Government Abstract
Tenants lack choices with declining stock whereas elevated prices delay building
As we enter Q3 2023, we proceed to see energetic F&B tenants outpace the quantity of stock. Whether or not it’s quick-service eating places (QSRs) in search of pads in new suburban grocery developments or chef-driven eating places in search of city core area, a excessive degree of competitors stays.
We’re seeing record-breaking rents being achieved within the city core which begs the query – how a lot room is left for hire to extend earlier than offers change into too troublesome to make? We’re at present in a landlord’s market, however we’re starting to stroll the road of rents being pushed as a lot as they will go whereas permitting tenants to achieve success.
Excessive building prices, elevated rates of interest, and land prices have set these rents, however even the tenants who’ve expanded their hire threshold are reaching a ceiling.
In our present state of the market, floor lease gamers with little or no contribution usually proceed to beat out construct to- go well with (BTS) or Reverse BTS customers regardless of credit score. When a brand new grocery-anchored website hits the market, the pad lineup is usually already established. Whereas offers will not be taking place rapidly, landlords are figuring out their goal QSRs and banks early.
We’re seeing a wholesome pipeline of 2025 and 2026 deliberate supply of life-style and grocery-anchored facilities to fulfill our rising inhabitants and tenant demand, however the standstill from an absence of present stock and the choice to interrupt floor stays resulting from elevated prices throughout the board.
