Tuesday, May 31, 2011
LANDLORDS, TENANTS JOCKEY FOR POSITION IN LEASE NEGOTIATIONS
MAY 25, 2011 12:05 AM, BY DAVID BODAMER, RETAIL TRAFFIC EDITOR-IN-CHIEF
The mood at ICSC’s RECon has been near exuberant.
The industry is the most bullish it has been since the Great Recession began with many attendees feeling relieved that the “light of the end of the tunnel” that many talked about last year did not end up being a train. Instead, it really was daylight. And the result is a climate in which deals are actually getting done.
It’s still far from being a normal dealmaking environment. But at least attendees think things are clearly moving in the right direction.
The biggest challenge in the market is the difference in performance between top assets and those lower down in the value chain. The consensus in the market is that if you operate class-A space, you’re in pretty good shape. Those are the locations retailers want and those are the deals that are getting done.
The sentiment on class-B and class-C space is not as clear, however. Some attendeesRetail Traffic spoke with said that tenants are beginning to look at those properties while others said that the market remains dead. However, even those that reported that retailers are looking at lower-quality space said that it remains to be seen whether any real deals will materialize from the recent inquiries.
“Tenants are more aggressive, but still nervous about class-B assets,” said Bill Taubman, COO of Bloomfield Hills, Mich.-based regional mall REIT Taubman Centers.
“There’s a flight to quality,” added Michael Glimcher, chairman and CEO of Glimcher Realty Trust, a Columbus, Ohio-based regional mall REIT. “The highest quality retailers are more demanding and are much more interested in class-A properties.”
Besides class-A shopping centers, retailers also are aggressively trying to grab urban locations. Rents on some of the country’s highest profile retail corridors—Madison Ave. in New York, the Miracle Mile in Chicago and Rodeo Drive in Beverly Hills—have surged in the past 18 months, according to several executives with global real estate service firm Newmark Knight Frank.
“Retailers want an urban footprint,” said Cynthia Groves, senior managing director, retail consulting. “Urban cores are hot and exceedingly competitive,” added Gregory Kirsch, a principal in the firm’s retail group. Kirsch estimates that rents have escalated between 30 percent and 50 percent in urban retail cores in markets like New York, Boston, San Francisco, Chicago and New York.
Still looking for help
While the market is improving, the balance of power in leasing negotiationsunquestionably still lies with tenants. Activity is picking up, but vacancy rates at retail properties remain at or near historic highs, depending on whose numbers you look at.
So while the era of mass concessions is over, some tenants still need help, according to Matthew Bordwin, co-president of GA Keen Realty Advisors.
The firm renegotiated 7,500 leases in the last two-and-a-half years. Bordwin expects renegotiations to remain a big theme for the next couple of years. Some retailers that got concessions in the past couple of years may need additional support. For example, when landlords granted rent reductions, in many cases they were for 18 months. Those periods are now ending, but some retailers still need help. So those are the kinds of conversations that will continue to take place, according to Bordwin.
Retailers are also ...
Monday, May 30, 2011
U.S. ECONOMY ON A PACE TO CREATE 2.3 MILLION JOBS IN 2011, SAYS NADJI AT RECON
MAY 24, 2011 1:52 PM, BY MATT VALLEY, NREI EDITOR-IN-CHIEF
LAS VEGAS — The U.S. economy finds itself caught in a tug of war between economic headwinds and real recovery, says Hessam Nadji, managing director of research and advisory services for Marcus & Millichap.
The biggest headwinds are the ailing housing market, record consumer debt, and a large amount of public debt. The signs of recovery include the creation of 1.8 million private sector jobs over the past 12 months and a continual rise in retail sales.
“Housing is headed for a double-dip recession,” Nadji told a packed room of 700 shopping center industry professionals at RECon 2011 on Monday as part of Marcus & Millichap’s annual retail outlook.
“The U.S. housing market is now contributing only 3% to our economic output versus 6% in 2005.” Nadji estimates that 30% of the turnover in the housing market today stems from distressed sales, either foreclosures or short sales.
“There really is no end in sight in terms of when we can see the inventory of foreclosures and distressed sales out of the picture, so that we can get to the bottom and start a new cycle.”
Continue reading this piece at NREIonline.com
Sunday, May 29, 2011
Consolidation Accelerates Ahead of Market Recovery
Since the beginning of 2011, there has been a torrid level of M&A activity in the commercial real estate services industry. Recently announced deals include CBRE’s acquisition of the ING Real Estate fund management business; the sale of Newmark to financial derivatives house BGC; Colony Capital’s loan and exclusive look period with Grubb & Ellis; the recapitalization of DTZ by investment group SGP and the possible follow on merger with BNP Real Estate; and the hotly rumored takeover of King Sturge by JLL. And that is just on the services side. On the information side, Argus is selling to Altus and Costar is acquiring Loopnet.
That big money is being deployed to acquire and expand existing platforms is a clear sign that the commercial real estate market is in the early stages of recovery. Key metrics show both sales and leasing volume are up and in the major markets both rental rates and asset prices have recovered sharply for core assets. But there is a long way to go for secondary markets and non-core assets. As commercial real estate climbs out of the depths of the credit crisis, industry leaders are now looking to expand their depth and breadth of coverage in order to capitalize on opportunities.
