Shopping Center Business

MAR 2016

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

Issue link:

Contents of this Issue


Page 0 of 68

MAXIMIZE EXPOSURE @ ICSC RECON May 22-25, 2016• Las Vegas DON'T MISS THIS OPPORTUNITY TO: TARGET more retailers developers, owners, brokers, capital sources and more who read our regionals and Shopping Center Business EXPOSE your company's projects and services both regionally and nationally MAXIMIZE your visibility through bonus distribution at our booth at ICSC RECON — plus, Shopping Center Business will be distributed at convention hotel room doors REACH important decision-makers not attending ICSC RECON RESERVE YOUR AD SPACE TODAY BONUS DISTRIBUTION FOR MORE INFORMATION, CONTACT Scott France, 404.832.8262 May 2015 • Volume 11, Issue 5 EXPANDING OPPORTUNITY Gene Spiegelman of Cushman & Wakefeld comments on activity in thriving retail markets — from Fifth Avenue to Nashville. Interview by Randall Shearin and Jaime Lackey B uyers and sellers are trading net lease properties at a vigorous pace in an environment marked by an abundance of low-cost capital, lofty property values and a lack of alternative income-producing invest- ments. Industry professionals say that the activity simply prolongs the net lease market's banner year in 2014. Most an - ticipate that 2015 could even top 2014 as long as no economic, interest rate or geopolitical surprises intimidate investors. Like other bullish prognos- ticators, Calabasas, Calif.-based Mar- cus & Millichap anticipates that lower gasoline prices will allow consumers to boost retail spending, whic further enhance the appeal of net lease properties. Institutional and foreign inve continue to have a strong appet drugstores, auto parts stores, service restaurants, ftness fac convenience stores and other ret More recently, private buyers s high net-worth individuals and offces have increased their net property acquisition activity, Jonathan Hipp, president and C Washington, D.C.-based Calkain "The hot streak is continuing, says. "We haven't seen any evide see NET LEASE pag NET LEASE DEMAND CONTINUES UNABATED Despite compressed cap rates and expectation for increasing interest rates, many experts beli NNN activity in 2015 could surpass 2014. By Joe Gose A s cities across the U.S. evolve and grow, we in the industry look to predict where the next opportunities lie. While the top international and domes- tic brands still vie for those coveted high street locations, which grow more expensive each year, creative developers seize unique opportunities to bring high-quality projects to thriving markets. To fnd out which markets offer the best opportunities for retailers and developers, Northeast Real Estate Busi - ness talked with Gene Spiegelman, who was recently named vice chairman and head of North American Retail Services with Cushman & Wakefeld. NREB: Let's talk about what you are seeing in the major retail markets across the U.S. We've seen improvements across the board since the recession. When you compare high streets today, where do U.S. high streets rank globally? Spiegelman: If you look at how the recession affected the real estate market, the high streets were the most resilient sector of the marketplace, followed by the top-tier super-regional and regional malls and other key segments of the shopping center community, including lifestyle centers and grocery-anchored centers. Shopping centers populated by "category killer" retail concepts such see RETAIL, page 36 Project spotlights: Assembly Row in Somerville, Mass. (left); East Market in Philadelphia (center); and Steelpointe Harbor in Bridgeport, Conn. (right). EXCITING RETAIL COMPONENTS ADD TO MIXED-USE PROJECTS Most Expensive Retail Locations in the U.S. Upper Fifth Avenue (NYC) Times Square (NYC) Madison Avenue (NYC) Lower Fifth Avenue (NYC) Rodeo Drive (Los Angeles) Union Square (San Francisco) Post Street (San Francisco) N. Michigan Ave. (Chicago) Lincoln Road (Miami) $/sf/yr $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $3,500/sf/yr Source: "Main Streets Across the World, 2014/2015," a Cushman & Wakefeld report $2,300 $1,400 $1,000 $675 $650 $495 $485 $325 New Industrial Projects Point to Rebound in New Jersey page 30 INSIDE THIS ISSUE Shifting Retail Landscape Pose CMBS Questions pag A New Outlet for New England Development pag How Did Brooklyn Retail Grow 80 Percent in Two Years? page 21 I f you were a tech company 18 years ago, there was a high likelihood you were located in Silicon Valley. Fast forward to today, and the tech land- scape looks much diferent. Silicon Valley is still a top contender among the tech set, but now so is San Francisco, Downtown