Subscribe
Share
Share
Embed
Current Season: First Draft Live
Between economic whiplash, shifting policies and market volatility that changes by the hour, you need industry insights that cut through the noise. That's exactly why we're launching First Draft Live, a new weekly series that breaks down what's happening, why it matters and what you need to know to do better business.
Join us live on Bisnow.com every Friday at 12:30 PM ET / 9:30AM PT for conversations with the industry's sharpest minds discussing the week's most critical stories, or catch the replay right afterwards — here on your podcast app of choice.
Okay. Welcome to First Draft Live. I'm Mark Bonner, business editor in chief coming to you live from New York. It is Friday, December 5, and we are closing out a year where the story of retail has become the story of the entire economy, strength on the surface, instability underneath. Retail real estate has been one of twenty twenty five standout performers.
Mark Bonner:Investment sales are up by more than 21%. Q3 demand finally turning positive. Leasing is still competitive and limited. New construction has kept fundamentals tight. And at the same exact time, the ground has shifted.
Mark Bonner:Tariffs have surged to levels we haven't seen in generations. Imports are delayed, slowing openings and killing deals. Consumer confidence has fallen for months. Store closures up 66% year over year. Seasonal hiring at its weakest since 2009.
Mark Bonner:And major brands like Amazon, Target, and Carter's are cutting corporate jobs heading into the holidays. Yet somehow, the consumer keeps showing up. Black Friday and Cyber Monday broke records. Value chains were mobbed. AI shopping assistance jumped 300% year over year.
Mark Bonner:It's a year defined by contradiction where sentiment and behavior sharply diverge and real retail real estate sits right in the tension between them. And that's exactly why today's show matters. Few operators understand the moment better than Walter Camp. As president of Northwood Retail, he oversees one of the most sophisticated portfolios in the country, one that has thrived through cycles because it reads the signals earlier than most. Ward, welcome to First Draft Live.
Ward Kampf:Mark, thanks for having me. I look forward to talking to today. It's very timely and everybody seems to kind of want every little data point the last since Black Friday. Every data point matters, right? So, you know, sentiment just came out.
Ward Kampf:It was up a little bit. So, you know, up into the right is always good. So, yeah, let's dive in.
Mark Bonner:So let's get into the split personality for a second. Right? Yeah. Retail real estate looks bulletproof on paper. Investment sales up 21, q three absorption finally positive.
Mark Bonner:Leasing still tight while the macro backdrop is cracking. Store closures up 66%. Consumer confidence is sitting below recession thresholds, and big brands are cutting thousands of corporate jobs heading into peak season. How do you reconcile a sector that's performing this well when so many of its fundamentals are flashing yellow?
Ward Kampf:You know, it's a good point. I've got a lot of reflection having done this almost forty years. You see different cycles, and they're all very different. You either see high interest rates, you see the GFC, the .com bubble, you know, if you saw the eighties, that was kind of more regional in nature but there's always and I think in retail, what's interesting, there's always evolution of retailers and I think the bipolar nature you just described is real. I think the consumer is conscious on purchasing but you know, I think what people do and what people say are two different things.
Ward Kampf:I do think one of the macro things that's underneath the surface is, you know, energy sub $60 is a tailwind not only for the consumer, the high end, the low end, the middle. It's also a tailwind for businesses, whether it's trucking, shipping, stuff like that. So I do think, you know, that's a big component of pricing, etc. And so it could be a real tailwind, you know, end of the end of the year. But certainly the uncertainty, I think, you know, it's been out there for a while and I think credit really matters.
Ward Kampf:And so
Mark Bonner:Yeah, we wrote about uncertainty this morning. Everybody should check out First Draft, the newsletter that I put out every morning. But just one more question on the split personality ward. I mean, you've been at this a long time. You've seen multiple cycles.
Mark Bonner:You've seen the economy do all sorts of things over the decades. Is this resilience that we're seeing in the retail sector? Or is the industry mistaking momentum for health?
