Jay Luchs
Vice Chairman, Newmark Knight Frank
Luchs has been in the business for more than 18 years. In 2018, his team completed $1 billion in retail transactions in L.A.
What’s the next big trend?
Anchors of shopping malls and shopping strips are having a much bigger focus on fitness, health and lifestyle. The coffee tenant and smoothie tenant are as important as a huge tenant in the property. It sets the tone for the rest of the leasing as people want to see people. It’s important that fitness, food and an environment are present in a retail property.
What do buyers want now?
Buyers still want credit tenants to sign long leases they don’t have to worry about. Smart buyers care about current tenants, hip brands and brands that are different than the mall tenants that are in every city in America. To be the best buyer and owner today means you need a diverse group of tenants. Having a crowd is more important than anything else.
What submarkets are hot?
Abbot Kinney Boulevard in Venice Beach and the Melrose Avenue corridor in West Hollywood.
What’s your outlook on real estate for the next 6-12 months?
We’re entering both an exciting and scary time. From a landlord perspective, there’s a need to be incredibly sensitive and careful as to which tenants to sign leases with and somehow balance a good financial deal with an interesting brand. From the tenant perspective it is important to choose good locations that can rely on neighborhoods and locals to keep a hopping atmosphere if possible. Brands want to be near spenders and yet they want to be authentic to their loyal customer.
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Justin Weiss
Vice President of Brokerage, Kennedy Wilson
Weiss is a downtown market expert with 10 years of experience in leasing and sales. Weiss and partner Lee Shapiro have completed more than 550,000 square feet of transactions in downtown.
What’s the biggest trend in retail now?
The experiential nature of retail is continuing unabated. More stores like Crate & Barrel are embracing food and beverage components, such as rooftop bars. In the restaurant world, commissary-style warehouses and commercial kitchens located strategically for delivery-only services like Postmates and Grubhub are also changing the game. From a landlord perspective, mall owners such as Unibail-Rodamco-
Westfield are embracing the idea of shorter-term, pop-up tenants. What submarkets are hot now?
Culver City and Playa Vista are on fire due to the arrival of numerous tech tenants like Google, Amazon and HBO taking massive spaces. West Adams is also growing quickly with tenants like Alta Adams and Gjelina opening.
What is your favorite deal so far this year?
Apple in Downtown L.A. This was not my deal, but it’s significant for my market. Everyone talks about its impact — expecting it to shake things up — but they have no idea. It’s going to be like a tidal wave headed to DTLA.
What is your outlook on real estate for the next 6-12 months?
While rents have risen in neighborhoods like Culver City, you’ve seen them really streamline elsewhere. The market is becoming more of a tenant’s market as vacancies and the number of second-generation restaurant spaces, in particular, are growing.
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Gabe Kadosh
Vice President, Colliers International Group Inc.
Kadosh specializes in retail, representing landlords and tenants in investment sales and leasing.
What’s the biggest trend in retail now?
Experiential retail, where people are not just wanting to go to a retail center to shop or eat but are looking to be entertained and have a unique social experience. This includes pop-up restaurants and retail stores that offer a unique, limited-time experience.
What submarkets are hot now?
Highland Park, Atwater Village, East Hollywood, and Mar Vista. These submarkets are attracting young professionals, which in turn are becoming attractive and hot markets for retail growth.
What is your favorite deal so far
this year?
The lease up and sale of 1067 Glendon Avenue in Westwood Village. It was rewarding to have worked on the rebranding of the retail tenant mix of this property.
What is your outlook on real estate for the next 6-12 months?
Retail store sizes are getting smaller. Because of online shopping, retailers don’t need to stock as much merchandise and don’t need large square footage. Rents will stay relatively flat because the trends are changing so rapidly. Moreover, labor costs have dramatically increased, and this is (a) huge issue for retail tenants.
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Richard Rizika
Partner/Co-Founder, Beta Agency Inc.
After leaving CBRE Group Inc., Rizika founded Beta, a retail real estate agency.
What’s the biggest trend in retail now?
Shopping centers are becoming places where consumers can interact and be entertained.
What do buyers want now?
Buyers want certainty. With retailer needs changing constantly, buyers are challenged to predict long-term retailer requirements. Construction prices and governmental fees are often outpacing rental growth. These and other factors make underwriting future cash flows very uncertain. Buyers want to lock in inexpensive long-term debt, which is often difficult given these market conditions coupled with lenders reluctant to lock low-rate, long-term debt late in the economic cycle.
What submarkets are hot now?
Ones along the metro line, specifically Culver City, West Adams, Studio City and Highland Park.
What is your favorite deal so far this year?
CIM (Group)’s development of Pico and San Vicente. Our collaborative effort integrates daily shopping needs in a ground-up, 76,000-square-foot shopping center to benefit an underserved but mature neighborhood.
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Jim Dillavou
Co-Founder/Principal, Paragon Commercial Group
Dillavou runs Paragon, an El Segundo-based retail group that has been on a development tear, focusing on small centers.
What’s the next big trend in retail?
Redefining space. We still talk about real estate in categories (multifamily, office, retail, industrial, etc.). Those terms are increasingly irrelevant as historical categories continue to merge, especially in urban areas. Retailers and developers are exploring creative new ways to share space efficiently to reflect the new norms and expectations of the sharing economy.
What do you look for in a development opportunity?
Irreplaceable real estate and solid fundamental underwriting. In combination, these two items have withstood the historically cyclical nature of the real estate, equity and debt markets.
What is your outlook on retail real estate for the next 6-12 months?
Very positive. Paragon began buying retail in 2009 in the heart of the capital market instability. Retailers were dormant, and capital for retail was non-existent. It was a contrarian bet to be sure. And because our business was built on this foundation, we tend to excel in times of market friction. Today’s market is presenting some strong investment opportunities for retail specialists with the capital, retailer relationships, and track record to assist the retailers in being successful as they continue to experiment with new concepts, formats and offerings.
