TOO GOOD

TO IGNORE

How open-air retail is winning for savvy investors

For the first time in over two decades, the four most important metrics for retail real estate are growing and blowing past their all-time highs: Traffic, Tenant Sales, Rent, and Occupancy. It’s simply extraordinary, and it’ happening in the only commercial real estate product type where you can achieve positive leverage.

Amidst the pressing trends and the frenzied nature of retail, open-air centers are great dirt. They are located exactly where traditional and emerging retailers and service providers want to be – in the backyard of the consumer.

Consumers and the Retailers that serve them are uniting in a common place: The Open-Air Suburban Shopping Center.

Open-air retail delivers an environment that caters to consumer lifestyles. With the rise of experiential shopping and outdoor leisure activities, open-air retail provides a unique opportunity for retailers to form genuine, lasting connections with customers.

Headlines and industry data will tell you about rising construction costs, the fact there is no new construction on the horizon, and that suburban growth remains strong. It’s driving record-breaking tenancy. Retailers need to move fast – or miss out.

DLC’s portfolio puts an exclamation point on the fact that open-air retail is the strongest real estate asset class to invest in. The volume of leasing deals we have done, the mix of co-tenancy we’ve developed, the returns on our acquisitions, dispositions, and refinancings – they all point to what we’ve been saying for years – the profit is in the store.

DLC BEATS THE MARKET

Same-store NOI growth 2023 vs. competing open-air REITs

How do we do it?

Opportunistic Retail Market

Focused Investment Thesis

Best-in-Class Team

 

RETAIL REAL ESTATE IS THRIVING.

THE STORE IS WHERE THE PROFIT IS.

Retailers realize the profit is in the store and embrace in-store fulfillment to lower customer acquisition costs.

NO NEW DEVELOPMENT.

For the past 15 years, the gross leasable area in open-air retail has net shrunk and continues to shrink due to a variety of factors.

THE STORE IS WHERE THE PROFIT IS

An explosion of non-retail businesses are gobbling up open-air retail space to get closer to the consumer.

THE STORE WON

Suburban migration and hybrid work has reignited traffic to brick-and-mortar stores. Retailers have fully embraced in-store fulfillment and realize brick-and-mortar is critical to success. Omnichannel is no longer a buzzword but a necessity – you can’t make $ in clicks without bricks.
84.6% 

of total retail sales happen in-store.

GREATER SALES PER VISIT

Shoppers spend

30-50% more 

per visit in-store vs. online.

E-commerce sales in 2023 accounted for 15.4 percent of total retail sales 

OPEN-AIR stores are

vital for retailers

PHYSICAL STORE LOCATIONS…

  • Help reduce the cost and frequency of returns
  • Can be used as part of the supply chain
  • Reduce costs related to logistics
  • Provide unmatched convenience for shoppers with the rise of BOPIS* and same-day delivery
  • Offer one-on-one customer service experiences
  • Lead to increased sales per customer visit
  • Offer free market research related to customers’ preferences
  • Increase brand awareness
*BOPIS: Buy online pick up in-store

more than 50%

of Walmart’s online orders 

are fulfilled from stores.

walmartgolocal.com – November 2023.; Omnichannel Retail – Using the Physical Store Footprint as a Competitive Advantage

EXISTING

RETAIL ASSETS ARE

MORE VALUABLE

Than ever

Construction costs increased

30-40% in the

past 3 years

Historic

LOW AVAILABILITY

With absorption robustly positive, and completions at record low, occupancy is at record high.

Retail space absorPtion, and availability (Occupancy)

Quarterly, In Millions of SF, and Occupancy by %

WHAT IS

available

moves

fast

In 2023, DLC lease renewals for spaces 10k+ were 98%
the Average time to lease retail vacant space is at an all-time low

*Based on the average months it takes to sign a lease from when a space becomes available

Retailers are investing

in OPEN-AIR stores

With escalating construction costs and limited availability, retailers are investing heavily in existing stores. Retailers are leveraging technology, improving shopping flow, enhancing efficiency and updating aesthetics to elevate the customers in-store experience.

 

“We plan to add about 141 net new stores. We also plan to remodel about 480 stores and relocate approximately 40 stores in fiscal ‘25”
John Klinger
Chief Financial Officer at TJX

DEAL EXPLOSION

With escalating construction costs and limited availability, retailers are investing heavily in existing stores. Retailers are leveraging technology, improving shopping flow, enhancing efficiency and updating aesthetics to elevate the customers in-store experience.

 

Mall RETAILERS

flock to

OPEN-AIR

Traditional mall brands are lining up for spaces and see their future at neighborhood shopping centers that are more efficient, cost-effective, and tailored to their customer.

DLC relocated Harbor Freight Tools, Ulta, Bath & Body Works, Old Navy, and Buckle from the enclosed mall directly across the street into the preferred open-air shopping center location

LIGHTSPEED LEASING

“The pendulum has shifted. The Landlord is in the driver’s seat from a deal perspective. A lack of vacancies has created the opportunity for landlords to re-imagine their properties. Leasing occupied spaces enables us to find the right user at the maximum return.”
Chris Ressa
EVP and COO at DLC

record-breaking

leasing spreads

Strong demand, muted supply and tight occupancy drive leasing spreads to highest level in decades.

DLC relocated Harbor Freight Tools, Ulta, Bath & Body Works, Old Navy, and Buckle from the enclosed mall directly across the street into the preferred open-air shopping center location

store openings exceed closings for the 3rd consecutive year

store openings vs. closures (2021-2023)

VALUE IS DRIVING

RETAIL GROWTH

50% of DLC’s Tenants are value retailers.

Includes all tenants focused on delivering value and competing on price to attract consumers

year-over-year change in quarterly visits to off-price value retailers and to overall retail nationwide

Source: U.S. Census Bureau, Bookings Institute. * Cushman and Wakefield calculations using county level classifications from Brookings.

demographics

favor the

suburbs

Suburban Shopping Center: A center who’s zip code falls outside of a major metro area.

AVERAGE ANNUAL POPULATION GROWTH*

Source: U.S. Census Bureau, Bookings Institute. * Cushman and Wakefield calculations using county level classifications from Brookings.

Retailers finding success outside of non-major markets

DLC has signed 127 NEW DEALS at suburban shopping centers in 2023 vs 84 in 2019

Suburban Shopping Center: A center who’s zip code falls outside of a major metro area.

year-over-year change in annual visits across select chains (2023 vs. 2022)

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Don't miss your shot to join the best team in commercial real estate. We want you!

Aidan Kelso

Vice President of Development

Kristin Sabia

Senior Vice President of Accounting

Peyton Thomas

Vice President of Construction, Renovo Construction Management

Meet the team

Chief Executive Officer
Executive Vice President & Chief Investment Officer
Executive Vice President & Chief Operating Officer

Your wins won't wait. Get in touch with our team today.

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