Ward Kampf:I think it's a combination of both. I think there's there has been this, you know, DTC brands that have been built kind of since the GFC, right? That have rolled out and so, that's one component. I think, you know, newness is really, really important and I think some of these brands, leadership, you know, you look at Gap, you know, two, three years ago, they were left for dead and I think the new team, you know, I walked out of my house this morning, there was a package from Gap and J. Crew.
Ward Kampf:I think new leadership, newness, and I do think that's what's winning in retail right now is do you have something new that consumer doesn't have and wants? And if you don't, you're gonna be people are gonna be shopping around price. And so it's more of a commodity. And that's where the split is.
Mark Bonner:Right. And look, and let's talk about consumer. Right? I mean, as anyone knows, what consumers say and what they actually do are often two different things. Right?
Ward Kampf:Right.
Mark Bonner:Because you look at Black Friday, you look at Cyber Monday, you look at the last five days of retail in America, consumers dropped about 11 and and a half billion dollars.
Ward Kampf:Right.
Mark Bonner:Yet, surveys say they expect that that group is gonna spend less, trade down, and rely heavily on promotions. Confidence has now fallen for four straight months. Expectations from most economists say that we should expect perhaps some recessionary wins early next year in q one twenty twenty six. What do you make of a consumer who talks like they're in a downturn but spends like they're not? And do you think that can continue?
Ward Kampf:Yeah, I think, you know, I I I do think everybody looks at it and wants to know, you know, the health of the consumer. I think, look, there's a subset or there's been a lot of generational wealth that's been created. I always start with demographics and I, you know, I think we have four. 1,000,000 people retiring a year. I think we have eleven, zero people turning 65 every day.
Ward Kampf:It's about 300, zero a month retiring. So the job market, the labor market, is kind of there. I know hiring is softened for sure, but the firings, some of it is you know, either people are trying to get more efficient around their business and probably should have done it a while back and are taking this opportunity to refine it. I think tariffs played into it. So, I think I think it's a little bit of both and then I think, you know, to your point, on the consumer, look, Christmas is going to happen and people are going to shop.
Ward Kampf:It starts a lot earlier, right? It's really September was soft. What we've seen in our centers, whether it's Texas, California, out in The Carolinas. October was really, really strong. November, good indications and you know, good early indications on kind of Christmas.
Ward Kampf:So. Yeah. I mean, November and December represent nearly 20% of the year's retail revenue,
Mark Bonner:but the Lloyd is forecasting the weakest holiday sales growth since 2016. If this season underperforms, we're gonna hit q one with negative year to date absorption, slow hiring, retailers are already operating under the thinnest of margins, the tariffs have not been helpful, inflation has not been helpful. What numbers or behaviors will tell you this holiday season is a turning point, not just a soft miss, but the start of a real pullback in 2026?
Ward Kampf:Well, I think, you know, one of the things we, you know, we've gotta step back a little bit and think about, you know, what we did in twenty, twenty one, twenty two where there was money, you know, you know, think about it in '21 or '22. I was in a James Purse store out in California. They said, you don't buy that sweater. It won't be here and so, there was this idea of, you know, there were no goods, right? In 2021 to buy and so people just snap stuff up.
Ward Kampf:Money was abundant. Money was still cheap, and then things started to shift '22 into '23. So I think, you know, now I think people got ahead, you know, on the inventory side. They moved right when they heard the word tariffs, And so, you know, they started to get the merchandise, get on plan and have it. So I think people are in a good position there.
Ward Kampf:I guess the question becomes, you know, does it get more promotional? And you know, how much more promotional and then, think, you know, you do have some weak brands or zombie brands. You look at Forever twenty one. How long did that go on? You know, two or three bankruptcies.
Ward Kampf:You see that? We kind of need those guys to go away and get more in balance. Does that make sense?
Mark Bonner:Yeah, makes perfect sense. I mean, the other thing that's sort of interesting right now, and you and I talked about this yesterday a little bit, is that, you know, if you took out the high net worth consumer, right, then I I do wonder what this picture looks like, right? There was a curious data point that came out of the holiday season where it showed that Walmart's fastest growing customer were high net worth individuals. Right? And Walmart is typically known for its discounts and being a bargain outlet for a lot of everyday average Americans.
