A possible recession in 2023 isn’t preventing retailers from opening stores in the country’s top properties, landlords said.

Kimco Realty management remains confident the firm will be able to grow rents and occupancy rates through 2023. “The big key is really understanding that brick-and-mortar versus e-commerce — that debate has really settled,” Kimco CEO Conor Flynn told Yahoo Finance. “It really is a combination of the two that is the sweet spot that makes retailers more profitable and connect deeper with their consumer.”

Flynn said the powerhouses of e-commerce are opening stores in his firm’s properties and will continue to if they want to grow their businesses. “They’re using those stores not only to sell merchandise but using it as last-mile distribution fulfillment. And that’s the game changer. That’s really what’s driving our robust results and allowing us to beat and raise capital multiple times this year.”

Even retailers with poor earnings and restless stockholders aren’t canceling plans to open stores at Simon properties, and they’re willing to pay steep rent hikes too, chair, president and CEO David Simon said on a third-quarter earnings call.

Leasing spreads at Simon properties were “wildly positive” and contributed to strong net operating income growth of 3.2% year over year during the third quarter, according to David Simon. That’s because retailers are finding out that investments in physical retail are more profitable than those in e-commerce operations, he said.

Simon owns stakes in retailers like Authentic Brands Group, JCPenney and Rue Gilt Groupe, and that gives the landlord knowledge of how omnichannel retailers are performing online. “Where they’re seeing most of the pressure is in the e-commerce business, so the flight toward bricks-and-mortar is real. It’s going to be sustained. And if they’re in the retail business and they want to grow, they’re going to open stores, and it’s that simple because the returns on e-commerce just aren’t quite what everybody talks about,” David Simon said. “We’ve seen no slowdown whatsoever.”

Walmart Will Lease Space Within Its Stores to Small Businesses

Popable, an online marketplace that matches brands with temporary spaces, will rent out space within Walmart stores to small businesses on short-term leases. Brands can sign up for leases ranging from one month to multiple years. Walmart and Popable cited the pandemic and hardships for small businesses as catalysts behind the collaboration.

Wary Optimism, Plus 4 Takeaways from ULI and PwC’s 2023 Emerging Trends in Real Estate

Oversupply and e-commerce no longer top concerns among retail property owners and developers, according to the 2023 Emerging Trends in Real Estate report from ULI and PwC, which surveys executives from all commercial property sectors — investors, fund managers, developers, property companies, lenders, brokers, advisers and consultants — concerning their business strategies, opinions and outlooks. Now, operators’ biggest concern is the state of the overall economy and how it will affect business.

A sense of wary optimism permeates the marketplaces industry, according to the report. Many feel that the industry underwent a reckoning during the pandemic, took its losses on the chin and shed itself of the weakest players. One anonymous institutional landlord told interviewers: “Retail has always had to adapt faster than other property types, simply because the consumer space is always evolving, and it is doing so at a faster pace than ever. But as much as those of us in the sector have spoken about retail resiliency in recent years, I am not sure many of us realized the true depth of that resiliency until the pandemic.”

4 Key Trends from the Report

• Return to Reality. A post-pandemic rebound drove some of the strongest rates of return, rent growth and price appreciation ever recorded. In 2023, that enormous growth and profits eventually will fall back to earth, ULI and PwC predict.

• More Climate Events. The earth is getting hotter, and extreme weather and climate events are becoming more frequent and more severe. The National Centers for Environmental Information calculates that the annual number of billion-dollar weather-related events in the U.S. has risen from three per year in the 1980s to more than 20 per year in the 2020s. In 2023, property owners, managers and users will make even further note of the impact of climate change on marketplaces.

• Investors’ New Darling. Investment will increase for all retail property types in 2023, according to the report. “Everyone is chasing industrial and multifamily, and there is greater uncertainty emerging around office,” one institutional investor told PwC interviewers. “There is greater clarity in retail now than there has been in a long time for investors.”

Former Supermarket Executive Joins SRS

SRS Real Estate Partners hired Sarah Nelson to fill the new position of chief marketing officer in the company’s Dallas headquarters. Nelson has more than 18 years of marketing experience. She most recently served as head of marketing, advertising and branding at H-E-B’s Central Market and previously spent more than a decade in marketing, data and technology roles at H-E-B. During her time there, Sarah built a digital marketing department and a targeted marketing team that developed personalized marketing campaigns and developed the retailer’s curbside and delivery business.