The following are excerpts from Western Real Estate Business’ September 2025 Volume 23, Issue 1:
Capital Flows but with Caveats
“The Rite Aid bankruptcy — which was a long-time coming — added a number of mid-sized boxes to the marketplace, yet with Walgreens going private and CVS announcing a large number of store closures, that puts downward pressure for rents, as well as making it more diffi cult to justify new construction,” adds Sandy Sigal, CEO and president of NewMark Merrill in Calabasas. Sigal believes some retailers, such as Big Lots and 99 Cents Only Stores, would have been able to restructure or survive had they been able to sell a portion of their stores in a “normal market” — but few things are normal today. Fortunately, interest in certain California shopping centers extends beyond investors. With vacancy tight, there are many tenants looking for room. “In each case, there is the opportunity to improve activity with a new, more relevant retailer,” Schnitzer says. Active owners are doing just that. Coreland recently executed two Sky Zone Trampoline Park leases in North Orange County, backfilling more than 60,000 square feet of former grocery space, while NewMark Merrill has inked deals with Burlington, Ross, Marshalls and Sprouts.
Momentum Meets Limits
Much like the state’s retail market as a whole, development in California is a paradox. So many parties — from developers and cities to tenants and consumers — would love to see more of a good thing. The shoppers are here, the lifestyle is here, the tenants want to be here and the developers, well, they wish it were easier to build here. First, there are the current nationwide challenges. “There’s lots and lots of uncertainty,” Sigal says. “Credit compression, no solid indicators on interest rates and an untested perspective on tariffs are on everyone’s minds.” Asher adds that tariffs can also increase construction costs and create supply chain worries. Then there’s the statewide hurdles. “Construction costs, permitting timelines and utility requirements continue to pose significant roadblocks for leasing and development activity,” Premac adds. “In short, everything costs more and takes longer to build, no matter the scope or size.” The pinch from these added cost and timeline pressures are being felt throughout SoCal.
Read the full publication here: Shopping Center Business : September 2025