Property Types
Retail
Is East Asia's Vertical Retail Model Wave of Future for U.S.?
Jul 22, 2009
By: Barbra Murray, Conributing Editor
Vertical retailing--building retail destinations higher instead of wider--has long been a success in cities like Hong Kong and Shanghai, but the trend has yet to catch on in the United States. However, given the country's growing population and dwindling pool of developable land in major cities, the time may be just right for the nation's metropolises to jump on the bandwagon, or so believes Charles Chan, president of commercial real estate brokerage firm Harvest International.
"It's a good model for places like New York, Chicago and San Francisco, where it's very densely populated and there's a limited amount of space," Chan told CPN. "I think this is a very timely model for future retailing because not only is space limited but rent, even though it's declining with the downtown of the economy, it's still expensive. So the only way to go is up... and going up, you can have an atrium, a level for food, a level for women's wear, a level for menswear--it's very easy to configure."
Indeed, the vertical retail premise has proven to be a winning endeavor in some major cities overseas. As real estate services firm Colliers International notes in a research paper on vertical retailing in Hong Kong, for retailers that rely on repeat clients--and are not dependent on the exposure a street-front location provides--the upper-floor retail unit is the most appropriate environment. Among the types of retailers that benefit the most from the arrangement are food and beverage businesses, salons and spas and learning centers.
The vertical mall concept certainly provides economic advantages for the retailer, but it presents coveted benefits for the shopper, too. "Nowadays when transportation is so expensive, you can shop and get your groceries at the same place," Chan said. "It's an easier way of living, and it's more cost effective. Additionally, it will work very well in very severe weather; you don't want to drive around and risk chances of getting in a traffic jam or getting hit by a car."
Harvest International is in the process of putting its money where its mouth is. The firm is planning to convert the former Caldor Department store building near Main Street and Roosevelt Avenue in Flushing, N.Y., into a vertical shopping center mecca. The 240,000-square-foot structure, located practically atop a subway terminal and fronting a bevy of bus lines, features four floors for retail space and a two-level underground parking facility. The project, tentatively named New World Mall, is expected to feature everything from a "hyper mega food mart" to a children's play center. "If you are a mother with a child and have only two hours to do your shopping, you can go to a vertical retailing location and within two hours, you can get things done without wasting gas," Chan explained. "You could pick up your groceries, pick up your child and get in and out."
Interior plans for New World Mall are currently being finalized, and once that activity is wrapped up, interior renovation of the building will commence, with a target completion date for early spring of 2010. Already, Chan said, "we've had lots of interest from retailers."
Recent Retail Headlines
General Growth Names Rufrano to Board
Jul 10, 2009
General Growth Properties Inc. named Glenn Rufrano to its board of directors. Rufrano is CEO of Centro Properties Group, a role he was appointed to in January 2008, leading it through a difficult restructuring effort. Australia-based Centro threatened to be an early victim of the credit crisis. Rufrano had been heading the shopping center company's U.S. operations, having served as longtime CEO of New Plan Excel Realty Trust Inc. before Centro purchased the public REIT in 2000. General Growth filed for Chapter 11 bankruptcy protection earlier this year.
Opus Property Services Reported for Sale
Aug 03, 2009
Opus Corp. is seeking to sell its property-management business, according to a report on bizjournals.com, the Web site of American City Business Journals. It quoted a company spokesperson as stating that selling off Opus Property Services would help the company renew its focus on its "core competency," along with its being a good time to sell because property management firms currently have an "appetite ... to grow their (business)." Opus' management portfolio totals about 30 million square feet of office, retail, industrial and corporate space.
Economic Update - CalPERS Takes Rating Agencies to Task
Jul 16, 2009
Another California trend? CalPERS, the nation's largest pension fund, has filed suit against the three largest credit-ratingsagencies, essentially asserting that the agencies gave away highratings like gold stars to kindergartners back in the days when realestate only went up. Or to use the language of the lawsuit, "wildlyinaccurate and unreasonably high" ratings on various structuredinvestment vehicles caused the pension fund to lose a cool billiondollars.
Opus Group Bankruptcy Filings Mount
Jul 09, 2009
The struggling economy is making its mark on Minnetonka, Minn.,-based
Opus Group which now has a number of its subsidiaries filing for
bankruptcy. So far, Opus West Corp. and Opus South Corp. have filed
Chapter 11 bankruptcy. Opus East, meanwhile, has filed Chapter 7.
Austin’s Hill Country Galleria, developed by Opus West, filed for
Chapter 11, too.
