DLC Releases Report on Explosive Growth of Open-Air Retail

ELMSFORD, N.Y., May 16, 2024 (Newswire.com) - DLC, one of the country’s largest private owners, operators, and managers of open-air retail, has released “Too Good To Ignore,” a research paper focused on the explosive growth of open-air retail across suburban markets.  

The report reveals that for the first time in more than two decades, the four most important metrics for retail real estate – traffic, tenant sales, rent and occupancy – are growing and blowing past their previous all-time highs.

Proof of this record high performance is DLC's own portfolio. Last year, DLC’s same-store NOI growth clocked in at 6.6%, well above public competing open-air REITs.

Relevant excerpts from the report include: 

• No new development: For the past 15 years, the gross leasable area in open-air retail has shrunk and continues to do so; construction costs have also increased by between 30% to 40% over the past three years. That combination has resulted in an increase in competition for space among open-air tenants.
   
• What’s available goes fast: In 2023, DLC lease renewals for spaces in excess of 10,000 square feet clocked in at 98%, and the average time to lease retail vacant space is at an all-time low. Store openings also exceeded closings in 2023 for the third consecutive year, with growth concentrated in the suburbs and non-major markets outside the top 25 MSAs. In 2023, DLC signed 127 new deals in suburban centers versus 84 in 2019. 
   
• Value is driving retail growth: Value retailers like T.J. Maxx, Burlington, Ross Dress For Less, and Five Below get two to three times more visits than overall retail. More than 50% of DLC’s tenants are value retailers.
   
• The tenant mix is evolving: An explosion of non-retail businesses are gobbling up open-air retail space to get closer to the consumer, and traditional mall brands (think Macy’s, Ulta, Claire’s, and Kay Jewelers) are flocking to neighborhood centers. For example, DLC recently relocated Ulta, Bath & Body Works, Old Navy, and the Buckle from an enclosed mall in Carbondale, IL, into one of its open-air centers, University Place, directly across the street.
   
• The store is where the profit is: Nearly 85% of total retail sales happen in-store, and shoppers spend between 30% to 50% more per visit in-store. Up to 40% of shoppers using click-and-collect also buy additional items when they come in-store. What’s more, retailers are now embracing in-store fulfillment to lower customer acquisition costs, to provide unmatched convenience for shoppers, and to increase sales per customer visit.

“Open-air centers are located exactly where traditional and emerging retailers alike want to be – in the backyard of the consumer,” said Adam Ifshin, founder and chief executive officer of DLC. “Simply put, they’re great dirt.”

“The pendulum of leasing has shifted,” says Chris Ressa, EVP and chief operating officer at DLC. “The landlord is in the driver’s seat from a deal perspective. A lack of vacancy has created the opportunity for them to re-imagine their properties. Leasing occupied spaces enables us to find the right user at the maximum return.”

About DLC: DLC is one of the nation’s preeminent private retail real estate companies, with expertise in acquisitions, development, architecture, leasing and management. Headquartered in Metro New York, DLC has regional operations in Atlanta, Buffalo, Chicago, Dallas, and Washington, D.C. For additional information about DLC and its portfolio, please visit www.dlcmgmt.com.

Source: DLC