Mark Bonner:Right? What do you what do you make of that? If they're fast growing consumer, people that have money, is that a signal of sorts?
Ward Kampf:I think it's, you know, I think it I think it's definitely plays into a signal if you think about it. It's definitely telling you something. And I think it's no different than businesses where, you know, they've gone through, you know, the last couple years and had to, you know, refine, you know, whether it's hiring, what do they need, cost, you know, if we're building out a space, you know, costs have risen, can we do it more efficiently? How do you do it faster, better, and cheaper? And I think even the high end consumers kind of said, you know what?
Ward Kampf:Things got ridiculously out of control price wise and so I think people are looking for value and just realizing, you know, like I said, the 2021, '20 '2 people were very flush and you know, it went on for a while. So I think, you know, you pull that back, you throw tariffs on there, some uncertainty, then you have this AI movement, which, you know, is causing a little bit of tremor in the workforce, but it's very efficient for some of the retailers, the way they can use it and move things around. Know, everything from drawings, you know, we did an architectural, we did a presentation for a group the other day and we used AI to create the renderings because we have a kid that has an architectural background. Know, so there's some there's some real efficiencies but there's also, you know, a consumer that, we I discussed. It's not the anxious.
Ward Kampf:They're very concerned and because of everything that's going on, you have geopolitical to, you know, everything that's happening and so, people are, you know, for sure concerned.
Mark Bonner:If you're just joining us, this is First Draft Live. I'm here with Ward Camp. We're breaking down two words defining the sector right now. Contradiction and instability. If you have questions for Ward, put them into the chat and our producers will feed them to me.
Mark Bonner:Let's keep moving. Tariffs. They now make up 13% of monthly consumer goods imports, yet retail prices are only up 2% on imported items. That means operators are eating almost everything, right as freight delays shrink, insurance and labor costs rise. Where are you seeing margin pain turn into real estate decisions?
Mark Bonner:Is it slowed openings? Is it smaller footprints? Is it negotiations? How do you see this margin guillotine ward?
Ward Kampf:Yeah, I would say it's a little bit of all of it. I think you know some of the opening, we've got three or four key openings in certain centers that should have opened this year that are getting pushed to next year. Again, back to kind of tariff supply chain, so that obviously affects, you know, rent commencement, getting them open. So that is back in play. It's something we thought would happen.
Ward Kampf:And so that part of it is very real, know, just as far as getting, you know, either stores open or the newness of it. So it has put a little bit of delay, but I think the good retailers, they know they have the data where the good assets are, where the incomes are, and they really that's kind of the space we play in. I go back to if you're in the commodity space, it gets a lot tougher to drive price, whether it's rental rates or what they can charge in store.
Mark Bonner:One of the one of the most surprising dynamics of the tariffs from a retail perspective this year has been more retailers than I think were previously expected ate the difference and didn't pass it on to the consumers. They didn't pass it down the chain. Right? Walmart is a one is a big example of this. Is there something to the notion that perhaps they're holding on to get through the holidays to get as much bang for their buck as humanly possible and that somehow in q one, '26 that we're going to begin to see that change, that they cannot withstand that pressure anymore from the tariffs.
Ward Kampf:Well, I think you're, I think you're already seeing it. I think you're seeing it in food, especially QSR. I mean, they, you know, Chipotle, Cava, all these guys, they passed sweet greens, they passed on the cost, and you know, there was a big article about it in the Wall Street, you know, the $20 salad or $20 burrito, people have pushed back and I think the keyword going forward, doesn't matter your political slant, right or left is affordability and so. Right. People are really conscious of like, that is kind of out of control where, you know some of these QSR guys went and you know having a 30 year old and a 28 year old they're very conscious of that type of stuff.
Ward Kampf:So you know I just I think that's kind of natural what's going on. And I I think it's I think it's gonna be hard to pass the tariffs on. And then there's a fifty fifty shot. Do the tariffs get lifted? You know?
Ward Kampf:By we do have this supreme court ruling that's still out there.
Mark Bonner:Or Taco. Yeah. Right? I mean but but Ward, I mean, it can't this can't stand. Right?
