Lisa Palmer, President & CEO, Regency Centers Corporation
Invest: spoke with Lisa Palmer, president and CEO of Regency Centers Corporation, about the influx of population to Jacksonville and how that has created a bevy of opportunities for grocer-anchored shopping centers. She also discussed what is next for the industry. “We continue to invest in our existing assets to enhance our merchandising and placemaking, while continuing to pursue new ground-up development opportunities,” she said.
What have been your key takeaways from the past year?
We’re celebrating our 60th anniversary. Being a part of the Jacksonville community for as long as we have, with our significant growth over that time, has really woven Regency into the fabric here. We’re a national company with 24 offices across the United States, but Jacksonville remains our headquarters. We also own and operate 19 shopping centers in the Jacksonville market, totaling over 2 million square feet of retail space. Our shopping centers have a mix of offerings that contribute to people’s lives every day.
What is your assessment of the state of the industry?
Our sector is comprised of grocery-anchored open-air shopping centers and the growth in the Jacksonville market has been significant. It started with the pandemic that led to a lot of migration, as Jacksonville remains one of the U.S. markets with the highest growth of population. The population increase has brought job growth and an increased demand for housing, goods and services. It has created good opportunities, and the shopping centers we own and operate have been performing extremely well as a result. At the same time, the desire to be close to your home and neighborhood has been strong as a result of post-pandemic consumer behavior. During the pandemic, people realized how much they enjoy and desire going out, and they don’t want to rely fully on e-commerce for all their needs. But at the same time, they want to stay close to home. That’s been a strong tailwind for neighborhood shopping centers, which are a part of the community.
How does Regency implement tech and innovation?
Technology and innovation are a part of our everyday work at Regency. Going back to 2019, we were talking a lot about the impact of e-commerce on our business. With the pandemic, a lot of trends that were already happening accelerated. Retailers were forced to service customers by providing delivery or having customers buy online and picking up at the store. That market share increased quickly, and we helped our tenants leverage technology to best serve their customers. We have also leveraged data using geospatial information and mobile data to better understand the demographics and behaviors of our customers. We’re also in the early innings of investing in artificial intelligence. We are focused on solving business problems at our core, and seeking ways to incorporate AI into systems we already use to achieve our financial objectives. It will make us better, so we’re encouraging widespread experimentation and rewarding success in how Ai is implemented.
How have economic drivers such as inflation and interest rates impacted business?
Inflation has impacted a large percentage of our merchants. Our shopping centers tend to be in neighborhoods and trade areas where there hasn’t been a lot of job loss. The markets we are in continue to grow, with wage growth that is commensurate with the cost of inflation. As a result, consumers can absorb some of the cost increases merchants have had to pass on due to inflation, primarily because the goods and services are essential.
Interest rates are different and have an impact on any company that has debt, which must be refinanced. As interest rates have risen, it creates a headwind for earnings growth that will continue. With a strong balance sheet, we are the only shopping center company in the country that has an A rating. As a result, our cost of capital is relatively low, so we are well positioned against others in our sector.
What have been some of the key projects in the region for Regency?
One of our differentiators is that we are among the largest developers of grocery-anchored shopping centers in the country, with more than half a billion dollars in projects under construction. We continue to pursue new opportunities in Florida, especially in Jacksonville, including the opening of a new Publix-anchored shopping center in the San Marco neighborhood. We’ve also completed the redevelopment of a Whole Foods in Jacksonville Beach, the second in the market. We’re also redeveloping Mandarin Landing, adding new merchants including Sephora, Cooper’s Hawk, and a Baptist Medical Center building. We continue to invest in our existing assets to make them better while continuing to pursue new ground-up development opportunities. With the significant population growth and demand for new housing, there is demand for new retail.
What is your outlook for the near term?
With the structural tailwinds of hybrid and remote work, people are spending more time in their neighborhoods. With the focus on essential goods and services, our outlook remains strong, with healthy fundamentals. That is true for the entire sector, but Regency is positioned even better because of the quality of our properties and a best-in-class team to capitalize on that demand.
