Jeff Enck is putting his career on the line with the belief that some shopping centers can actually do better without a high-profile national chain store as an anchor.
He’s just taken the role of senior vice president with national retail brokerage SRS Real Estate Partners, overseeing the division focused on shopping centers with local businesses filling their spaces.
For several years, investors have sought retail centers anchored by a grocery store chain and other strong retailers, but Dallas-based SRS is confident the contrarian play of marketing retail properties not reliant on national shops also will attract attention. These properties long have been “undefined territory,” in the retail sector, Enck told CoStar News.
“This is a new product category for us, building on the success of the sale of grocery-anchored shopping centers, big-box sales and now we have this offering,” Enck said. He said he’s in the process of identifying this territory, which includes multiple tenant retail strip centers ranging from 8,000 square feet to 50,000 square feet.
These retail centers provide an opportunity for smaller tenants, or businesses just getting off the ground, to lease space despite not being credit tenants, those that have an established credit history required by owners of larger centers. The potential of anchorless properties is fueled in part by the demand from these small tenants, one reason Enck said the retail centers have had outsized returns.
The unanchored retail category “hasn’t gained a lot of press and has been a bit ignored because they have mom and pop owners with no credit tenants,” he added. “But unanchored retail has quietly been growing.”
Enck has more than 20 years of experience in the industry and has focused on the sales of shopping center and retail buildings net leased to a single tenant throughout the Southeast. He joined SRS this year from Stan Johnson Co., a brokerage firm acquired by Northmarq last year. He also has worked at Shane Investment Property Group, Marcus & Millichap and other brokerages.
Working as part of the investment properties team led by Kyle Stonis and Pierce Mayson in the firm’s Atlanta office, Enck plans to bring more unanchored retail opportunities to institutional buyers, international funds, individuals with high net worth, equity funds and private investment firms.
“If you have the right buyer, unanchored shopping centers can have higher returns compared with” retail property leased to a single tenant, Enck said.
“They have also always been there but has largely flown under the radar. If you have an unanchored retail center in a great location, it’s almost better than having a credit tenant because if one tenant moves out you can easily plug a new tenant back in.”
With new retail construction often limited to single-tenant properties right now, Enck said it’s a good time for would-be investors to find a foothold in well-located unanchored retail properties. The biggest challenge for would-be investors beyond financing and interest rates is finding available properties to purchase, he said.
“The good thing about retail is it’s about 91% occupied across the country and is a healthy product category,” he said.
One of Enck’s favorite retail properties to visit, Parsons Alley in Duluth, Georgia, near Atlanta, shows an unanchored retail property can be more than a shopping strip. The neighborhood retail center was recognized by the Congress of New Urbanism for its public-private partnership in taking abandoned properties and giving them new commercial life.
Enck said likes the urban downtown feeling of Parsons Alley, which brings together experiential retail and fun for visitors that fit the city where the property resides. The developers were able to reuse a 1904 bank, a 1940s church and preachers home and warehouse-like buildings to create Parsons Alley, the urban real estate group said.
Enck also listed the property during his time at Shane Investment Property Group.
Combining this new platform with the firm’s existing retail investment sales experience, Enck said it will bring a full range of exit strategies to would-be sellers. In adding an unanchored retail platform to SRS, he said it will be beneficial for the firm’s clients with added property exposure, maximizing value through disposition scenarios and increasing deal flow.