Darpan Patel of Marcus & Millichap argues that the retail apocalypse is behind us, with low vacancies and slow new construction. He says retrofitting spaces left by closures is the fastest way for tenants to reach revenue.

Darpan Patel, Senior Vice President, Marcus & Millichap

Watch the episode ↗

In this conversation

How growing up as the tenant in his family's gas stations and liquor stores taught Darpan the customer side of retail before he ever sold a building.

Why he believes the retail apocalypse is behind us: record-low vacancies, household formation driving demand, and new construction slowed by rates and permitting.

How closures from Big Lots to Walgreens open corners for backfill tenants and retrofits that reach revenue faster than ground-up building.

His view that deals rarely die over money alone, but over issues that were not explained or exposed up front, and how his team closes due diligence in days.

Why cap rates near borrowing costs have brought back the smart buyer, who asks about the roof and HVAC before the look of the building.

His take on why housing stalls: understaffed permitting offices, layered approvals and per-unit costs of $600,000 to $700,000.

Household formation drives retail growth, and in those markets you can't get space fast enough, and you can't build it fast enough.

Darpan Patel

Chapters

From the family gas station

Darpan's start as a tenant in family businesses, a 2010 finance degree, and the jump to commission sales at Marcus & Millichap.

The retail apocalypse is behind us

Low vacancies, Sun Belt demand and store closures that leave room for adaptive reuse and backfill tenants.

By the numbers

1,200

Walgreens stores slated to close over three years, announced October 2024, with 500 in the first year

Darpan cites the Walgreens closures as the kind of space give-back that opens strong corners for the next user, if the rent and retrofit make economic sense.

Source: CBS News (October 15, 2024) ↗

Why deals die

Buyers with more options, and why transparency and early diligence keep transactions from falling apart.

Diligence when money costs more

Starting with financials, 10-day due diligence periods, and buyers now focused on capex and environmental risk.

Brokerage as a team business

How technology and teams let brokers scale, while the job stays a people business run from a phone.

Why housing is slow to build

Understaffed permitting, programs like the Live Local Act, and inflated per-unit costs that stall projects.

It's not really a money issue, it's: was it explained properly, was it handled properly, was it exposed on the front end?

Darpan Patel

Takeaways

Patel says household formation drives retail growth, and in Sun Belt markets tenants cannot find or build space fast enough.

New construction can sit two years from its first dollar of revenue, so adaptive reuse of vacated boxes speeds tenants to market.

With cap rates near borrowing costs, smart buyers now ask about roofs, HVAC and pending capex rather than a building's looks.

Deals rarely die over money alone; they die when an issue was not explained or exposed up front, so diligence starts before the offer.

On housing, he points to understaffed permitting offices and per-unit costs of $600,000 to $700,000 as reasons projects stall.

The aesthetics of the building don't matter as much as the bones of the building: how's the roof, how's the HVAC, what are my expenses pending?

Darpan Patel