Broad Reach Brings Optimistic Outlook To Retail Development

shopping center

Put commercial real estate and retail in the same sentence and it usually spells trouble. That’s not the case, however, for Annapolis, Maryland-based Broad Reach Retail Partners. While other developers have understandably struggled with the pandemic, Broad Reach has designed and operates its properties with an emphasis on grocery store anchors and a focus on community involvement.

“We’re now over 90 percent of our collected rent, which is our pre-COVID recovery level,” Broad Reach CEO Nate Tower tells PYMNTS. “And I think it’s really a tribute to our tenants. Our centers provide daily needs, goods and services that people need, no matter what the situation. We’re anchored by grocery stores, but we also have dollar stores, liquor stores, nail places, hair salons and yes, some of those had been hurt by the shutdown. But they’ve come back strong. Are there places that people need in their daily lives. So we’ve been able to weather this pretty well.”

Broad Reach is confident where other developers are cautious. It recently acquired Warsaw Village Shopping Center in Warsaw, Va. — an acquisition that represents that confidence in the CRE sector despite the COVID climate. It currently owns 13 centers, and has managed and leased over 47 properties totaling over 4.5 million square feet since its founding in 2006. Tower says that confidence also comes from the spirit and resilience of his tenants during the pandemic.

“The resourcefulness we’ve witnessed has been astounding,” he said. “For example, one of our apparel tenants used FaceTime to walk customers around the store for a personal shopper experience — just one case of our tenants demonstrating that, pandemic or not, necessity-based retail is a pillar of our communities. It’s something we’ve always believed, and we’re proud to continue finding and elevating the value these centers bring to local residents.”

Tower is modest about Broad Reach’s success as a shopping center company rather than a mall real estate investment trust, and he’s also not one to predict any part of retailing’s demise. He’s an advocate for brick-and-mortar retailing. He does think the mall sector will diminish, but he also believes that the evolution of grocery and grocery retailers can be a positive factor in creating retail destinations. Those destinations, he says, need to be part of their community to be successful. Having tenants that fit into the daily life of those communities is part of the Broad Reach formula. As Tower says, when a family needs diapers it’s helpful to have a Walgreens down the street at a Broad Reach center.

“I’m not diminishing the impact of the digital-first economy, but the majority of sales are occurring in a physical location,” he says. “So we have to balance out with all the negativity around what I call ‘sticks and bricks.’ Some of the retail concepts that have gone away were not serving the needs of the consumer anymore. Did Amazon kill them? I don’t know, it probably had an impact. But I also think that some of these retailers did not have a great pulse on what the consumers’ needs and demands work. If you’re not meeting the needs of the consumer, you will have trouble.”

Tower singles out the grocery category as one with excellent companies behind it and one that focuses on the customer experience. That experience will determine the success of failure of the centers they anchor.

“I think we will see more customer service-oriented retailers at malls and shopping centers, ones that focus on the customer experience,” he says. “Consumers are looking for someone to help them make the right decisions. There was also the entertainment concept for malls and I think that will rebound eventually. But the attraction from our perspective is in grocery. I think that you’re seeing a nicer grocery store. And I think that Whole Foods had a lot to do with that. I think the shopping experience in a grocery store is much nicer than it was 10 years ago. The physical display is much more user-friendly and more appealing and they had a big influence on that.”