U.S. Chain Store Sales Down 5% in July
Aug 07, 2009
Leaner inventories and a shift in state sales-tax holidays hampered
U.S. chain store sales in July, which were off 5 percent on a
same-store basis, compared with the same period last year, according to
the International Council of Shopping Centers.
Economic Update: On Cars, Gas and Lipstick Sales
Jul 15, 2009
Closely watched retail figures from the National Retail Federation show
that June retail sales took a small dip of 0.2 percent when compared to
May, and were down 3.8 percent when compared to June 2008. These
figures differed somewhat from those of the U.S. Department of
Commerce, which released its own retail sales figures last week that
showed a slight improvement in sales in June when compared with
May--growth of 0.6 percent. The difference is that Commerce includes
cars, gasoline and restaurant sales, . In fact, the only category to
have grown since this time last year was health and personal care
stores, up 3.7 percent since 2008. Could it be due to the "lipstick
effect"?
Economic Update - Fast-Track Chrysler Reorganization Stalls
Jun 09, 2009
The Chrysler reorganization and sale to Fiat, which
was to have been a model of a quick turn-around, has hit a snag in the
form of a court order by U.S. Supreme Court Associate Justice Ruth
Bader Ginsburg. Pension funds that hold some of Chrysler’s secured loan
are objecting to the goings-on, claiming it isn’t fair to them, and so
petitioned Justice Ginsburg for the measure. It isn’t clear how long
the temporary stay will delay the sale, or whether it will kill the
sale, or whether the full court will reverse the stay in a few days.
It’s unlikely, though, that the legal wrangling will affect the fate of
the Chrysler dealerships slated for closing, or change the amount of
real estate their closing will put on the market.
Economic Update - Starwood Eyes Distressed Sector with $500M Fund
Jun 08, 2009
Yet another deep-pocketed real estate entity has jumped into the grave-dancing game—only please, don’t call it that, but rather strategic investment in distressed properties. The player is a newly formed investment company called Starwood Property Trust Inc., a creation of Starwood mogul Barry Sternlicht, which filed with the Securities and Exchange Commission late last week for a public offering that aims to raise half a billion dollars to do the distressed-property boogie. It will invest in not only physical properties, but mortgages and mortgage-backed securities.
Economic Update - CMBS Delinquencies Spike
Jul 14, 2009
U.S. Commercial mortgage-backed securities delinquencies grew in June
by a record $2.2 billion, according to Fitch Ratings. Last month there
was a 2.6 percent delinquency rate among U.S. CMBS, up 48 basis points
from the previous month. In June, at least, problems in retail
properties and the hospitality industry inspired much of the upward
bounce in delinquencies. But there's more to come, especially in the
beleaguered hotel sector.
Economic Update - Legacy CMBS Now Under TALF
May 20, 2009
In a major expansion of the Term Asset Backed Securities Loan Facility (TALF), the Federal Reserve said on Tuesday that investors will be able to buy existing securities backed by commercial real estate loans--so-called "legacy" CMBS. The commercial real estate industry has been pushing for this for some time, and it will at last be possible starting in July.
Economic Update - Tesco Completes Sale-Leaseback, CMBS Deals
Jun 22, 2009
British retailer Tesco Plc. inked a sale-leaseback of 14 properties. The sale-leaseback followed on the heels of the company's successful
completion of the sale of commercial mortgage-backed securities. The offering by Tesco may mark the glimmering beginnings of a new, simpler CMBS market.
RaceTrac Initiates Sale-Leaseback Program
Jul 20, 2009
RaceTrac Petroleum Inc., which owns and operates 530 convenience stores
and gas stations in 12 states, has tapped CB Richard Ellis Inc.'s
global corporate services unit to exclusively manage a sale/leaseback
program..
With Robust Retail Demand on the Horizon, Work Begins on $100M Shopping Center at Fort Bliss
Jul 09, 2009
Development in the retail sector, which began its nosedive with the
collapse of the housing and credit markets, is hardly booming. However,
the situation is quite different at Fort Bliss in El Paso County,
Texas, where the Base Realignment and Closure Act of 2005 will bring an
estimated 127,000 new military personnel and family members to the area
by 2012.
Economic Update - Green Shoots a Little Greener, but CRE Not Overjoyed
Jul 21, 2009
It was a good way to start the week, economically speaking. According
to the Conference Board, the U.S. index of leading economic indicators
rose 0.7 percent in June, marking the third rise in the index in as
many months. In the first half of 2009, the index improved at an
annualized rate of some 4.1 percent , a clear contrast to the way it
shrank in the last half of 2008 at an annualized rate of 6.2 percent.