Los Angeles, Irvine, and parts of South Bay and West Los Angeles known as Silicon Beach. Wherever you wind up in the state, it seems you can't throw a microchip without hitting an ofce property that is targeting the tech elite. With increased competition, naturally, comes higher rents and sale prices. A new research report by CBRE Group shows an aggregate rent premium of 11 percent across 30 of the nation's top tech mar- kets. "[That number] jumps signifcantly higher in the hottest tech submarkets, including Santa Monica, which at 85 percent, had the second-highest rent premium in North America," the study notes. "Sili- con Valley's Mountain View [was] at 73 percent. In Los Angeles, high-tech leasing activity took up 1.4 million square feet in 2014. It was tech companies' most active year yet in Greater Los Angeles. Tech frms employed 60,183 people in Los Angeles at the end of 2014." Riding the Tech Wave Santa Monica alone boasts 158 high-tech tenants that occupy 2.3 million square feet of ofce space, according to the study. The average asking rent was $61.68 per square foot, with a vacancy rate of 9.3 percent as of the second quarter of this year. The city was also ranked No. 10 out of the top tech sub- markets when it came to ofce growth, experiencing an 18.4 percent increase from the second quarter of 2013 to the second quarter of 2015. A lthough it boasts one of the larges lations and economies in the entire western United States, the Valley Sun is often omitted from real estate co tions in favor of its glitzier counterparts Angeles and Las Vegas. However, Pho the capital and largest city in the State o na — is in the midst of a real estate cycle seen parts of the city dramatically trans since the end of the economic downt the makeover continues, the landscape c substantially, leaving investors with a of opportunities across the metropolitan submarkets. Phoenix's Changing Skyline A development spike has resulted in pearance of new city landmarks over t eight years. The impact of projects lik Silicon Beach, Los Angeles' newest burgeoning tech hub is now home to elevon at Campus El Segundo, a 15-building offce campus in El Segundo that contains a total of 210,000 square feet. CALIFORNIA'S APPETITE FOR TECH SPACE GOES INTO OVERDRIVE Home to some of the nation's largest tech hubs, it's no surprise California has an insatiable desire to capitalize on the success of some of its biggest technology companies. But with rents rising and space evaporating, it's getting harder to compete in this landscape. By Nellie Day see TECH, page 53 see PHOENIX, pag Grace Communities' 44 Monroe recently debuted in Phoenix. It is the tallest residential building Arizona. PHOENIX TAKES FLIGHT The city is in recovery mode as it joins other Western giants in growth. By Alex Girda Tips for property manager dealing with the California drought. pag Orange County Market Highlight page 30 page Economic Developmen Heats Up in the Inland Los Angeles Market Highlight page 32 INSIDE THIS ISSUE October 2015 • Volume 13, Issue 2 A s demand for business parks rises along with the rest of the Texas economy, industrial park developers are working hard to keep up. That not only means developing more parks, but ensuring they are strategically located and equipped with the amenities that tenants want. Construction of industrial space ramped up signifi cantly in 2014. In the Dallas metroplex, an estimated 22 million square feet of industrial development was completed in 2014, compared to just 7.3 million square feet in 2013. Also, average eff ective rents climbed an estimated 6 percent in 2014 in metro Dallas, reaching $4.45 per square foot annually. Rents rose 9.7 percent in 2013. One of the largest players in th ro Dallas industrial sector is Hil Properties' AllianceTexas. Span number of cities in the norther of the metro, Alliance celebrat 25th year of operation in 2014. Perot Jr. founded Hillwood, an company has grown its "inland concept into a multi-billion business. Recent tenants entering A include LG Corp., which has m into a 1 million-square-foot bu that was recently completed. T building is part of Alliance C North, a new development area I-35 W i th the results tallied, respon- dents to the online forecast survey of Texas Real Estate Business predict 2015 will be a year of growth across the state for the commer- cial real estate industry. Brokers expect the volume of investment sales and leasing to be higher, and developers plan to start more projects in 2015 than they did in 2014. One factor that isn't expected to change is the booming economy in Texas. The state's unemployment rate stands at 5.1 percent as of December, lower than the