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Kidder Mathews 2nd Quarter Retail Report August 2, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News, Retail Sales Comps.
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Below is the Kidder Mathews 2Q retail market report compiled by Andy Robinson in our appraisal department. The report details construction activity, retail sales, rent forecasts and highlights sales comparables for the first half of 2011.

The investment activity chart shows continued improvement in both deal volume and cap rate compression.

The full report is available by clicking here: Retail-Market-Research-Seattle-2011-2q.

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More vacant space…in Lebam, WA July 26, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News.
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Most of us by now have heard that the Borders Group, the second largest bookstore chain after Barnes & Noble, announced last week that they were abandoning bankruptcy protection plans after failing  to find an investor. This means the closure of nearly 400 stores (after already closing 200 earlier this year) and subsequent loss of roughly 11,000 jobs. While the writing has been on the wall for some time, the announcement is yet another blow for battered landlords who just beginning to enjoy renewed tenant interest. And large, two store retail boxes might be tough to re-lease.

Now, in blow to small  town landlords, the U.S. Postal Service has announced the closure of 3700 locations, including 39 in Washington State alone.  Two locations in downtown Seattle will be closed but most of the remaining locations appear to be in rural towns…by the way, where are Marlin, Wishram and Lebam? Anyway, in these smaller towns where there is no post office branch, the USPS may pursue a “village post office” concept whereby they will locate limited services within grocery stores or gas stations. The Puget Sound Business Journal lists the local closures here and there’s more from the Wall St. Journal article here.

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.

For Sale: Harbor Towne Center, Oak Harbor, WA July 21, 2011

Posted by Erik Swanson in Listings.
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Puget Sound Investment Review – July 2011 July 18, 2011

Posted by Erik Swanson in Puget Sound Investment Review.
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Landlord concessions diminish while sales increase July 15, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News.
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Although it seems rents will remain soft for some time, vacancy rates are stabilizing and landlords for the most part have stopped having to give rent concessions.  The caveat is that this will vary widely by location and even down to the asset level. Grocery anchored centers and core assets are more likely to maintain and potentially even grow rents (barring another blow to the shaky economy). Older centers without a strong anchor in tertiary markets have more of an uphill battle.

According to Costar,the nationwide vacancy rate for all retail stood at 7.1%. Malls fared better with vacancy at 5.8% (see chart above).

As a result of improving market conditions, average cap rates on retail acquisitions fell to 7.5% in April, according to RCA, 20 basis points below the 7.7% recorded in January. – NREI Online

With the capital markets showing more interest in the secondary markets, investors are now beginning to acquire assets in non-core areas. April sales of retail properties valued over $2.5 million increased by 39% over last year. As we indicated before, competition for good retail has continued to push cap rates down.  According to Real Capital Analytics, caps have dropped nationally as much as 20 basis points from the start of the year.

Just Listed: 38th Street Retail Center, Tacoma, WA July 7, 2011

Posted by Sean Tufts in Listings.
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Data shows CRE recovery continues July 6, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News.
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Separately released data from the Mortgage Bankers Association and Costar shows that despite continued weakness in the general economy and in job creation, commercial real estate fundamentals continue to improve in all sectors.

The MBA’s Q1 Databook showed 1st quarter commercial mortgage origination for all property types were up over 1st quarter last year and the index reached its highest mark since 2008. For retail in particular, the data is much the same and reflected the cyclical nature of the CRE market. Although down from 184 in 4th quarter 2010, the 1st quarter index score of 96 was the highest 1st quarter since 2008 (a score of 100 on the origination index equates to an average quarter in 2001). This equates to a 13% increase in loans for retail properties. Full report here.

“The retail real estate market has now experienced eight quarters of positive net absorption” -Costar

Real estate strategists at Costar predict that a second half improvement in the economy will accelerate CRE recovery. Retail sales are expected to increase and retailers should again begin expansion after scaling back new store openings at the end of last year.  Furthermore, with almost no new construction, positive net absorption should continue as retailers move into second and third generation space. See complete Costar article 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!

Loja Real Estate Acquires Lakeland Town Center June 24, 2011

Posted by Erik Swanson in Articles, Development, Research/Data, Retail News, Retail Sales Comps, Sale.
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Last week Loja Real Estate of Walnut Creek, CA purchased the Lakeland Town Center from Investco of Sumner. The transaction closed on June 17, 2011 with a sale price of $39.4 million – approximately $300 per square foot. The cap rate was not disclosed but sources tell us that it was “in the low 6 cap” range.

Source: Tarragon

The Lakeland Town Center is a 132,000 square foot grocery-anchored shopping center sitting on 12.4 acres. The center was built by Investco affiliate Tarragon in 2002. The center is anchored by a 67,000 square foot TOP Food & Drug and includes other quality tenants such as Blockbuster, Starbucks, The Rock Brick Oven Pizza and Brewery and McDonald’s. 

Loja Real Estate, LLC, is a wholly owned subsidiary of The Loja Group LLC,  a women-owned real estate investment management firm with $135 million in assets under management. This is their first purchase in Washington and their third outside California.

More evidence of the appetite for strong grocery anchored centers and proof that sellers in our region will continue to reap the benefits of a supply constrained market.