Video transcript:

As we begin to think about what is our retail strategy specifically, are we in a disposition or acquisition mode? Do we want to be overexposed or underexposed to retail? What is the Amazon effect? What is the inflation effect? What is the E-commerce suffocation and the insurance impact on retail?

We’ve seen something interesting happening in retail and that over the last quarter, we’ve seen 17 million square feet of retail outdated retail demolished but only 11 million square feet built. We’ve also seen this play out in this case of regional malls, your class A malls are outperforming and are accepting and taking on new tenants in new occupancies, specifically with occupancy rates in the mid-90s, specifically around 94-95% across the US, but the class C malls are just getting the life sucked out of them. They’re losing to E-commerce and moving their resources elsewhere into the office and other warehousing types of additive tenant bases. Telecom centers are often a filling stopgap measure for their larger retail centers.

And so here’s what you’ve got, you have a vacancy rate across all regional shopping malls of around 9%. The power center vacancy is much lower at 4.5%. So that tells us we’d rather be in power centers rather than regional mall structures. These neighborhood centers are equally as strong at about a 5% vacancy rate and really, really strong real rates and positive absorption. In fact, the majority of retail absorption has been in the neighborhood strip center space of over 5 million square feet in the last quarter alone. So this is an area to look for the strip center space has also been around 4.8 4.9% occupancy, vacancy and implying a 95% occupancy rate. And the general retail space has been the most attractive at a 3.5% vacancy rate going into 2023. So this tells us two different things. First of all, you want to be in the best locations, but you also want to be in the more upscale of the shopping center and upscale mall situations.

The second thing we want to learn from this is that the general stand-alone stores the single net lease the single tenant spaces are a strong place to be now you’re going to pay much much lower cap rates for this and to be much more expensive, but their vacancy rates are almost nonexistent. They’re functionally completely full across the United States. And so historically, we’ve had an average vacancy of around 5.6%. Across all retailers across the United States forecasts. We’re looking forward to the 2023-2024 forecast and vacancy of around 4.5% about 150 Decrease in vacancy and so the occupancy still remains very high 95% level and it’s a great place to have an investment going into 2023. So hopefully this helps you as you put together your 2023 retail investment strategy.