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Jeff Lyon, Kidder Mathews featured in NAIOP video December 5, 2011

Posted by Erik Swanson in Articles, Blogs, Development, Research/Data, Uncategorized, Video.
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KM’s CEO Jeff Lyon hosted NAIOPs 2011 Night of the Stars awards gala last month. Jeff’s appears in a short promotional video with some pretty cool animation featuring Kidder Mathews. You can check out the video here.  

Here are the 2011 NAIOP WINNERS with some links below:  

Public Project of the Year: UW Foster School of Business – Paccar Hall

Public Project of the Year: Pike Place Market Renovation

Community Impact of the Year: Compass Veterans Center

Hospitality Development of the Year: The Alaska Building – Marriott Hotel

Private Education Development of the Year: Seattle University – Lemieux Library & Expansion and Renovation

Technology/Life Sciences (Non-Public) Development of the Year: Swedish Issaquah Hospital and Medical Center

Redevelopment/Renovation of the Year: Terry Avenue Building

Commercial Interior of the Year: Nuance Communications

Multi-Family Development of the Year: LINK Apartments

Mixed Use Development of the Year: The Landing – Renton

Industrial Development of the Year: Harbor Wholesale Grocery Headquarters: Warehouse and Distribution Center at Hawks Prairie 111 Corporate Park

Office Development of the Year: Bill & Melinda Gates Foundation Campus

Market Adaptation of the Year: Stadium Nissan of Seattle

Deal of the Year: Seventh & Madison Building – Polyclinic

Developer of the Year: Vulcan Real Estate

SIOR Industrial Broker of the Year: Wilma Warshak

SIOR Office Broker of the Year: Jesse Ottele

SIOR Investment Sales Broker of the Year: Jon Hallgrimson


Another commercial real estate industry resource: CRE Radio July 22, 2011

Posted by Erik Swanson in Articles, Blogs, Investment Tools, Research/Data, Uncategorized.
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A few months back, while surfing commercial real estate blogs, I came across “America’s Commercial Real Estate Show”.  It’s an innovative national talk show that focuses on commercial real estate. The Founder, Michael Bull is a 30 year veteran of commercial real estate and owner of Bull Realty in Atlanta.  Bull puts together weekly broadcasts that cover all property types. Topics have ranged from retail leasing strategy to CRE auctions to medical office development. Each show begins with a market update from an industry data provider or news source that helps facilitate a panel discussion.   

The program is recorded each Wednesday and airs Saturday from 10 a.m. to 11 a.m. (Eastern Standard Time) on biz 1190 WAFS and on the Internet at www.commercialrealestateshow.com. The programs are archived as a podcast and available on demand at the same web address. The show can also be accessed with a smart phone.  Below are links to some recent shows:

Land and Development Industry
U.S. Office Market Update 
U.S. Industrial Market Update 
Loan Workout Strategies 
Capital Markets Update 

ACRE’s next show focuses on medical office investments and is scheduled for July 30th. Check it out here.

Weekend Reading – Happy 4th! July 1, 2011

Posted by Erik Swanson in Articles, Blogs, Development, Puget Sound Investment Review, Research/Data, Retail News, Video.
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We’ve blogged recently about the improvements in lending conditions in for CRE. It appears that we’ll see more banks with available capital to lend on CRE. With loss provisions falling for the sixth straight quarter, banks are freeing up dollars for new loans. In addition, foreclosures have increased while the total amount of delinquent balances (delinquencies, foreclosures, and restructured loans) has decreased. Costar digs into the numbers in a recent article:  LESS DISTRESS: CRE Taking Less of Toll on Nations’ Banks .

New Kind of Mall?  – A quick article from RetailTrafficmag.com discusses a Czech developers mall concept that caters specifically to men. Check out the property’s Facebook page here.  I don’t read Czech, but judging by the photos he might be onto something. Over the holiday weekend, I’ll be putting together my wish list of retail categories and potential tenants…Developer and equity partner wanted.

