Shopping Center Business

MAY 2017

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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GROCERY STORES 272 • SHOPPING CENTER BUSINESS • May 2017 Kroger and Walmart relative to the re- duction in the number of new stores they will be building in the future. Instead of aggressively adding new stores, these re- tailers are focused on strengthening their existing portfolios and improving the pro- ductivity of the square footage they have. SCB : What are the threats to the grocery business today? MCKESKA : The leading threat is the growth of online sales. In the past, inves- tors have viewed grocery stores as being relatively immune to online sales, but I think that thought process is beginning to shift. It will take time, so it won't happen as quickly as in other sectors of retail, such as clothing, electronics and soft goods. However, I do think the industry realizes it is coming and will dramatically impact their business in the coming years. In fact, the previously mentioned Food Market- ing Institute and Nielsen study estimates that online food-at-home purchases will grow from an estimated 2 percent of the market today to 20 percent by 2025. This represents approximately $100 billion in annual sales and 3,900 brick-and-mor- tar grocery stores. While it is likely that a significant portion of this growth will come from brick-and-mortar stores add- ing e-commerce capabilities, the overall impact will be substantial nonetheless. SCB : How are you working with grocery retailers to mitigate the issues that they have? MCKESKA : Grocery chains are trying to take a thoughtful approach to develop- ing multi-year real estate strategies in alignment with their longer-term business plans. This is not an easy thing to do these days because of the continual and accel- erating shifts taking place in the industry. It is easier to invest in the stores that are doing well and refrain from investing in those that aren't. Overlaying a broader strategy beginning company-wide, then narrowing down to each market, and finally to individual assets and adjusting investment priorities and return expecta- tions once the portfolio is filtered through these lenses is a wiser approach. We are using this approach to really drill down as to why and where to invest in particular markets and stores. SCB : Tell us a little bit about your career? MCKESKA : I have been in the grocery busi- ness for close to 25 years in various exec- utive level real estate positions. I started with American Stores in the mid-1990s and moved to Albertsons when they pur- chased American Stores in 1999. In 2006, Albertsons sold the company in pieces, with the majority of the grocery store assets being sold to SuperValu, where I ultimately ended up running all of real estate until most of the assets were sold to Albertsons LLC in 2013. Until mid-2016, I was head of real estate for Southeastern Grocers, which operates 750 stores un- der the Bi-Lo, Winn-Dixie, and Harvey's brands. SCB THE ULTIMATE MARKETING TEAM TO FIND YOUR BEST BUYER > Kokua Realty is an award winning national investment brokerage team that assists our clients in the acquisition and disposition of investment real estate. Keoni Fursse, CCIM has over 29 years of experience and leads the Fursse Team representing developers, franchisees, and private investors in the marketing and selling of investment properties nationwide. To learn more about selling your single tenant net leased property, please contact: Keoni Fursse, CCIM, R(PB) CEO & Principal Broker 808.280.6556 keoni@kokuarealty.com Maui Retail Center Paia, HI $2,800,000 5.9% Cap Rate Development Site Seattle, WA $23,390,000 Kansas City MSA Retail Center Blue Springs, MO $3,760,000 Aloha The Fsse Team kokuainvestments.com Marketing & Selling Investment Properties Nationwide FOR SALE SOLD SOLD

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