NEW YORK CITY—During the International Council of Shopping Centers New York National Deal Making Conference, Faris Lee Investments CEO and president Rick Chichester took time out to talk with GlobeSt.com about the state of the retail industry.

While he’s generally seeing good trend lines and is optimistic, he did sound some cautionary notes. Here’s what he told GlobeSt.com’s Rayna Katz:

“The energy level of the industry—for the most part—is positive and it’s not exuberant or irrational. There’s excitement and stability in terms of the economy gaining strength, though people are being careful.

“Tenant activity is good,” he continued. “Those who’ve survived have created a birfuacted model to allow them to have both an online and in-store presence. And then you have the need based-dollar stores competing with each other and with the department stores. That makes the industry dynamic so people have to be innovative.”

In terms of capital markets, Chichester added, “They all are all strong and, at the same time, disciplined. It’s making for a good, stable, market that’s expanding for everyone. But I have to issue one word of caution: the debt market is what’s driving a lot of the activity because interest rates are low, so people need to make sure the discipline for underwriting for that debt is in place.

The reason there is so much capital in real estate right now is that it’s difficult to find yield anywhere, so a lot of money is chasing product, making demand outpace supply. That’ll keep pressure on interest rates and cap rates but at some point we could get to asset inflation so discipline is key.”

And market watchers might be surprised by what retail asset class is making Chichester particularly bullish.

“One retail property sector that’s exceptionally strong right now is single tenant net-lease product,” he said. “It has become a core asset in the last three to four years. Individuals are investing in it and I expect it to expand.”