The Resilient Retail Renaissance: Kimco Realty’s Strategy Amid Economic Uncertainty

In an era marked by persistent concerns about the U.S. economy, Kimco Realty stands as a counterpoint to prevailing pessimism, demonstrating robust growth in the commercial real estate sector. During a recent appearance on CNBC’s “Mad Money,” CEO Conor Flynn offered host Jim Cramer and viewers insight into how the shopping center REIT has not only weathered economic headwinds but thrived, delivering impressive quarterly results and a compelling 4.6% yield.

“It’s all about the fundamentals,” Flynn explained to Cramer. “From a high level supply and demand, supply is the big benefit to Kimco Realty. Of all the commercial real estate sectors, shopping centers are the lowest amount of new supply under construction, 0.3% of existing stock.”

This supply constraint has created a significant competitive advantage for Kimco. Flynn noted that “there’s more office being built today than there is shopping centers, and it’s been ten years running.” The result has been a market dynamic where “demand has outpaced supply,” generating pricing power for Kimco and driving vacancy rates to “all-time lows.”

The company’s strategic positioning has allowed it to capitalize on retail sector bankruptcies that might otherwise appear as negative indicators. When Cramer mentioned Party City’s bankruptcy, Flynn characterized these as “chapter 22s” – companies that have filed for bankruptcy multiple times. “We knew that this was coming,” Flynn said, “and we’re seeing how quickly the absorption is occurring. We’ve already backfilled half of our Party Cities at nearly 40% newly spread” – meaning new tenants are paying 40% more than Party City was.

A key element of Kimco’s success lies in its tenant mix. “Most Kimco shopping centers are dominated by a grocery anchor like a Kings or a Whole Foods or Trader Joe’s or Sprouts,” Flynn explained. These anchors, often paired with TJX Companies stores, create what Flynn called “the sweet spot in retail.”

The shift toward service-oriented tenants represents another pillar of Kimco’s strategy. “Over 80% of our new deal flow is coming from services,” Flynn told Cramer, citing urgent care facilities as an example. These businesses represent “the e-commerce resistant type use,” requiring in-person interactions that can’t be replicated online.

Looking to the future, Flynn highlighted the company’s mixed-use development potential. “Shopping centers are 80% parking lots that are just untouched,” he observed. “Our strategy is first string major metro markets,” where changing transportation patterns may eventually reduce parking requirements. “We’ve entitled 12,000 apartments to be built on our parking lots of the future,” Flynn said, creating synergistic environments where “retail enhances the apartments, apartments enhance the retail.”

When asked why Kimco’s stock sometimes faces selling pressure despite strong fundamentals, Flynn suggested it might be “retail PTSD” – lingering fears from the so-called “retail apocalypse” that preceded the pandemic. Despite these market reactions, Flynn emphasized that Kimco is “positioned as a defensive play” offering “convenience and value” to consumers.

Perhaps most tellingly, Flynn noted that the company’s watch list of potentially troubled tenants “is the smallest list it’s ever been in history.” The pandemic, he explained, accelerated the exit of weaker retailers, and those vacancies “have been absorbed with much more resilient type tenancy.”

Kimco’s financial strength has allowed it to take advantage of stock market dislocations. As an A-minus rated company by Fitch – “one of only 11 REITs across all universes,” according to Flynn – Kimco has been able to repurchase shares when prices fell, addressing what Flynn described as “this big disconnect between public and private valuations.”

For investors seeking both income and resilience in an uncertain economic landscape, Kimco’s story offers a compelling case study in how strategic positioning, tenant selection, and financial discipline can create value even in challenging retail environments.

*Source: CNBC “Mad Money” interview with Kimco Realty CEO Conor Flynn*