Mark Bonner:I mean, these retailers cannot continue to absorb this. Right? At some point, something's gonna have to give. Could be the Supreme Court. Could be Trump changing his mind behind the the resolute desk in the Oval Office.
Mark Bonner:I mean, how much longer do you think this can stand before something happens?
Ward Kampf:Well, I do think, you know, some of the trade agreements that, you know, I think we went out with with very high numbers, you know, trying to end up. You think about Switzerland and the watch, you know, at 39%. Well, that wasn't sustainable, right? So, we ended up what it like 19% on watches. I mean, I think there's we're gonna have to find a balance where yes, it will tip us into something very different.
Ward Kampf:You know, but we have very favorable tax policy coming, you know, in '26, not only for the household, but also for businesses. With very cheap energy prices. So I do think there's there's gonna be a push and a pull. You know, does it break? I don't have a crystal ball, but, you know, it there definitely is a slowdown.
Mark Bonner:Let's go to a question from the audience. Ward, are you seeing K shaped spending to match the K shaped economy that people keep talking about?
Ward Kampf:Yeah. I mean, the top slant of the K has really widened. But one thing I do think people, you know, they are disproportionately outspending the bottom part of the K. The K has widened and the slant has really widened. But I do think one thing, you know, we always think about, you know, we're an investment committee or we're talking.
Ward Kampf:You gotta remember, you know, the very, very high end, the amount of money that has been created in this country in the last fifteen years is unlike anything we've seen in small markets, big markets, and there's a micro economy underneath either those companies or those individuals, if that makes sense. They invest in other asset classes or you know, they reinvest in people, etcetera. But there has been a lot of money that has been created, and I think we'll see a big transfer of wealth over time. Kind of
Mark Bonner:back to that, brother. Yeah. Let's let's talk about leasing for a second. Headlines say leasing is competitive, but deal flow is getting noisier. Delayed equipment, customs, backlogs, tariffs, tariff timing, have tenants killing leases so they don't burn free rent before they can even open.
Mark Bonner:How widespread is this really?
Ward Kampf:I think it's look. I think one of the things you're seeing is weak tenants that aren't well capitalized. This is a huge you know, this is a real problem for a lot of those tenants. And then some of the legacy tenants that have been around kind of repackaged three or four times, you know, that's a challenge. But I do think there is this divergence either people pushing the openings out in next year.
Ward Kampf:Maybe they were going to open, you know, in the spring and they're pushing to fall because they want to have all their ducks in a row. So, it is still competitive though. The best assets, the right spaces, right sales per square foot, and the right demos. People have that data and they want to be there. So I think it's market by market and you know, asset, you know, asset.
Mark Bonner:So, do you think, I mean, Ward, do you think it's is it isolated friction or is it the early signal that deal velocity is weaker than the stat show?
Ward Kampf:I think it's, you know, I think everybody's going to be, again, more purposeful about where they open and more thoughtful about the dollars they spend. I mean, we have a lot of square footage in America, right? And so, there hadn't been a lot built. So, I think we're in balance. I think some people want to build new to Zap Pencil.
Ward Kampf:I don't know. And you know, I think it's I think we're going to see continue to see limited development over time. You know, we're just not going to be wide open and I think we're going to have a big absorption of some of the boxes or some of the retail space that comes back.
Mark Bonner:Ward, we got a couple more questions here. Will prices correct across the board or do incomes and spending eventually catch up with the heightened prices?
Ward Kampf:I think think you'll see there'll there'll be a resistant point at almost every level. I mean, there is going to be some type of pushback and people are making those adjustments. Know, it's at the high end, middle, whether it's food or retail or experiences. Yeah, I mean I definitely think you'll see that.
Mark Bonner:Okay. And are you concerned about instability with drugstore chains and risk of a domino effect if there is a bankruptcy?
Ward Kampf:Yeah, I mean, listen, I think the drugstore chains, you know, when we talk about closures, you think about drugstore banks, some of the inefficiencies, kind of what's going on direct to consumer in that space. A lot of stuff around, you know, what the traditional drugstore was. They're more in the managed care business today, if you think about both Walgreens and CBS, that's really where they're driving to. So it's disruptive that's, you know, there's a lot of disruption in all these different businesses, whether it's clothing, technology, etcetera. And so I think drugstores were, you know, one that was really going to get hit.