Technology has changed the way we experience media, shop, and communicate with each other. Increasingly, it is at the expense of retailers and shopping center owners that lease to them. Now, some bricks and mortar retailers are fighting back. Retailers have begun to utilize technology to improve the physical shopping experience and increase sales both online and at the store. Check out 7 Innovative Ways the IPAD is Used in Retail – Mashable.com . And check out this video: Korean Grocery Store uses Clever Marketing Campaign –Wimp.com

Have a very happy and safe Independence Day!

Puget Sound Investment Review – June 2011 June 15, 2011

Posted by Erik Swanson in Articles, Blogs, Puget Sound Investment Review, Research/Data, Retail News, Retail Sales Comps.
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Cap Rates…Rise or Fall? June 14, 2011

Posted by Erik Swanson in Articles, Blogs, Research/Data, Retail News, Sale, Uncategorized.
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Today, I was speaking with a developer who’s contemplating putting a retail center on the market. This particular asset is stabilized and he’s enjoying increased cash flow after his interest rate has adjusted downward on a variable rate loan.  He believes his tenants will accept their scheduled annual rent increases and expects the operating income will rise accordingly. Life is good, why sell? 

Investors seeking stabilized assets with has contributed to several quarters of cap rate decline. Couple that with a looming inflationary period and the likelihood of rising interest rate environment seem to beg the question, “is it time to sell?”  There are a few dynamics to consider here; the increasing availability of inexpensive debt, the lack of suitable alternative investments, and the sentiment that retailers are healthier. Investors have seen that vacancy rates have leveled off and rent growth, albeit modest, may soon begin. This is putting downward pressure on cap rates as buyers price in these future NOI gains.

Every deal is unique unto itself and obviously needs to be analyzed beyond how the value is affected by today’s cap rates. It seems clear however, that we’ll see rising cap rates in the not too distant future. Click the link to check out an interesting article in National Real Estate Investor  .

Institutional Retail Grab June 9, 2011

Posted by Sean Tufts in Articles, Blogs, Retail News.
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As previously discussed in recent blog posts, sales volume has significantly jumped this year in the retail sector led by institutions with a nearly unlimited and practically free capital source. Their focus on purchasing retail centers has done many things to retail landscape, most importantly by driving CAP rates down to unexpected levels. It continues to change the ownership profile across the country as private capital controls less and less product.

This has always been the case for large shopping centers but was less of a concern for the single tenant market, where private investors dominated. That has changed significantly in the last six months as the share of institutional ownership of single tenant retail assets grew from 5% to 25%.

Check out the article in National Real Estate for more detail.



Investment Sales Volume June 1, 2011

Posted by Sean Tufts in Articles, Blogs, Research/Data, Retail News.
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Retail investment continues to improve locally and around the nation. As data continues to roll in a clearer picture is starting to come together which mirrors what we have been seeing on the ground the last couple of months. Retail Traffic’s latest article explores the changes in the credit markets as capital starts to flow to other deals besides class-A core product. It also touches on the some of the reasoning behind the increased demand and resulting drop in cap rates.

Two of the biggest reasons investors have come back into the marketplace en masse are improving retail sales and record low interest rates. In April, same-store sales for U.S. chain stores, as measured by ICSC, rose 8.5 percent. Year-to-date, same-store sales are up 4.9 percent—a vast improvement over recent years, when same-store sales often posted declines. Retailers have gone from shutting down new opening plans in 2008 to mulling expansion in 2010 to actually signing leases this year.”

This year we have seen an increase of over 160% in dollar volume of retail centers sales in the Puget Sound compared to all of last year. If deal volume continues at this pace (which could happen if deals like the Kimco portfolio close) it will represent a nearly 400% increase in deal volume and record as the largest year since 2007.

Nationally, cap rates continued their fall for the fifth straight quarter. Below is Retail Traffic and Real Capital Analytics graph of retail cap rates and price per square foot.

The full article is well worth the read.

