Retailers realize the profit is in the store and embrace in-store fulfillment to lower customer acquisition costs.
TOO GOOD TO IGNORE
suburban open-air shopping CENTERS ARE the darling of cre
TOO GOOD
TO IGNORE
suburban open-air shopping CENTERS
ARE the darling of cre
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.
Consumers and the Retailers that serve them are uniting in a common place: The Open-Air Suburban Shopping Center.
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.
READ ON. The story is too good to ignore.
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 EVOLUTION OF TENANT MIX
An explosion of non-retail businesses are gobbling up open-air retail space to get closer to the consumer.
GREATER SALES PER VISIT
Shoppers spend
30-40% more
per visit in-store vs online
84.6%
of total retail sales happen in-store.
Source: United States Census Bureau
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
Source: walmartgolocal.com – November 2023
EXISTING RETAIL ASSETS ARE MORE VALUABLE THAN EVER
If America was once over-stored we aren’t anymore.
The increase in construction costs combined with the decrease in retail space deliveries has resulted in an increase in competition for space among tenants.
And with the need for more stores, comes the need for more space.
Driving speed of deals and favorable landlord pricing.
HISTORIC LOW AVAILABILITY
Retail space absorPtion, and availability (Occupancy)
What is available moves fast
the Average time to lease retail vacant space is at an all-time low
DLC SNAPSHOT – In 2023, DLC lease renewals for spaces 10k SF+ were 98%
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.
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 SNAPSHOT – 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
deal explosion
Non-traditional retail can’t move fast enough to devour spaces at open-air shopping centers. Unique co-tenancy and competition drive the investment win.
DLC SNAPSHOT – 2021-2023: DLC added 214 new-to-portfolio tenants, an 18% increase from 2017-2019
openings exceed CLOSINGS FOR THE 3RD CONSECUTIVE YEAR
Aldi plans to add 800 stores nationwide by the end of 2028.
Five Below has set a goal of tripling its store count to more than 3,500 locations by 2030.
DG plans to open 800 new stores and conduct 1,500 remodels and 85 relocations in fiscal year 2024.
Where is store growth coming from?
VALUE RETAIL
Value retail growth is happening in suburbs and non-major markets.
SUBURBAN MIGRATION
Businesses migrate to suburban open-air shopping centers to get closer to consumer.
NON-MAJOR MARKETS
Markets outside the top 25 MSA’s are an attractive destination for retailers.
WHERE IS STORE GROWTH COMING FROM?
VALUE RETAIL
Value retail growth is happening in suburbs and non-major markets.
SUBURBAN MIGRATION
Businesses migrate to suburban open-air shopping centers to get closer to consumer.
NON-MAJOR MARKETS
Markets outside the top 25 MSA’s are an attractive destination for retailers.
value is driving retail growth
year-over-year change in quarterly visits to off-price value retailers and to overall retail nationwide
DLC SNAPSHOT – Greater than 50% of DLC’s Tenants are value retailers.
Retailers finding success outside of non-major markets
year-over-year change in annual visits across select chains (2023 vs. 2022)
DEMOGRAPHICS FAVOR THE SUBURBS
average Annual population growth
DLC SNAPSHOT – Suburban shopping centers account for 92% of DLC’s portfolio.
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
Same-store NOI growth 2023 vs. competing open-air REITs
OUR PARTNERS SAY IT BEST
Your wins won't wait. Get in touch with our team today.
Jonathan Wigser
Adam Greenberg
Aaron Wu
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