national average of 5.8 percent and nearly a full percentage point below where it stood a year ago. If there is a caveat to the optimism, it's falling oil prices. As of Dec. 22, the price of crude oil stood at $56.50 per barrel after selling for more than $100 per barrel as late as May 2014. With oil production serving as a ma- jor driver of the Lone Star State's econ- omy, the low prices could put a damper on development if they do not rebound quickly. The other big question mark is inter- est rates. The 10-Year Treasury yield hit its 2014 high of 3.06 percent last January, and has been gradually falling since that time. Near the close of the year it was 2.16 percent. Among developers responding to the survey, 5 percent expect a further decrease in interest rates in the next 12 months, while 11 percent are uncertain. January 2015 • Volume 10, Issue 11 see BUSINESS PARKS, pag see SURVEY, page 22 TerraFirma Earth Technologies Relocates Headquarters page 14 INSIDE THIS ISSUE Market Highlight: Lubbock Eco Propels Into Expansion Mode pag Market Highlight: Coastal Bend Experiences a Coastal Boom pag Dallas Cowboys Announce Name For New Headquarters page 8 SURVEY RESULTS SHOW OPTIMISM FOR 2015 Online survey results reveal industry professionals expect another year of strong growth. By Haisten Willis TEXAS-SIZED BUSINESS PARKS GROW IN POPULARITY Industrial buildings increasingly feature depths of 630 feet and clear heights of at least 36 feet. By Haisten Willis Lakeside Trade Center is located in the Dallas suburb of Flower Mound. Hillwood Properties has been aggressively building industrial properties since 2013. January 2015 • Volume 13, Issue 5 GENERAL CONTRACTORS ARE OFF TO A RUNNING STAR Growing business confdence leads to a new round of construction projects to begin the new year. By Danielle Everson G eneral contractors have the wind at their back as 2015 gets underway. The U.S. economy grew at a 3.5 percent annualized rate in the third quarter of 2014, a posi- tive sign for the construction industry. More good news came when the Bu- reau of Labor Statistics reported that nonfarm payroll employment grew by 321,000 in November, with the con- struction sector posting a net gain of 20,000 jobs, well above the six-month average of 14,800. What's more, the unemployment rate in the construction sector fell to 7.5 percent in November, the lowest rate for that month in seven years, accord- ing to Ken Simonson, chief economist for the Associated General Contractors of America (AGC). Scott Wittkop, president of the cen- tral division of St. Louis-based Mc- Carthy Building Cos., says the con- struction market is starting to loosen. "We're starting to see more opportu- nities, and projects that were deferred three and four years ago are coming back to life. Developers are starting to do work again. It's really a shift in the market. There is more optimism among owners, so they are willing to invest." In 2014, McCarthy exceeded $4 bil- lion in sales, a threshold the company hasn't reached since the Great Reces- see CONTRACTORS page 19 C ommercial real estate profes- sionals are optimistic about the business growth prospects at their company in 2015, according to an exclusive online survey conducted by Heartland Real Estate Business. Nearly two-thirds of brokers expect their frm's total transaction volume by dol- lar amount — including leasing and investment sales — to increase dur- ing 2015 in the Midwest. Similarly, 87 percent of lenders and fnancial inter- mediaries anticipate the total amount of commercial and multifamily loans closed by their frm in the Midwest re- gion will increase in 2015. Among brokers who expect their business to grow this year, 39 percent estimate that growth will range be- tween 5 and 10 percent. Nearly one- third of broker respondents (32 per- cent) expect their business to grow between 11 and 15 percent. Among lenders who anticipate high- er loan volume in 2015 versus 2014, 46 percent are projecting growth to be be- tween 6 and 10 percent, while 30 per- cent predict their lending volume will grow 11 percent or more. see SENIORS pag Fifeld Cos. Sells K2 Apartments for $214.2M to Georgetown Co. page Expanding Omaha Businesses Fuel Construction of Class A Offce Space page 16 pag E-Commerce, Auto Industries Dri Spec Development in Kansas Cit INSIDE THIS ISSUE A slowdown in refnancing activity within the seniors housing sector an uptick in construction lending are two trends refected in loan from the U.S. Department of Housing and Urban Development ( for fscal year 2014. HUD's LEAN Section 232 mortgage insurance program used to fna skilled nursing and assisted living facilities fnished FY 2014 with $4.21 billion in total loan volume, down approximately 27 percent from the prior yea cord of $5.82 billion. (HUD's fscal year runs from Oct. 1 to Sept. 30.) Industry experts say the decline in the refnancing of existing HUD known as Section 223 (a) (7) loans, was expected because many borrowe already taken advantage of the opportunity to refnance their properties terest rates near historical lows. They emphasize that the HUD LEAN progr HUD REFINANCING BOOM IN SENIORS HOUSING RUNS ITS COURSE A falloff in the refnancing of existing HUD loans leads to a drop in total annual deal volume. By Matt Valley Hoffman Estates, Ill.