Q2 Demand as Weak as Expected Across Sectors--Except M-F
Jul 13, 2009
The dismal economy continued its stranglehold on the commercial real
estate industry, as per CBRE Econometric Advisors' recently released
analysis, pushing up vacancies in the office, industrial and retail
property markets. But there was one surprise. Demand in the
multi-family sector, despite the ongoing job losses that are hindering
the formation of new households, was essentially unchanged from the
first quarter of the year.
Economic Update - Homebuilding Unexpectedly Perks Up, For Now
Jul 20, 2009
The residential market made a surprising turn on Friday, with the U.S.
Department of Commerce reporting that housing starts were up 3.6
percent in June when compared with May: an annualized total of 582,000
units versus 562,000 units. Economists weren’t expecting that many.
Cadillac Fairview Buys 49% Interest in NY Macerich Center
Jul 31, 2009
Cadillac Fairview Corp. purchased a 49 percent interest in Macerich's Queens Center in the New York City borough of Queens for $150 million in net cash. The eighth joint venture between the two firms, the venture gives Canadian Cadillac Fairview, wholly owned by the Ontario Teachers' Pension Plan, entree to New York City. Queens Center is the top-performing asset in Macerich's portfolio: The 966,499-square-foot urban retail center, which at year-end 2008 was 97.5 percent occupied, was at that time producing annual mall sales of $876 per square foot. Macerich purchased it in 1995 and redeveloped and expanded it in 2004.
Economic Update: Retailers Term CIT Too Big to Fail; TALF Attracts Interest
Jul 17, 2009
As if the retail industry didn't have enough trouble, the prospect of a
CIT Group bankruptcy is blowing through the industry like an unexpected
squall. On Thursday, those new worries were reflected in the S&P
Retail Index, which fell 0.8 percent. If CIT does go under, many
smaller and mid-sized apparel retailers might also have trouble staying
afloat later this year, especially during the critical holiday season.
CalPERS-First Washington JV to Replace Macquarie in Partnership with Regency Centers
Jul 17, 2009
Macquarie CountryWide Trust agreed to sell the majority of its interest in Macquarie CountryWide-Regency II L.L.C., a four-year-old partnership with Regency Centers Corp. that owns 86 retail shopping centers valued at $1.7 billion, to Global Retail Investors L.L.C. , a joint venture between the California Public Employees' Retirement System and an affiliate of First Washington Realty Inc. The phased sale will result in Global Retail Investors owning 60 percent of the partnership, with Regency having the option to increase its ownership from 25 percent to 40 percent. Otherwise, the remaining interest would be sold to Global Retail Investors or elsewhere, depending on two possible options.
Crossman to Handle Leasing for 10.4MSF Publix Portfolio
Jul 20, 2009
Third-party leasing and management firm Crossman & Co. has been
named the exclusive leasing representatives for all Publix-owned retail
properties in Florida, Georgia, Alabama, Tennessee and South Carolina.
Is East Asia's Vertical Retail Model Wave of Future for U.S.?
Jul 22, 2009
Vertical retailing--building retail destinations higher instead of
wider--has long been a success in cities like Hong Kong and Shanghai,
but the trend has yet to catch on in the United States. However, given
the country's growing population and dwindling pool of developable land
in major cities, the time may be just right for the nation's
metropolises to jump on the bandwagon, or so believes Charles Chan,
president of commercial real estate brokerage firm Harvest
International.
Net-Leased CVS Property Trades in Illinois
Jul 06, 2009
Marcus & Millichap Real Estate Investment Services has arranged the
sale of an 8,540-square-foot single-tenant net-leased property, located
in Westville, Ill.
Economic Update - Consumer Spending, Saving Up; Will Retailers Benefit?
Jun 29, 2009
This might count as good news: U.S. consumer spending and personal income both rose in May. Spending jumped by a small but noticeable 0.3 percent when compared with April, and personal income spiked upward by 1.4 percent, the strongest jump in more than a year, according to the U.S. Department of Commerce. The question now for retailers and their landlords is how much of that is going to go toward buying things.
Filene's Basement Assets Snapped Up by Men's Wearhouse in $67M Auction
Jun 09, 2009
Clothing retailer Men's Wearhouse has emerged victorious from a
feverish nine-hour auction of assets belonging to off-price chain
Filene's Basement, which fell victim to the retail market's downward
spiral and filed for Chapter 11 bankruptcy protection in early May,
just two weeks after its purchase by Buxbaum Group affiliate FB
Acquisition II. Acting through its affiliate, K&G Acquisition
Corp., Men's Wearhouse put forth the winning bid of $67 million for 17
to 20 of Filene's store leases, as well as the leases on the company's
Massachusetts corporate headquarters and distribution center, its
Maryland storage facility and-- possibly most important--the Filene's
Basement trade name.
