Shopping Center Business

MAY 2016

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

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NET LEASE 172 • SHOPPING CENTER BUSINESS • May 2016 the end of 2017 emphasizes the need for a functioning securitization market. Cram, president of private lender En- voy Net Lease Partners, wonders wheth- er lenders like banks and life insurance companies will have the capacity — and tolerance for risk — to meet the debt re- quirements in the commercial real estate market, including net lease buyers, even if the CMBS market rebounds. Late last year, the Fed and other regula- tors warned banks that they would more closely watch commercial real estate lending in 2016, which has made banks more cautious, he says, and life insurance companies allocate only a certain amount of capital toward real estate. Plus, Cram suggests that anticipated bankruptcies and defaults in the energy industry could amplify a growing aversion to risk, which could bleed into the mortgage market and increase loan costs for net lease borrowers. "We're in a market where execution risk is higher than it has been in several years, because the financial players — especially the CMBS players — don't know where they are (in terms of pricing loans) with all the market volatility," Cram says. "The whole issue on the debt side is that we have some rollover happening, never mind any new projects that need financing. So where is that capital going to come from if CMBS isn't there?" SCB A s experiential destinations contin- ue to reign supreme for shopping center success, Club Pilates has seen escalating growth throughout the U.S. The studio was founded in 2007 by Anthony Geisler, former founder and owner of LA Boxing, which rose to 200 franchises in 30 states before Geisler de- cided to sell and move with his staff to begin Club Pilates. Classes at the studio, which utilize re- former machines, range from CP Car- dio Sculpt to CP Stretch-ilates and CP Restore-ilates, and cater to skill levels from beginner to advanced. The company began franchising in 2012, and has been met with heavy de- mand for locations ever since. Current- ly, the company has 155 franchises in 23 states. "We're selling about 25 to 30 units per month," says Geisler. "Nearly one per day. It's great on the sales side, but on the real estate side, we need to find homes for all of these people. We have about 65 locations with leases right now, and we're looking for nearly 100 locations across the country today." The company focuses on grocery-an- chored shopping centers in high traffic areas. "The majority of our classes at this point are female-based, so we bring the person with the largest discretionary in- come in the family," says Richard Fein- berg, vice president of real estate at Club Pilates. "That's the person that's going to be dropping off the laundry, doing the grocery shopping — It's the ideal overall shopper that a grocery-anchored landlord would want to see." As far as space requirements, Club Pi- lates studios range from 1,400 to 2,000 square feet and can fit into freestand- ing, in-line or end-cap locations. "Our average space is 1,500 square feet with no less than 20 feet of frontage," says Geisler. "The studio contains 12 reform- er machines, a retail section, a reception area and a private training room and bathroom." Being small class-based, Feinberg notes that the studio is great for a shopping center because it does not take up a large amount of parking. "The maximum we are ever going to have if we're full is 16 people per hour," says Feinberg. "Once they're done with us, they're shopping somewhere else in the center supporting another tenant. Very simple from a TI standpoint." The company is actively pursuing new real estate leads and locations across the country as franchisees continue to hotly pursue the concept. — Katie Sloan Club Pilates Expands Nationwide SUNSET STRIP or VEGAS STRIP Bialow takes you where you need to be. Our experienced team is skilled at tailoring a regional or national expansion plan that meets each retailer's individual needs. 781.444.2316 | bialow.com

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