CFO Robert Mason weighs in on what it takes to stay ahead of the game as the retail sector faces significant change.
The retail sector is in the midst of a transformation generated by the e-commerce revolution. The ones who will come out on top of this trend will be those who understand how to leverage the new tools and platforms. Robert Mason, the new CFO of retail development company Skilken Gold, discussed with Commercial Property Executive why this new era is less about exclusion and more about inclusion and cohabitation of two very different aspects of retail.
What are your expectations for 2018 regarding retail development?
Mason: We’re bullish for 2018 and beyond. The industry is going through change, particularly with the popularity of e-commerce, and change creates opportunities. The future of retail isn’t brick-and-mortar or e-commerce—it’s both, as evidenced by the major players’ heavy investments in physical and digital marketplaces—a result of logistics and ensuring products are as close to their consumers as possible. The brands that win will be the ones that figure out the interplay between online and offline commerce.
What can you tell us about the financing process for retail projects?
Mason: Traditional financial institutions are cautious of the industry. We mitigate by working with the best in class, concentrating on strong credit tenants with sustainable business models. The capital space looks a lot different today—it’s not just banks and insurance companies. We’re working with a wide range of partners, including domestic and international private equity.
We have seen retail developments that have failed to meet expectations. What are some mistakes CRE investors make when it comes to new projects?
Mason: Commercial real estate investors often take too much time to make the “go” or “no-go” decision. You can waste a lot of resources on the “maybe” project.
Another mistake we’ve seen is when developers become emotionally attached to a project. Our investment decisions are based on a bottom line collaborated approach with all vested members of our development team.
Commercial real estate investors often take too much time to make the “go” or “no-go” decision. You can waste a lot of resources on the “maybe” project.
– Robert Mason CFO, Skilken Gold
Like you said, the retail sector is undergoing a transformation, as e-commerce continues to take up market share. How do you think the retail experience will look like in a few years?
Mason: Convenience and technology advancements will continue to drive development. E-commerce names will grow their “showroom” locations and traditional retailers will build out their e-commerce platforms. Technological advancements are simply a temporary disruption that will yield positive change for existing retailers. Those that don’t buy into it will and should be gone.
How do you think the new tax legislation will impact retail?
Mason: It’s still too early to tell, but more money in consumer’s pockets is good for the retail industry. We have already begun to see several large companies define a plan to expand their national footprint. Additionally, the new tax legislation adds up to a 20 percent deduction for qualified business income of pass-through entities and maintains critical benefits to the commercial real estate industry, including 1031 exchanges, section 179 deductions and bonus depreciation.