JV Makes $25M Virginia Retail Play
Jul 16, 2009
A joint venture between Spectrum Partners L.L.C., Alex. Brown Realty
Inc. and Potomac Capital Advisors, has acquired Westgate Plaza Shopping
Center in Manassas, Va., for $25 million from Principal Real Estate
Investors.
Philly Shopping Center Lands $17M in Financing
Jun 24, 2009
The New Jersey office of Holliday Fenoglio Fowler L.P. has secured $17
million in financing for Columbus Crossing, a 142,000-square-foot,
grocery-anchored shopping center in Philadelphia.
Economic Update - Homebuyers Slowly Returning to Existing Home Market
Jun 24, 2009
Homebuyers seem to be returning to the existing-home market this summer, according to the latest report by the National Association of Realtors on existing U.S. housing sales. The sales of single-family homes, condos and coops rose 2.4 percent in May compared with April, coming on top of a gain for that month compared with March, thus marking the first back-to-back monthly increase in existing home sales since 2005.
Economic Update - Discount Retailers Still on Top
Jul 09, 2009
Even in a recession, there will be winners. Even in the retail world,
which has taken such a beating lately, there will also be winners--such
as Family Dollar Stores Inc., which reported its fiscal third-quarter
numbers on Wednesday. Its earnings spiked upward by 36 percent, which
the discount retailer attributed to strong sales of necessities.
Comparable-store sales, an important metric in the retail game, were up
6.2 percent.
Economic Update - Christmas in July to Boost Retail Sales?
Jul 10, 2009
As expected, June was a lousy month for retail sales--except at a few
retailers, probably including Wal-Mart Stores Inc., though the giant
retailer doesn't report monthly comparable-store sales. Target Corp.,
on the other hand, reported a 6.2 percent comp-store drop from June
2008, while Costco Wholesale Corp. dropped 6 percent. Major department
store chains took a comp-store drubbing as well: Nordstrom Inc., down
10 percent; Macy's, down 8.9 percent; J.C. Penney down 8.2 percent;
Dillard's Inc. down 14 percent.
Economic Update - Spooked by Economy, Consumers Consume Less
May 14, 2009
The U.S. Department of Commerce reported that retail sales dropped by 0.4 percent in April, compared with the previous month. The decline was a little more than expected, but less than the revised March drop of 1.3 percent. The recent two months of decline followed unexpected increases in consumer spending in January and February.
Economic Update - Wal-Mart Takes Historic Healthcare Position, But Why?
Jul 02, 2009
It's a peculiar time in history when a retailer can influence the debate about national healthcare policy. Yet Wal-Mart is doing just that by coming out earlier this week in favor of the government forcing employers to provide health insurance to workers. It was seen as something of a surprise. The Wall Street Journal characterized the National Retail Federation as "flabbergasted" by Wal-Mart's decision. (Were NRF officials sitting around in conference rooms, being flabbergasted together?)
Economic Update - Retailers See May Malaise
Jun 05, 2009
May comparable-store sales numbers are filtering down from various retailers, and the results aren't inspiring confidence in the prospects for recovered consumer spending. Actually, most analysts expected average retail same-store sales to decline in May 2009 when compared with May 2008, but the trouble was they declined more than expected.
Redevelopment of Former Auto Dealerships a Tough Prospect
Jun 11, 2009
In May, both Chrysler and General Motors cut loose thousands of dealerships --
some 789 by Chrysler as part of its bankruptcy proceedings, and then about
another 1,100 by GM even before its bankruptcy. The moves were part of the
aggressive scaling back by both companies to meet the stipulations of the
federal government's Auto Task Force.
Economic Update - Deutsche Bank Offers Grim View of U.S. Mortgages
Aug 07, 2009
Like a trailer for a monster movie, a new report by Deutsche Bank is promising scary things in the not-too-distant future. Assuming that housing prices continue a decline, the percentage of underwater mortgages might rise to 48 percent of the total, or roughly 25 million loans, by the first quarter of 2011. The bank is predicting that U.S. home prices will decline a further 14 percent from current prices by the first quarter of 2011.
Retailers Caught in Limbo as Sale-Leasebacks Bring in Fewer Dollars
Jul 07, 2009
Beset by a still-icy lending climate, as well as continued weak
fundamentals as a result of the global economic slump, cash-strapped retailers are
increasingly finding themselves caught between a rock and a hard place
when it comes to monetizing their real estate holdings via sale
leaseback deals.
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