Sandy Sigal has been betting on the staying power of neighborhood retail for more than four decades, and now he wants to up the wager.
Sigal’s firm, NewMark Merrill Companies, owns or manages more than 110 shopping centers valued at more than $3 billion and with over 2,000 tenants. The portfolio spans 13 million square feet across California, Colorado and Illinois. And, at ICSC Las Vegas last week, Sigal’s conviction met a retail market back in favor.
Capital is pouring into shopping centers, construction remains limited, rents are rising, and traffic at NewMark Merrill’s centers is running well above pre-COVID levels, Sigal said. But that doesn’t mean he’s calling an all-clear.
Commercial Observer caught up with Sigal to discuss pricing risk, fragile consumers, California politics, winning retailers, and why he still believes physical places will become more valuable as life becomes more digital.
This conversation has been edited for length and clarity.
Commercial Observer: We’re in the final hours of ICSC. How was the conference this year for you?
Sandy Sigal: It’s great, I love this conference. This is like my 40th ICSC — it’s crazy to think about. I’ve been in the business since I was 20, and I’m 62, so I missed a couple for COVID, but there you go. I’ll tell you, the energy is good. There’s a lot going on, and we’ve been swamped the entire time.
But I think there’s a cautionary tale to a lot of what’s going on here, which is pricing. It’s going to be interesting to see a year from now what happens with the capital flow. It’s so heavy right now into retail. The one thing that’s kept the lid on it has been that there’s not much construction.
That’s the biggest thing I’ve heard. There’s no construction, very little availability.
Very little availability. But you know what’s going to happen soon? People are putting a lot of money into shopping centers right now, and there’s not a lot of new stuff coming on, so rents are going up pretty decently. Tenants, I think, are starting to become more cautious about their margins. And we’ve got a fragile consumer.
Now, that hasn’t really shown up. Truthfully, in our centers, our traffic is as high as it’s ever been. I think basket sizes may be short, but we’re at 20 percent above pre-COVID numbers.
But you just wonder what this year might bring, especially if you get any construction starting to come through the pipeline. I’d put a caution line by that.
The other thing that I think is super — it’s no surprise — is technology. You just go to the proptech area over there, and you sit there and look, and you see how many vendors there are. People know intuitively, “I’ve got to do something with AI.” And AI can mean everything from chatting and asking a question to programming.
So I wonder in the next three to five years what this all looks like, because where we’re at now isn’t even the biggest step. The biggest step is robotics. Imagine 12 years from now, this conference, you’ll have robotics running around here.
I saw one here yesterday.
That won’t be rare. The reality is we needed this AI to come into place and be developed like it’s being developed. But, at this point, there’s nothing to keep your goods and services from being delivered to your store by a robotic truck that was robotically loaded and robotically unloaded, with the store location being totally robotically stylized.
That’s labor costs, that’s transportation costs. So that sounds pretty good to retail investors.
And then you say, “Well, by the way, you have a robotic sidekick that works in your store.” Maybe you have one or two humans with customers, but now you have support and robotics. Sounds pretty good from a labor perspective.
But, also, what do those people do for jobs? So you feel like we’re going into an incredible opportunity. I think the math of running the store is going to change dramatically. You look at what Walmart could do as far as getting the right goods at the right places at the right time already, knowing that all that technology is flowing down in our business.
I think the math is going to be good. As greedy landlords, we hope we’re going to get a nicer piece back of what’s left over, and we’ll see. But I also wonder how that impacts what comes to the front door.
The fundamentals are strong, but you’ve warned about things like political risk and tariffs and inflation, things that other folks at ICSC dismiss or try not to acknowledge. What are you most concerned about over the next 12 months?
Look, I think this is populism. We have a governor’s race coming up. It’s been very interesting. First, you could ask yourself, for a state the size of California, how could this be our best choices? We’d be a large country in the world if we were by ourselves — and we’ve got these choices.
But it’s going to be very interesting. Is a Democratic state going to elect a Republican? You’ve got someone who doesn’t have a huge amount of experience, but talks some decent game from a business perspective. Is it going to be an apologist billionaire who’s going to soak the rich? “Our problem is we’re not taking enough from you.” Or is it going to be more moderates in the middle?
This is a countrywide phenomenon. And I know why: because the average customer or the average consumer doesn’t believe the system is working. It’s a difficult scenario.
Truthfully, we try to make as much difference as we can at the community level. At the community level, people still love shopping and connecting, and to still feel that energy. People say a lot about California, or any other place, but we own centers in California, and merchants do great. They’re happy. They’re sending their kids to college. They’re doing all these things. They’re just trying to get through the day and create memories.
You’ve said California is always a core of NewMark Merrill, but do you feel yourself being called across the border more often each year?
We’re in Colorado and we’re in Illinois, and we like those markets. We’re looking at Texas. We’re looking at Utah. We have a lot in California. For us, it’s very city-specific where we are. I would not be in L.A. City. Other cities, yes. But this populism is a little bit everywhere.
But, yeah, I’d like to diversify our portfolio.
Have you ever had properties in the city of L.A.?
Yes, I had the first few. We have a couple we manage and one property in the City of L.A.
But you don’t consider it anymore?
Not anymore.
You’ve talked about winners and losers in retail. Which retailers or categories in 2026 look like winners?
One of my favorites is Five Below. It’s the perfect mix of bargain hunting, discovery and excitement all built into one. You have candy, you have soft drinks, you have school supplies, you have clothing, you have mini electronics, soccer balls and footballs and Nerf balls. I just love that vibe.
Sprouts — I like the way they’re building. I think they’re incredible. We’ve done a bunch of Sprouts. We’ve got another Sprouts in Chicago.
Pet hotels are a big thing.
Pet hotels? Like boarding pets?
Yeah. Full disclosure, I’m an investor in K9 Resorts. Think of this as child care, but child care covers a certain age. Pets always need a place their entire lifetime if the parents go away, and you can own a pet no matter what age you are.
Imagine the need to board your dogs when you go away, or when you go to work. These are incredible. They grow like crazy. In a lot of cases, just like day care, you get two visits a day. They drop off the dog, they pick up the dog. They come to your center.
You have some barking, yes, a little bit of that, but dogs don’t require the total level of care kids would.
When I go to England — I spend a month in London — they have the most, because almost everyone seems to have a pet in London. Westfield malls there have a dog care built right in.
If you had to make one long-term bet on retail — tenant type, geography, format, operating strategy — what would it be?
If I make one bet, I think as the world gets more disconnected through electronics, robotics — all the trends that you’re seeing in front of you — social connections and human connection, the value of human connections is going to go up. You’re going to see more and more people visit centers they care about.
I think people will spend more and more time doing memory-making at physical outlets. I think the premium on visiting physical is going to go up. The more people work at home, the more people talk to things that are not human, I think the premium of physical space is going to go up.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
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