The new Kimco has greater penetration in growing markets such as Houston, Phoenix, and Miami. How long do you expect populations to keep increasing in Sun Belt markets?
Enhancing our ownership in Sunbelt markets was one of the reasons we were so excited about this partnership. We’ve strengthened our presence in Atlanta and other parts of Texas and intend to grow at scale in these markets. We are bullish on the population shifts and continue to invest heavily in those locations. We also see trends that look promising in other parts of the country, like the Pacific Northwest. We’re very focused on geo-diversification. Certain markets in the South don’t pose heavy barriers to entry for new supply. In many of our other markets, like the Northeast and the Mid-Atlantic, it’s harder to get approval for development.
In some markets, you’re adding mixed-use elements to traditional grocery-anchored centers, even including residential. What local market factors do you gauge in determining where this will work?
Single-story centers with a lot of surface parking in communities where it’s appropriate to create additional density are a great opportunity for this. Multifamily is what we are most used to adding, and a premium can be achieved with retail around it and below it. The Kimco center is in that first-ranked suburb outside of major infills, so we look for populations where the young professionals have public transportation options to get to their jobs in the city but want urban amenities when they return home. Also empty nesters who want those same amenities and no longer want to pay for the maintenance and upkeep of a family home.
Will these centers begin including tenants not usually found in a neighborhood center?
One of the most exciting things about retail is how dynamic it is. If you look at the grocery segment, we still have the Krogers and the Publix’s, but now they’re combined with Whole Foods or a Trader Joes or a discount grocer like Aldi or Lidl. We’re not much different than we’ve always been in the tenant categories we seek. Fitness concepts are strong, and there’s been a change in the way our traditional tenants interact with them. Gym members took up a lot of parking and then hopped in their cars and left. Now, in terms of how they dress and buy vitamins and smoothies, they do business in the centers. So now fitness is a highly coveted tenant. It's the same with medical concepts like urgent care and chiropractic. We also do well with a mix of quick-serve, fast casual, and sit-down restaurants all co-existing. We curate the best mix within the co-tenancy for each center.