-based Leopardo Cos. Inc. completed ground-up construction on this new, 35,000-square-foot police headquarters building for the New Lenox Pol Department in fall 2014. New Lenox is located 40 miles southwest of Chicago. see SURVEY page 22 A MOSTLY SUNNY FORECAST SURVEY Industry pros are bullish on business growth prospects for 2015, but also voice concerns. By Matt Valley and Danielle Everson T he Southeast's increasing rel - evance in the global marketplace is due in large part to the suc- cess of its ports. Internationally rec- ognized companies like BMW, Boe- ing and Walmart have expanded in the Southeast to operate closer to the ports handling their imports and ex - ports. According to JLL's Port, Airport & Global Infrastructure research divi - sion, volume of twenty-foot equiva- lent units (TEUs) in 2013 at 13 sea- ports across the country was 3.3 percent higher than in 2007. TEU vol - ume at West Coast seaports dipped by 6.8 percent in that period, while East Coast ports exceeded their 2007 vol- umes by 19.1 percent. The large spike of activity for East Coast ports in the past seven years has resulted in a windfall of industrial tenants expanding in and around the ports. Three of the largest Southeastern ports in terms of capacity are the Port of Charleston, PortMiami and the Port of Savannah. Each have been a boon to the industrial market in their respec- tive state, and with the expansion and harbor deepening projects underway at each port, each should only escalate their importance in the coming years. T he participants of the fourth- annual Southeast Real Estate Busi- ness forecast survey generally expressed optimism about the future of the commercial real estate market in the Southeast, as well as confdence that their frms would increase their activity in brokering investments sales and leases, buying and selling assets, breaking ground on new construction or providing acquisition, construc and refnance loans. In terms of overall debt fnanc 71.4 percent of participants in the er survey say the loan production their frms will increase in 2015, most of the rest (21.4 percent) predic will stay close to the same. In last ye survey, about 72.4 percent of le see SURVEY, pag January 2015 • Volume 15, Issue 10 SURVEY PARTICIPANTS EXPECT A STRONG 2015 Respondents are bullish for what this year will offer, both for their frms and for the overall marketplace in the Southeast. Most expect interest rates to stay where they are and for m projects to break ground. By John Nelson SERVICING THE MARKET ON A GLOBAL SCALE Ports in the Southeast are actively pursuing new business and are boosting the region's industrial market as a result. By John Nelson Weyerhaeuser Begins Master-Pla Development, Tamanend, in Louis page 11 Grubb Ventures, Lincoln Harris Team Up in Raleigh page 16 pages 16-18 Market Highlight | Raleigh Snapshots: Miami Off and Atlanta Retail page INSIDE THIS ISSUE see PORTS, page 20 Do you expect the total dollar amount of commercial and multifamily loans closed by your frm in the Southeast in 2015 to increase, decrease or remain the same? 21.43% 71.43% 7.14 Stay the Same Increase Decrease Base: 2015 SREB Lender Forecast Survey Roughly 40 percent of the automotive imports to the East Coast go through the Port of Charleston. The port is currently undergoing $1.3 billion in capital improvements. Photo courtesy of the South Carolina Ports Authority Lenders Anticipate More Loans in 2015 Number 110 ® New Projects From north to south, new centers are making their mark on the state's retail market. January 2016 CHANGING THE RETAIL ENVIRONMENT From big markets like New York to small cities like Lexington, Kentucky, America's developers are changing the way we think about retail centers. InvenTrust Focuses On Quality Westfeld and Steiner Open New Centers Institutional Investors Seek Acquisitions Crayola Drives Traffc DECEMBER 2015 LEADING THE WAY THROUGH THE 21ST CENTURY

Articles in this issue

Links on this page

Archives of this issue

view archives of Shopping Center Business - MAR 2016