Peter Montesanto
Name: Peter Montesanto
Title: Senior Vice President, Colliers International Boston
Age: 55
Experience: 33 years
In a fast-changing retail landscape, shopping centers’ challenge is to remain frequent destinations. Particularly in the suburbs, that often involves a “de-malling” strategy – tearing down interior space and replacing it with stores with direct entrances. As a broker for Boston-based Dartmouth Co., Peter Montesanto was responsible for leasing connected to redevelopment of the Walpole Mall. Seven retail pads and 150,000 square feet of new retail space were added, while a large portion of the interior mall was demolished. Montesanto joined Colliers International Boston in 2016 and leads its retail services team, representing landlords at properties such as the 293,500-square-foot Maynard Crossing, which will be anchored by a Market 32 By Price Chopper supermarket.
Q: Were you surprised that Wynn Resorts is having difficulty attracting Newbury Street-type retailers to their casino in Everett?
A: No. There’s not a lot of critical mass of retail in that corridor, and retailers like to piggy-back on each other. (The casino) is very insular. You go there for gambling and entertainment. You’ll get a high-end jeweler in there, a couple of high-end restaurants, but I never thought it was similar to what they’ve done in Vegas with Fashion Show Mall or the Shops at Caesars. It’s not the right place for it.
Q: Are you doing more tenant or landlord representation these days?
A: Right now, probably more landlord representation. It seems to be how our business is going. Back in the day it was probably 70-30 (tenant representation). Now it’s almost 50-50 where you have to be involved with both as you move along. The real estate departments in these retailers are getting smaller, so as brokers we’ve become more of an outsourced real estate department. You’re dealing with every aspect.
Q: What retail submarkets are seeing the biggest rent swings?
A: Obviously the Seaport has exploded at triple-digit rents. That’s really gone crazy. And it’s just the tip of the iceberg as far as what’s opened there. I was down there the other day when it was 80 degrees and all of the food service was packed, people were eating outside on the greens. That is probably number one. And certainly Downtown Crossing with Old Navy, Primark and Roche Bros.’ success and expansion. There’s been a lot of interest in 350 Washington St. (the former H&M store) and I think you’ll see something significant go there in the next three to six months. I think there’s room for another urban grocery, whether it’s Trader Joe’s or a Whole Foods Market type. I could certainly see them looking at Downtown Crossing.
Q: What changes are you seeing in lease negotiations and do tenants have the upper hand?
A: I don’t see a whole lot of change right now, but within the next six to eight months you’re going to be seeing a little bit more favorable lease terms for the tenant. Landlords have been riding a big wave for a long time, but in New England I don’t see a lot of change. Since 2010 nationally, we’ve developed about 150 million square feet of retail. The U.S. is overbuilt on retail. In New England, there’s still not a lot of inventory so we’ll be fine. Retail usually follows residential and residential is still very strong in Boston, although that’s going to slow down with the condo and multifamily development.
Q: What new formats are you seeing in retail development?
A: You’re going to have to look for alternate uses for retail, especially on the I-495 corridor. Urban retail will be strong, but the suburbs will have significant changes. You can’t just build a cookie-cutter strip center. It’s got to have entertainment, fitness, outdoor space. WS Development has done a great job, especially at Marketstreet Lynnfield, with skating rinks, playgrounds, green space. That is something that’s going to reduce your GLA (gross leasable area) a little bit to create some activity that shows some energy on the site.
Q: Is Maynard Crossing a good example of that approach?
A: Maynard Crossing is breaking ground in June and we’re probably 70 percent committed. What we’re trying to do in Maynard is target across the board. We’re trying to create more of a town center within a shopping center, and you have to do that in the suburbs. You have to create more than just straight retail uses.
Q: With anchor stores downsizing, who’s picking up the slack?
A: Market Basket in our market is a behemoth. Shaw’s and Stop & Shop are trying. They’re putting the money in to improve their concepts. You’re going to see more urban and smaller versions of those grocery stores. Stop & Shop and Shaw’s need to figure out where they’re headed, because Market Basket just croaks them. It’s an 800-pound gorilla. Wegmans is coming and is very successful.
Q: What will become of the old anchor spaces?
A: Those big retailers have been threatening to close and now you’re starting to see it come to fruition. You’ll see more direct access from exterior to interior, more de-malling of those big boxes. That’s where the entertainment play comes into effect, because they need a lot of space. The malls in our market, specifically the Simon properties, are going to be fine. But I don’t think you’re going to see any development of interior malls anytime soon.
Montesanto’s Top Five Favorite Golf Courses:
- Salem CC – Peabody
- PGA National – Champions Course – Palm Beach, Florida
- The Country Club – Brookline
- La Quinta TPC Stadium Course – Palm Springs, California
- Mid Ocean Club – Bermuda
