these changes.
The Effect of E-Commerce on Traditional Brick & Mortar Retail
Bryce Phillips of EVO and Bryan Jaffe of Cascadia Capital both agree that successful retailers will need to develop omni-channel retailing models to stay competitive as the internet gains more market share over brick and mortar retail. Retailers should focus on delivering a shopping experience to their customers. It’s this differentiation that will allow companies to compete directly with, and possibly “out-niche” internet giant Amazon.com.
Steve Berndt of Albertsons-Safeway, Inc. commented that they are not viewing online grocery sales as a large threat to business, and this format is only nibbling at the edges of the food business.
The Right Time To Sell & Tenancy Impact on Cap Rates
Cap rates for top-tier grocers are approximately 25-50 basis points below cap rates for lower-tier grocers, according to Stuart Tanz. Additionally, occupancy costs will always play a significant role in cap rate levels due to tenants being able to extend lease terms if store sales are high enough to support rental rates.
Capital Pacific would like to extend a special thank you to our panelists. Without your willingness to share your insights, CP Exchange would not have been possible. We look forward to seeing everyone in Spring 2016 for CP Exchange in Portland.