Shopping Center Business is the leading monthly business magazine for the retail real estate industry.
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This is our largest and most in-depth editorial feature for the market. Leading executives from the Tri-State area will discuss retail real estate activity, recent transactions, and market analysis. Maximize exposure for your company and properties to the national, regional and local market. For more information, contact Scott France, President/Co-Publisher (404) 832-8262 scott@francemediainc.com DON'T MISS OUR DECEMBER ISSUES DISTRIBUTED AT LEADING THE WAY THROUGH THE 21ST CENTURY ¨ 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 Westfield and Steiner Open New Centers Institutional Investors Seek Acquisitions Crayola Drives Traffic DECEMBER 2015 LEADING THE WAY THROUGH THE 21ST CENTURY www.REBusinessOnline.com May 2016 • Volume 12, Issue 5 INCREMENTAL OCCUPANCY Landlords cater to small-office space users to fill space now — and in the future. By Jaime Lackey L ast year, New York City's upper Fifth Avenue, which stretches from 49th Street up to 60th Street, once again topped Cushman & Wake- field's Main Streets across the World 2015/2016 ranking. With average rents rising to $3,500 per square foot, this retailing mecca was nearly 50 per- cent more expensive than second place Causeway Bay in Hong Kong, where rents averaged $2,399 per square foot. Further proof of New York City's retail power is found in the rents elsewhere in the city. In fourth quar- ter 2015, ground-floor retail space in Times Square was fetching an average of $2,336 per square foot, and Madi- son Avenue's ground-floor space from East 57th Street to East 72nd Street was averaging $1,601 per square foot, according to Cushman & Wakefield's Manhattan Retail Market Statistics report. To put these prices in perspec- tive, consider that in 2015 both Paris and London's high streets — Avenue des Champs Elysées and New Bond Street, respectively — achieved aver- age rents of $1,300 per square foot, ac- cording to the Main Streets Across the World report. Strong Fundamentals A number of factors are helping to fuel the high rental prices in New York City. In 2015, 58.3 million tourists trav- see HIGH STREETS page 44 REACHING GREAT HEIGHTS Have the most expensive retail rents in the world gotten too high? By Lindsey Walker Marcec CMBS Scenarios page 34 INSIDE THIS ISSUE Net Lease Investment Sales Activity Maintains Brisk Pace page 36 Positives in Rhode Island Office, Despite Shadow of Superman Building page 29 Lehigh Valley Industrial: Increasing Rents and Spec Construction page 26 Jaindl Properties and Dunn Twiggar Company are developing The Waterfront, a 26-acre project with 675,000 square feet of office space and 425 apartments in Allentown, Pennsylvania. See page 31. MIXED-USE PROJECTS LEAD URBAN REVIVAL IN NORTHEAST I n commercial real estate, bigger is often better. Developers want to build as much space as the market can bear and landlords invest time and money to attract big companies that ink deals for large floorplates. But during the Great Recession, many office users reduced their square footage. And even as the economy picked up, companies that were hiring reduced their space-to- employee ratio, fitting more people into the same size office space. With fewer large companies growing their footprints, some landlords began to make a concentrated effort to create spaces that would appeal to start-ups and entrepreneurs. Landlords have always signed smaller tenants to fill spaces. But today's landlords are creating programs that deliberately cater to small tenants, from offering short-term flexible leases to providing furnished suites. These small-space users help property owners to increase occupancy in the short term — and the relationships can benefit landlords over the long term. For example, Eastman Companies has a tenant that started with about 1,800 square feet and has expanded into a space nearly 10 times that size, says Michael O'Neill Properties Group is developing The Pointe in Sayreville, New Jersey. The project will feature 2.4 million square feet of retail, 2,000 townhomes, 32,000 square feet of office space and 1,250 hotel rooms. See page 30. A public-private partnership has developed Storrs Center, a town center project adjacent to the University of Connecticut in Mansfield. See page 32. see OFFICE SPACE page 42 ICSC NEW YORK NATIONAL DEAL MAKING