Ward Kampf:So I do think it's something to watch out for and a potential bankruptcy, you know, we've seen that with Rite Aid. You know, could we see another one? I have no idea.
Mark Bonner:And if that, if we did see that, would it have a ricochet effect on the market?
Ward Kampf:I think there's, you know, I think we always think it's one thing or another. I think, you know, it would definitely, you know, whatever's closest to your house, you know, you'd probably shop differently. But yeah, I mean, it could potentially have a ricochet. I mean, you have a lot of vacant, you know, good real estate available. So it could definitely put some pricing pressure on.
Ward Kampf:Yeah. Space.
Mark Bonner:Look, store openings have outpaced closures for years, but that flips this year. Closures are expected to beat openings by 50%. Yet value chains, off price, fitness, food and bev, luxury resell are expanding aggressively. Which categories are built for this moment, and which ones are about to get exposed in 2026?
Ward Kampf:I think the weak credit tenants legacy that didn't, you know, change into technology whether online, you know, didn't have the right real estate, brick and mortar to support it. I think the resale, I just saw the founder of Fashionphile thirty minutes ago. I think their business is through the roof. I think places like RealReal where there's value. You know, I think again, people are going back to that consciousness.
Ward Kampf:I think, you know, food and beverages had some disruption because people aren't drinking as much. You know, there's a lot of disruption around Ozempic and some of that and you know, the tenants will tell you openly, you know, that those are some of the things, you know, people, you know, are their patterns are shifted, you know, with less least out, least amount of alcohol consumed, I think in fifty years this year. So.
Mark Bonner:And it's unbelievable and that and that's not about saving money, right? Because if you've been to a bar lately, you know that that mocktail cost the same amount of money as a Grey Goose Martini.
Ward Kampf:Right.
Mark Bonner:And so you think that's the Ozempic effect?
Ward Kampf:I think it's Ozempic. I think it's cannabis has caught alcohol for the first time. No matter what your thoughts are on it. Like there are a lot of states where it's legal. That's part of it that they're realizing, you know, at first, they thought it was just inflation.
Ward Kampf:Now it's for sure you know the weight loss drugs, people are just eating less and then I think young kids today and older people, whether they're either you know on one of the weight loss treatments or the younger kids, they eat different and they don't drink as much like we did when we were young. So, health and wellness, longevity on the. Yep. Older people but even the younger people are much healthier than we were. You know, we ate anything we wanted and we drank a lot.
Ward Kampf:So, you know I
Mark Bonner:remember when I moved to New York in the in the middle of the great recession, you know, that PBR and a shot of Jameson for $5, that's out the window. You don't see that being advertised on the streets here anymore. One more thing before we get to the end here is that like, you know, I I I think most people in commercial real estate, including retail, would say that the word of the year is uncertainty. Right? And let's call it the instability premium.
Mark Bonner:There's been so much uncertainty, and we've kind of walked through a lot of it, that it almost becomes predictable. That uncertainty has now certain. Ward, I know you've seen all this. We've talked about it. How do you actually price that into deals right now?
Mark Bonner:It has it become so predictable that it is part of the thinking? And how do you view that?
Ward Kampf:You know, there's new things all the time in retailers. Always know, you think back to, you know, Sears, JCPenney's, Ward's over time, Mervin's. I mean, I've seen it kind of all of it, right? And so, I do think that there's one or two department stores people have their eyes on. You know, this could be the end of the road.
Ward Kampf:I think the uncertainty part definitely being there, this is different because you do have this new movement of, you know, artificial intelligence whether it's, you know, shopping. There's a lot of social selling that's going on. Things are just different now. You know, the way people are selling. Whether it's TikTok, Instagram, in store.
Ward Kampf:There's just a lot of different movement and everybody wants to point to one or two things. So, I do think the word uncertain is out there and so, I do think that's what makes people potentially pause. You know, if they're looking, you know, instead of buying five things, buy three, right? And so
Mark Bonner:Have you experienced anything like this in your career?
