While retail property operations often involve substantial tenant improvement costs, unanchored shopping centers offer unique efficiency advantages that are attracting increased investor attention, according to one Texas-based retail property specialist.
The CapEx Advantage
“When you’re re-tenanting a space, it’s not typically required to move wells and split the utilities and reconfigure in a manner that requires a lot of CapEx,” explains George Wommack, CEO of Headwall Investments. “It’s typically where one tenant leaves a suite and another tenant can go right into that exact same suite.”
This operational efficiency creates significant cost advantages compared to other retail property types, where tenant changes often require extensive renovations and utility reconfigurations.
Location-Driven Strategy
Wommack says successful operations depend heavily on strategic property selection. “These properties that we’d like to see excellent visibility from the road. It’s ideal if they’re on a signalized intersection. We like properties that back up to residential subdivisions.”
This focus on convenience and visibility helps maintain consistent tenant demand. “The one, one and three mile radius is really where these properties draw most of their customers from,” Wommack notes.
Capital Structure Innovation
Headwall has built its $220 million portfolio using an innovative capital approach. “Our equity comes primarily from high net worth individuals and family offices… we’ve raised 94 million of equity through those channels,” Wommack explains.
This funding structure allows the firm to move quickly on acquisitions while maintaining focus on operational efficiency. “They’re an integral component to platform success,” says Wommack of their investment partners.
Market Evolution
The operational advantages of unanchored centers are gaining broader recognition. “We’re currently seeing a shift to where more and more institutional money is flowing into the space,” Wommack notes, suggesting that efficient operations and stable cash flows are attracting sophisticated investors who previously overlooked the sector.
