Phillips Edison & Company, Inc. (NASDAQ:PECO) executives said demand for grocery-anchored shopping centers remains strong following the company’s meetings at ICSC Las Vegas, citing robust retailer expansion plans, limited supply and continued opportunities for acquisitions.
During an ICSC recap webcast, Kimberly Green, senior vice president and head of investor relations, said the retail real estate conference drew nearly 35,000 attendees, more than 850 exhibitors and more than 5,000 retailers. Phillips Edison hosted more than 400 meetings over two days, using the event to negotiate leases, discuss pending deals, evaluate acquisition opportunities and strengthen retailer relationships.
Vasili Lyhnakis, senior vice president of leasing and portfolio management, said the event reinforced that the company’s strategy is “working” and that the external environment continues to support it. He said retailers remain focused on grocery-anchored shopping centers in suburban markets with leading grocers, while limited supply has helped Phillips Edison maintain pricing power.
“The tone overall was very, very positive, and we feel like we're very well positioned going forward,” Lyhnakis said.
Retailers Continue to Seek Grocery-Anchored Space
Lyhnakis said Phillips Edison’s portfolio is 97% occupied, with leasing rates at all-time highs and a high retention rate. He said the company is seeing no signs of slowing demand, particularly from retailers seeking necessity-based, suburban retail locations.
Addressing concerns about the consumer backdrop, including inflation, energy prices and credit conditions, Lyhnakis said the company benefits from its grocery-anchored focus. He said grocer sales per square foot in Phillips Edison’s portfolio have increased more than 46% since 2019, helping drive traffic to its centers.
He also said 74% of the company’s annualized base rent comes from necessity-based goods and services, and that the company’s demographics are above the U.S. median income level.
Lyhnakis said retailers are increasingly selective about real estate and are willing to wait for higher-quality locations rather than invest in weaker centers. He said the company did not hear from retailers at ICSC that they were slowing store-opening plans.
“I’ve been leasing here for over 20 years. I’ve never seen the demand this strong,” Lyhnakis said.
QSR, Fitness and Wellness Categories Drive Leasing Activity
Marissa Visconsi, vice president of leasing, said retailers are expanding with a sharper focus on unit economics and site efficiency. She pointed to drive-thru-oriented quick-service restaurant concepts as an area of strong demand, citing 7 Brew’s growth from roughly 100 to more than 1,000 locations in a few years and average unit volumes of about $2.7 million.
Visconsi said 2025 has been productive from a leasing standpoint, with more than 60 new leases executed across fitness, QSR, service and medical users. She said retailers are still expanding, but growth is “increasingly disciplined.”
Ashley Casey, senior director of national accounts leasing, said fitness and salon suite concepts are changing how they use space in neighborhood centers. She said LA Fitness is targeting around 40 new deals in 2026, while Planet Fitness is planning roughly 180 openings. Casey said grocers have become more receptive to fitness tenants because they can drive repeat visits and increase dwell time.
Casey also cited salon suite operators such as Sola Salons and IMAGE Studios, which she said continue to expand in high-income suburban trade areas. She described the format as “leases within leases,” with one larger space housing multiple small beauty operators.
On restaurant demand, Casey said national accounts meetings with QSR users were growth-oriented and increasingly focused on 2027 and 2028. She said Dave’s Hot Chicken told the company it has 433 stores open, plans 43 more in 2026 and is targeting 145 new store openings in 2027, with average unit volumes near $3 million.
Acquisition Pipeline Remains Active Despite Competitive Pricing
David Wik, senior vice president and head of acquisitions and dispositions, said retail is attracting significant capital, but Phillips Edison continues to find acquisition opportunities. He said the company recently affirmed its 2026 gross acquisition guidance of $400 million to $500 million.
Wik said Phillips Edison has acquired $185 million of assets year to date and has more than $200 million under contract. He said the company could end up above the midpoint of its acquisition guidance, though he emphasized it remains early.
Wik said pricing remains challenging and cap rates have compressed over the past 12 to 18 months, especially for high-quality grocery-anchored centers in growth markets. However, he said it is difficult to see cap rates compressing much further given interest rates, though larger deals, portfolio transactions and recapitalizations could see additional compression.
He said Phillips Edison’s national platform allows it to pivot among markets and grocer banners when pricing becomes too efficient in certain regions. The company’s typical acquisition “sweet spot” is the $20 million to $50 million range, where Wik said trades are less efficient than larger deals.
Wik also discussed Phillips Edison’s expansion into “everyday retail,” saying the company has built a portfolio of more than $220 million in that category over the past 24 months. He said the company targets a 9% unlevered internal rate of return for grocery-anchored acquisitions and 10% unlevered IRRs for everyday retail centers.
Everyday Retail and Grocer Relationships Highlighted
Lyhnakis described everyday retail as an extension of the company’s existing leasing model, calling it “more neighbors” coming into the portfolio. He said those properties often include highly visible roadside spaces near existing grocery-anchored shopping centers, creating opportunities to mark rents to market.
Casey said the appeal of everyday retail acquisitions is the leasing upside embedded in the properties. She said the company looks for tenants that strengthen the broader ecosystem around daily needs traffic drivers, particularly grocers.
Visconsi cited Plaza West Covina in West Covina, California, which she said had two vacant spaces at closing. She said one space advanced to lease with a Mexican QSR concept, while business terms were finalized with LaserAway at ICSC for the second vacancy, with the asset expected to reach full occupancy within a few months of acquisition.
Lyhnakis said Phillips Edison held more than 30 grocer meetings during ICSC, including with Kroger, Publix, Albertsons, Safeway, Harris Teeter, Whole Foods and Walmart. He said grocer relationships remain central to both leasing and acquisitions, including diligence on potential purchases and value-creation opportunities.
Leasing Process Speeds Up
Executives said speed has become a larger factor in leasing decisions. Visconsi said many retailers are prioritizing speed to open and speed to revenue, even as rent economics remain important. She said some concepts are bringing in construction support and permit expediters early, while others are targeting second-generation restaurant space to reduce build-out time.
Lyhnakis said lease turnaround times have shortened, with some leases now being signed in two weeks or less compared with the 30- to 60-day timelines the company had often seen previously.
Casey also said Phillips Edison is using artificial intelligence and data in leasing to process more information faster, including retailer targeting, void analysis, merchandising strategy, demographics, traffic patterns and category trends. She said AI is not replacing team judgment but is helping improve speed and precision in markets where quality space is scarce.
About Phillips Edison & Company, Inc. (NASDAQ:PECO)
Phillips Edison & Company, Inc is a publicly traded real estate investment trust (REIT) that specializes in the acquisition, ownership and operation of grocery-anchored, necessity-based shopping centers. The company's investment strategy is centered on properties that benefit from everyday consumer demand, seeking to deliver stable cash flows through long-term, triple-net leases with national and regional tenants in the grocery, drugstore and essential retail sectors.
In addition to its core retail portfolio, Phillips Edison & Company provides integrated services covering property management, asset management, leasing, development and acquisition sourcing.
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