How is tenant demand shifting?
National brands are becoming increasingly selective and strategic when evaluating new locations.
What construction cost or supply chain pressures are affecting timelines?
Construction costs remain elevated; however, we have strong construction partners and work closely with them to manage costs and minimize unnecessary increases. Supply chain conditions have also largely stabilized compared to the significant challenges experienced in the years immediately following the pandemic.
How is the design of retail changing ?
Retail continues to evolve as online shopping influences how consumers shop and how retailers use physical space. While e-commerce is not eliminating brick-and-mortar retail, it has contributed to smaller store footprints and fewer traditional “Power Center” developments. Our specialty has long been grocery-anchored shopping centers that focus on daily-needs uses and provide convenient, necessity-based shopping for the surrounding community. Additionally, cities are increasingly seeking mixed-use developments that integrate retail with residential, dining, and entertainment. Examples include Main Street at The Preserve, which incorporates ground-floor retail, and The Resort, where retail is integrated with restaurants to create a more active and engaging environment.
How are you approaching the re-leasing of big-box vacancies like Rite Aid? Are you looking to backfill them with one large tenant, or subdivide the space into several smaller shops?
In Northern California, we have had success backfilling a former Rite Aid with a medical user. We currently have two similar vacant boxes in Southern California, which have proven more challenging to lease. Subdividing these larger spaces into smaller tenant spaces is certainly an option, but the associated construction and redevelopment costs can make that approach cost prohibitive. We continue to explore all viable opportunities, including non-traditional uses, while also pursuing temporary leasing options to generate activity and minimize the financial impact of the vacancies.
What's the biggest misconception about how tenants get chosen?
The local community often assumes that we simply select the tenants we want for a project. In reality, we begin with a “best-in-class” tenant mix strategy and actively pursue the strongest retailers and restaurants for each development. Ultimately, however, each tenant determines whether a location fits its growth strategy. They evaluate factors such as existing and projected population, daytime population, demographics, economic data, trade area characteristics, sales potential, and their overall expansion plans before committing to a location.
Wayne Williams is the Vice President of Marketing at Lewis Retail Centers. Based in Upland, CA, he enjoys following AI trends, marketing, and fishing in his free time.