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Retail Market Conditions Favor Household Names

Texas Real Estate Business

May 1, 2024

Northwood Retail President, Ward Kampf, discusses how mom-and-pop concepts remain integral to placemaking and experiential quality, but national credit tenants have some undeniable advantages in Texas Real Estate Business.

“We really like local tenants if they’re creditworthy because those local regional tenants contribute to the personality of your center, and you have to make [leasing] decisions based on what’s best for your center, including taking flyers on some smaller tenants,” says Ward Kampf, president of Dallas-based owner-operator Northwood Retail.

“But it’s gotten trickier in recent months as retailers and landlords have all faced higher costs of capital.” Some of Northwood’s recent leasing activity exemplifies this push-and-pull dynamic. Last fall, the company welcomed three new tenants to its Hillside Village shopping center in northeast Dallas.

JuiceLand is a regional tenant that has only been around about a dozen years but has grown to over 40 locations in Texas. Los Angeles-based veterinary clinic Modern Animal also operates on a regional basis but continues to target new openings in Texas. The third tenant, cosmetics retailer Sephora, is a global brand with more than 2,500 stores across 35 countries, many of which are in Kohls stores.

And prior to those deals being inked, Northwood brought in Phoenix-based Sprouts Farmers Market, one of the fastestgrowing grocers of the last decade, as a new anchor tenant at Hillside Village.

Kampf offers insight on the strategy behind the deals with the national users. “Sephora is a tenant you’d typically find in a [Class] A mall or center, and Sprouts tends to be in wealthy neighborhoods that can support specialty grocers,” he says. “When you have that kind of credit and are such a strong player, it allows you to keep growing. And if you’re looking for growth, those stronger retailers can lower [your] cost of capital, and those that generate high margins tend to win out. That’s kind of what we’re seeing play out.”

See the full article in the link below on pages 1 and 28-29.