West Coast Shopping Center Trends with Matt LoPiccolo
In this episode of the Matthews™ Podcast, host Matthew Wallace kicks off the Publication Takeover Series with the National Shopping Center Overview, breaking down shopping center trends with the help of regional experts. Matthews™ Senior Vice President Matt LoPiccolo joins to discuss key retail and shopping center trends across the West Coast. With nearly a billion dollars in transaction experience across California and the broader Western region, LoPiccolo brings grounded, real-time insight into a market defined by both competition and complexity.
A Career Built on Specialization and Understanding Risk
LoPiccolo’s path into retail investment sales began with local San Diego shopping centers, a highly hands-on, information-driven asset class. Early in his career, he immersed himself in site-level intel: CAM structures, big-box turnover risk, lease-up economics, and the intricacies of multi-tenant operations. Over time, these fundamentals shaped his specialization. He learned that shopping centers carry layers of uncertainty not found in single-tenant assets, from operational exposures to business-plan variability. That complexity became an advantage, sharpening his approach to underwriting, basis evaluation, and deal strategy.
Why West Coast Retail Remains Competitive
Despite higher borrowing costs, West Coast retail continues to outperform. LoPiccolo identifies two major drivers:
1. Low Inventory + Strong Fundamentals
Vacancy remains tight across most Western metros, preserving landlord leverage and keeping competition elevated—even in a challenging capital environment. Deals that do hit the market draw attention, especially in stabilized neighborhoods and grocery-anchored centers.
2. Healthy Tenant Demand
Fast-casual dining, fitness concepts, and coffee operators continue expanding, providing steady absorption and anchoring neighborhood centers. While some categories feel saturated, overall demand remains consistent across suburban and coastal submarkets.
How Underwriting is Changing
Higher interest rates and a 35–40% rise in operating expenses over the past decade are forcing buyers to underwrite more conservatively. Even triple-net centers face absorption questions as tax reassessments and CAM escalations reset tenant costs.
Downside Protection Matters More Than Ever
Investors want clarity around basis, rollover timing, big-box risk, and true NOI. The new priority is not just upside potential—but downside certainty.
LoPiccolo reflects on how volatility has shifted investor psychology:
Understanding your downside risk is the foundation of every deal today.
Value-Add Hasn’t Disappeared
Older definitions of value-add, simple lease-up, light repositioning, or rent mark-to-market, are less common today. Instead, modern value-add often requires:
- Higher capital injection
- More operational cleanup
- More patience
- More certainty in the business plan
Many legacy owners have low bases and long-term stability, making pricing gaps more pronounced. Meanwhile, buyers expect to be compensated for risk associated with box vacancies, rising rents, and redevelopment scope.
As LoPiccolo puts it:
Value-add hasn’t gone away, it’s just evolved. There’s still opportunity, but the market is demanding clarity, cleaner execution, and a real justification for the risk.
The Risk Factor of Post-COVID Rents
One unique challenge emerging in the West is the dramatic increase in build-to-suit and big-box rents. LoPiccolo notes some uses—coffee, QSR, even grocers—are signing deals at 50–60% higher rents than just a few years ago.
While developers need these rents to offset construction costs, investors increasingly question sustainability. Even long-term corporate leases feel less invincible when rents exceed historical norms by such a margin.
This “post-COVID rent reset” will influence valuations for years to come and sits at the intersection of capital, tenant health, and long-term exit strategies.
What Investors Are Asking Today
Across his client base, LoPiccolo sees several recurring themes:
- Basis: Is the entry point defensible relative to replacement cost and risk?
- Risk: What’s my exposure to turnover, downtime, and re-tenanting costs?
- Expenses: How will OpEx growth and tax reassessment impact tenant absorption?
- Timing: Does the business plan realistically match my investment horizon?
Buying retail today requires a deeper understanding of tenant health, the cost of re-tenanting boxes, and the long-term operational outlook of each center.
What Will Shape the West Coast Market Next?
While broader capital markets remain fluid, LoPiccolo believes West Coast retail will continue to offer durable opportunities for disciplined investors. Key forces to watch:
- The sustainability of post-COVID rent levels
- The evolution of value-add underwriting and execution
- Tenant category shifts and oversaturation risk
- Expense growth and tax reassessment impacts
- Big-box re-tenanting trends and redevelopment plays
The Human Side of Brokerage: Persistence, Authenticity, and Failure
Beyond market dynamics, LoPiccolo offers advice to rising CRE professionals:
Do not be afraid to fail. Getting in front of a client is the win.
He stresses that success in retail brokerage comes from consistency, transparency, and authenticity—not just deal outcomes. Clients value advisors who deliver honest insight, even when the message is that now may not be the right time to sell.
Long-term relationships, he says, are built on trust and clarity. In a fluid market, that kind of candor and alignment often matters more than short-term transaction volume.
Guiding Principles for Leaders Navigating Today’s Market
LoPiccolo leaves listeners with core philosophies that have grounded his career:
- Embrace failure as part of growth.
- Stay authentic. Relationships drive everything.
- Know the story behind every asset.
- Understand risk before chasing reward.
- Be persistent and patient.
These principles, paired with disciplined underwriting and real market awareness, define successful navigation of today’s West Coast retail environment—and set the tone for the Publication Takeover Series as it moves through other regions across the country.
