“The investment thesis has to start with the quality of the underlying real estate,” says Shane Garrison.
OAK BROOK, IL—Stick to your knitting, says Shane Garrison, EVP and chief operating and chief investment officer at RPAI, especially in the face of bad news coming from the retail front. In this exclusive Q&A, he explains his reasoning for not letting the bad news unravel your nerves–or worse, pull back on your investment thesis.
GlobeSt.com: The bad news from the retail sector is not stopping, Shane. So how much of this news is exaggeration?
SHANE GARRISON: We clearly live in a period of sensationalism, and the overall sentiment around retail is greatly exaggerated and overblown to the downside. One needs to look no deeper than the private markets, where you have individuals and companies who do retail for a living. You’re still seeing phenomenal pricing for class-A assets, and even class-B+ assets depending on the market. And you’re still seeing great broad-based liquidity for retail assets in general, whether they be triple net, shopping center, mixed-use or what have you.
Between liquidity and the overall occupancy dynamics, we’re also seeing significant rental comps, and all this tells you that the fundamentals for the right real estate assets are very much there. But again, it gets watered down by some of the unfortunate headlines.
GlobeSt.com: Do the bad-news reports put too much blame on e-tailing? Isn’t retail’s problems in large part the result of simply bad management?
GARRISON: That’s a great question. But good enough isn’t good enough anymore in retail. Yes, some of that attrition is attributable to e-commerce, but more often than not it’s stagnant management and brands and concepts that have had their day in the sun. Clearly, there’s an evolution of platforms, and the higher responsibility to deliver a more vibrant customer experience has put a lot of these companies out to pasture.
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