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Inflation to provide tailwind for grocery-anchored retail
The grocery-anchored retail segment is well-positioned for the year ahead, according to Blair Welch, founding partner, Slate Asset Management.
“We continue to see positive fundamentals in the grocery sector, and demand in the asset class is strong,” says Welch in an interview with IREI. “Even with inflationary pressure, revenue and sales are likely to continue to grow and drive positive performance by grocers. That, in turn, creates a tailwind for rents, which should rise over long term, as grocers continue to perform well.”
Welch adds the capital required to reposition or re-tenant a grocery store is much lower than traditional retail, or other asset classes in general, and more in line with logistics, which is a benefit for owners in an inflationary environment in which costs are going up. At the same time, the inflationary environment means the cost to construct new buildings will be elevated, so the value of existing real estate is even greater.