CP Exchange | Portland 2016

April 28th marked the fourth annual CP Exchange, held this year in Portland, OR. This exclusive client event, hosted by Capital Pacific, brought together commercial real estate’s largest movers and shakers in the industry for a candid conversation on emerging trends in investment real estate.

Located in the urban industrial space of Union Pine, the evening began with an energetic cocktail hour. Afterwards the group settled in for a panel-led conversation moderated by Kevin Adatto and Scott Frank of Capital Pacific.

The Panel

Patrick Donahue | Donahue Schriber
Noel Johnson | Killian Pacific
Jerry Chevassus | New Seasons Market
Siouxsie Jennett | Mambo Media

On the New Grocery Landscape:

Organic. Local. Jerry Chevassus of New Seasons Market has seen an increasing trend of grocers and mass retailers shifting their focus to organic and locally-produced fresh food. This is New Seasons’ bread and butter, but Costco and Amazon are also becoming huge players in this space, competing heavily to obtain market share.

New Seasons differentiates themselves by offering an experience for its customers, as evidenced by its rooftop deck and wine bar at the brand new Woodstock neighborhood location in Portland. As such, customers are drawn to their stores for more reasons than buying groceries on a daily basis. The experience offered at New Seasons keeps customers hungry for more and in the store for longer periods of time.

On Onmi-Channel Retailing & the use of Technology in Driving Sales:

Our panelists agreed that retailers will need to develop omni-channel retailing models to remain viable and compete heavily with Internet retailers. “Clicks and bricks” is becoming increasingly prevalent for many retailers and grocery stores, where a user can order products or groceries Online and conveniently pick up at the store. Siouxie Jennett of Mambo Media also touched on the use of beacon technology, which tracks where customers are shopping, and believes this is going to be key for retailers and Landlords moving forward. Kohl’s reportedly spent $1 Billion on this technology within the last two years to be able to follow where customers shop in their stores and offer incentives while in-store to further drive sales.

Market Cycle: Where Are We?

Our panelists remain very optimistic about where the current market is headed. Patrick Donahue of Donahue Schriber believes the lack of supply is driving the aggression in the market, and predicts that cap rates for quality retail assets will likely decline over the next two to three years. Debt remains cheap in the market and as
long as interest rates remain lower, values will not fluctuate in a negative way.Noel Johnson of Killian Pacific believes that although cap rates are very aggressive as of current, risk-adjusted yields for retail assets remain very attractive relative to returns seen in Europe, Japan, and China. As long as returns remain more competitive relative to alternative countries, yields will continue to be pushed lower.