Optimism at ICSC Retail Convention May 25, 2011

Posted by Erik Swanson in Articles, Blogs, Development, Retail News.
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We’ve just returned from Las Vegas where we, and roughly 35,000 others, attended the ICSC Global Retail Real Estate Convention or “RECon”.  The mood was upbeat and energetic and we were pleasantly surprised with the level of activity. We had a busy schedule packed three days with meetings, parties, and dinners that included prospective buyers, developers and property owners large and small.  The consensus; while it’s not a normal deal making environment, there’s a cautious optimism that things will continue to improve in the retail real estate retail sector.  A couple of takeaways from the convention:

  • Secondary markets will see increased capital as investors seek yield. See Shopping Center Today News RECon recap here.
  • Retailers will speed up expansion through 2012. See GlobeSt.com’s report from RECon here.
  • Institutional buyers awash in cash will continue to compete for Class A properties keeping cap rates low for quality product.
  • Redeployment of capital – Many owners are contemplating selling now before cap rates increase with looming inflation.
  • Tenants still have plenty of leverage and benefit of choice. See the RetailTrafficmag.com article:  Landords, Tenants Jockey For Position in Lease Negotiations.

Costar: Rising Occupancy Should Bring Growth In Retail Rents By Year-End May 13, 2011

Posted by Sean Tufts in Articles, Blogs, Research/Data, Retail News.
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Costar provided the rosiest outlook for retail rents we have seen in a very long time with their latest article, “Rising Occupancy Should Bring Growth In Retail Rents By Year-End”. The title alone provides a warm and fuzzy feeling for any owner or broker that deals in retail real estate. With rents falling an average of 35% from their peak this is very welcome news and provides some hope for a future recovery.

The recovery is obviously further along in specific areas, especially the Northeast, where “Retail sales have already returned to 2007 levels, with year-over-year growth in the 6% range for the last couple quarters — well above the historical range of 4.5% to 5%”. That may be true out East, but we have yet to feel the rebound. Below is a chart of taxable retail sales in the state of Washington. It does appears to have leveled off and based on the sales reports of the area’s major retailers (Costco, Nordstrom, etc) we expect the Q1 numbers to show further signs of improvement.

Year Total Taxable Units
2010 Annual $100,808,236,059 186,652
2009 Annual $100,879,383,855 185,254
2008 Annual $114,007,928,210 188,124
2007 Annual $118,957,667,480 190,003
2006 Annual $111,442,431,996 187,340
2005 Annual $102,154,111,438 185,348
2004 Annual $93,440,674,067 180,206
2003 Annual $87,664,282,658 174,629
2002 Annual $85,368,356,296 169,471
2001 Annual $84,913,896,471 165,756
2000 Annual $85,344,751,728 166,217

Activity on the leasing side has picked up since the beginning of the year, led primarily by national tenants that have realized that the window is likely closing on sweetheart deals at the bottom of the market. With basically zero in the construction pipeline we expect that it will not be long until the vacancy rate starts to inch down and we finally see some upward pressure on rental rates. We will still lag behind the East Coast and rent growth is unlikely to occur any time before next year but we absolutely appreciate the optimism!

Here is the full article for your weekend reading pleasure!

Will the internet kill the retail store? May 3, 2011

Posted by Sean Tufts in Articles, Blogs, Research/Data, Retail News.
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Over the last couple of years we have had what seems to be weekly conversations about the impact the internet has on retail centers. Retail Traffic’s article today from David Lynn of ING Clarion sheds some terrific light on how the dynamic seems to be unfolding.

The argument is made that the internet is actually a complementary tool instead of something that is going to be the downfall of the retail sector. Lynn explains it this way:

The Internet has become a supplemental tool for savvy retailers. Many retailers are successfully incorporating their own websites into multi-channel strategies by offering multiple means for a consumer to obtain a particular good. Although retailers may face execution challenges, multi-channel retailing can effectively increase overall profitability… The technology enables retailers to maintain smaller inventories and more efficient stores, but this does not directly equate to smaller floorplates and less real estate.”

I would add that the impact is similar to the question about tenants surviving the recession. Those that have made it today have proved that they can adapt and have a much higher probability of long term success. Even some of largest tenants did not survive the downturn because they could not handle the change brought on by the recession. They may not have lasted long anyways under their current strategy with or without the recession. When’s the last time you rented a movie at a traditional movie store? As in all businesses, it comes down to the business model and they adaptability of the retailer. Consumers are never going to buy everything online. In fact, the article makes the claim only 4.2% of total retail industry sales were online.

Read the full article here. While you are there, check out another worthwhile article, “Costar Sees Stability in the U.S. Retail Scene“.