Ward Kampf:You know, the 80s was, just, you didn't have the government printing money, right, in the 80s. So that was something very different. The GFC, you know, was a shorter amount of time, but you knew something was very, very wrong. This is different because it's bringing up to your point. You know, we've got a issue that just popped up.
Ward Kampf:I was down at the Domain Northside, our center in Austin and you know, Waymo, driverless Waymos are pulling up to Nordstrom. They're pulling up to restaurants and people are putting either a gift in it or they're putting food in it and different than Ubers where we have pens in our centers for the Uber line. We don't have that figured out. Yeah. And there is a company out there that's working on that, but that's a brand new, if you think about the effect on parking, shopping, you know, it's a it's a whole whole new issue that's arisen in the last two to three weeks.
Mark Bonner:You know, one one good thing that came out of the GFC was that it led to the longest expansion of the American economy in history.
Ward Kampf:Yeah.
Mark Bonner:I just wonder, do you think that there's any reason to believe that once we get in we get through whatever we're calling this, that we won't come out on the other side of it, and that it'll be another massive expansion that will be historically significant to the economy?
Ward Kampf:Well, I go back to demographics. You know, you had a demographic. It was always about suburban America growing out, schools, etcetera. And so, you've got an aging demographic, you're going have a transfer of wealth. Technology is playing a big part.
Ward Kampf:I mean, you know, you see the statistics of people either using their phone to purchase something, they generally have to go to the store, etcetera. So, I do think this is different and something I haven't seen. I think the changes are real. But it all kind of reverts to the mean, right? I mean, people, there were cities like San Francisco.
Ward Kampf:They said, it will never come back and in the last year, they've had one hell of a run out there. So I do think there are places that revert, and retail has always been one of those that kind of reverts back to the mean. But there's always a headwind or concerns, you know.
Mark Bonner:Okay, final thoughts. What are three convictions you're willing to stake your name on for 2026?
Ward Kampf:I think the best best curated real estate projects and the best demographics obviously will start to gap out, just like they they always do when you get in times like this. People want certainty, so that's, you know, the best real estate will win. That's one thing. I do think we'll have more closures than we've had in the last five to seven years. Know, generally every January you have a tenant here or there at your center that doesn't make it.
Ward Kampf:I think we'll see more of that play out. I do think we'll work through some of that. And you know that could free up some space and give people opportunity to remerchandise on the weaker tenants. And I would just say, you know, the last part, retail, the evolution of retail is just so fast. It's such a big part of the economy.
Ward Kampf:You know, we always think about goods, but services are such a big part of retail now today, whether it's MedStar or MedTel, whether it's technology, whether it's the Apple Store, we just opened Google, one of their first stores down in Austin. So, you know, there's always something different. Know, the rise of food coming out of the GFC to combat online. So, I think, you know, right now there's this stat online's up. Sure, it's up.
Ward Kampf:I mean, people are looking for value, but that'll play back into in store. So I do think you've got to look at the positives while you're balancing what's underneath the surface as you talk about.
Mark Bonner:Now Ward, I can't let you go without a question about your Oklahoma Sooner football team. So we can end on this and then we'll get out of here. Do you guys deserve to be in the playoff?
Ward Kampf:Yes. We got the best defense in the country. I know everybody. Our offense is ugly. We do find a way to win.
Ward Kampf:We have a you know, we've played some of the played one of the toughest schedules and we got about seven or eight banners hanging up in Norman and you know, I'm not saying we'll get one this year, but we'd love to get another one.
Mark Bonner:Good luck to your football team and thank you so much for joining us today.
Ward Kampf:Alright. Well, we're looking forward to LSU and Lane and the whole thing down there. Thank you. Appreciate it.
Mark Bonner:If you go Tigers. And if you missed any part of this conversation or wanna catch earlier episodes, you can find every show on biznel.com or in your favorite podcast feed. Just search First Draft Live. We'll be back with our last show of the year on December 19. See you then.
Mark Bonner:This is First Draft Live. Have a great weekend, y'all.