“No one knows if those shop-space tenants are going to make it,” Thompson said, “so if I buy your shopping center and most of it’s not even open, how do I know what I’m buying?”
In Thompson’s estimate, the pandemic has accelerated a transition to online grocery shopping by at least five to six years.
But landlords can find a silver lining: The online shift may trigger a change in perspective among grocery tenants. In Northeast Florida, for example, broker Carrie Smith said Mavis Discount Tire can’t lease parcels in Publix Super Markets Inc.-anchored centers because automotive is a restricted use.
“Grocers historically have limited certain types of uses because of parking or they thought it conflicted with their product offerings,” said Smith, managing partner of Franklin Street in Jacksonville, Florida. “I think there’s going to be a big shift in that.”
Smith points out that the vast majority of newly built, grocer-anchored shopping centers were already responding to pressure from e-commerce. Most newer centers have a fraction of the small-shop space that older centers do; 7,000 to 10,000 square feet is the new norm, whereas older properties might have 20,000 to 30,000 square feet.
Covid is accelerating that trend as well as other strategic changes in the grocery space, she said.
Voorhees, the CBRE vice chairman, agreed. “It’s all changing so fast. It’s like we’re so close to the blast, our ears are still ringing.”
Source: Sacramento Business Journal