Why Phillips Edison calls its tenants "Neighbors"

Phillips Edison & Company owns and manages some 300 grocery-anchored shopping centers in neighborhoods throughout the United States and-- in PECO’s case--the term “Neighbor” applies to its tenants as well as to its properties’ suburban locales. A few years ago, leaders at the company started calling its tenants “Neighbors” and it quickly became a part of the culture. We spoke with the company’s CEO and founder, Jeff Edison, to learn how the amicable appellation for its rent-payers came into being.

Why does PECO refer to its tenants as Neighbors?

It really reflects the value of our tenants and the communities that we serve—one shopping center at a time. Each of our Neighbors is more than just a tenant occupying a space. We have nearly 300 shopping centers and each of the communities we serve are different. Calling them Neighbors reminds our associates of the special roles they play in those communities. They have strong relationships with their customers, who decide every day that this is where they want to get their hair done, where they want to work out. Neighbor is a term that affirms that our tenants are important members of the community.

What about within the Phillips Edison community? Have you implemented any digital communications tools to unite them?

We have a platform for our Neighbors called DashComm which makes it easier for them to get questions answered about billing, invoicing, and more. We created this platform at the same time that we were implementing the Neighbor concept. We 100% lease our own space so, with any issues that our Neighbors have to address, they know they are dealing directly with a PECO associate. It creates a best-in-class service-level consistency and has significantly strengthened the relationships we have with them.

If our Neighbors have a roof leak or need their HVAC serviced, this is how they can get that fixed quickly. If we encounter a weather emergency—like a hurricane—it also gives us another way to communicate with our Neighbors and be made aware of their concerns in a timely manner.

Do you get any feedback about your Neighbors program from national chains that have locations in several PECO centers?

Some 75% of our rents come from national and regional Neighbors. We roll out our Neighbor Survey every two years where we ask all of our Neighbors to score how we’re doing as a landlord. We continue to get extremely positive results. In our latest survey, we had a 94% overall satisfaction rate from our Neighbors.

Are you seeing any big changes in the types of new Neighbors moving in to your centers? Medtail? Fitness? New food and beverage brands?

Medtail—which was a very small part of our business maybe seven years ago—is coming on strong. And it’s not just urgent care and vision care, but things like chiropractic services and physical therapy. Our occupancy rate is at its highest level ever—over 97% in 2022—and we had a 90% rate of renewals.

Grocery-anchored centers did well in the early days of the pandemic with so many workers stranded at home. Has that had a permanent affect on traffic at your centers?

Our top grocers continue to drive strong recurring foot traffic to our centers. During the pandemic, grocery stores and the foot traffic to grocery-anchored centers recovered at a faster rate than that of other retail locations. Since then, the vacancy spread between grocery-anchored and non-grocery-anchored centers has widened. Grocery-anchored centers are well-positioned to maintain these lower vacancies, which we are seeing in our portfolio.

Throughout 2022, our Neighbors demonstrated their resiliency and successfully managed many challenges including inflation, supply chain issues, and labor shortages. We continue to benefit from a number of positive macroeconomic trends that drive Neighbor demand and support our growth, including hybrid work, migration to the Sunbelt, and population shifts that favor suburban markets. These demand factors are further amplified because limited new supply is being delivered to the market.

We expect these favorable trends to continue to benefit PECO's well-located grocery-anchored neighborhood centers in 2023 and beyond.