There is little doubt that the big will get bigger and more consolidation will follow. The real question remains “how best to provide service?” Is it through a large corporate bureaucracy, best-in-class local providers or some combination that provides the requisite global infrastructure, quality control and support with the best local talent and client-centric approach? Clearly some of the recent M&A activity is following familiar strategic patterns, while others are dramatic course changes.
Over the past 40 years the commercial real estate industry has grown from a local business to a global industry with each economic cycle accelerating the transformation. Now more than ever global resources and reach are critical to serve commercial real estate clients at the local level. The trick is to be able to deliver local service at the global level. Finding the balance between entrepreneurial local market expertise and the institutional strength of a global company is the key to optimizing global real estate services. In the quest for scale and market share, the customer is often lost.
As the largest global managed network of commercial real estate firms we are committed to be a driver and leader in this industry transformation, evolving to serve the ever growing needs of our clients without sacrificing the local touch and customer care we have been known for.
About the author
Scope of Service Experience Jeffrey M. Finn is President and Chief Executive Officer of NAI Global. NAI Global, with over 165 affiliated commercial real estate brokerage firms throughout the world, a web of strategic partnerships and a core of real estate service specialists, is the world's largest managed network of commercial real estate service firms. The NAI system is involved in over $45 billion in real estate transactions annually. Mr. Finn is one of the founders of the company, and over the past decade, has helped lead the organization to its current position of industry prominence. He has been active in marketing, management and strategic planning capacities with NAI. Mr. Finn has represented major accounts including BP Amoco, Air Products & Chemicals, The United States Postal Service, Unisource and WorldCom - MCI. Mr. Finn has also pioneered the company's international growth establishing NAI Canada, NAI Europe, NAI Latin America, and NAI Asia Pacific. In addition to leading the company's Corporate Services Real Estate Group, Mr. Finn has established the company's many technological initiatives, which have earned the company a leadership position in the use of intranets and extranets, to efficiently deliver services. NAI Global's proprietery technology provides real time online information about markets and projects to streamline and systemitize the transaction and portfolio management process. In 2003 and 2004, his efforts were recognized by Realcomm, from which he received their prestigious "Digital Impact" awards for Brokerage Automation and Innovation in the commercial real estate industry. Education B.S. - Boston University School of Management (Cum Laude Graduate) New Jersey Real Estate Brokers License Numerous CoreNet, CCIM, SIOR seminars and courses. Professional Affiliations & Designations NAI Global, Inc. - Board of Directors NAI Cares Foundation - Board of Trustees The Peddie School - Trustee University of Pennsylvania, Wharton Real Estate Center - Founding Member & Past Advisory Board New Jersey Business - 40 under 40 International Council of Shopping Centers (ICSC) National Real Estate Investor - 40 Stars of Tomorrow Commercial Property News - Top Executives to Watch Real Estate Forum - The Forum 100 - Real Estate's Top Companies
Wednesday, May 25, 2011
EXPERT WITNESSES: A HALF-DOZEN INDUSTRY THINKERS SHARE THEIR KNOWLEDGE IN KEY AREAS
Some parts of the commercial real estate business are easy to understand. Leasing, design, development, construction and investment come to mind as bread and butter areas that most people can get their heads around—at least in broad strokes.
But there are niches that require just a bit more knowledge and nuance. Things like lease administration, resolution of troubled banks, title insurance, 1031 exchanges, cotenancy clauses, and defeasance are all subjects that are best left to the real experts.
So that’s exactly what we did.
In the following links, you’ll find columns on each of these topics from some of the leading lights in the industry. Brian Olasov, managing director with McKenna Long & Aldridge LLP, is a specialist on banking and real estate capital markets issues. He kicks things off with a look at whether it still might make sense for the government to create a second Resolution Trust Corp.
After that, Tara Scanlon, a partner with Holland & Knight LLP in Washington D.C.,examines some common issues retailers and landlords may face in reviving dormant projects.
Next, ...
Tuesday, May 24, 2011
NAI Global Expands into Mumbai, India with Sure Shot Suggestions
NAI Global, the world’s premier managed network of commercial real estate firms and one of the largest real estate services providers worldwide, announced today it is expanding its coverage into Mumbai, India with the signing of Sure Shot Suggestions ( India ) Pvt. Ltd. The firm will now operate as NAI Sure Shot Suggestions.
Located in Mumbai, India, NAI Sure Shot Suggestions is a full-service commercial real estate firm formed in 1992 by Sanjay Puri. The firm is a leading provider of real estate services to many local Indian corporations and investors and is renowned for its work on behalf of many multi-national corporations including Amway, Barclays, Citibank, Orange, Schlumberger, Sony and Standard Chartered.
“Through our partnership with NAI Global, we are now able to provide real estate services to our clients beyond Mumbai with the high standards of service we have established in the Greater Mumbai market.” stated Sanjay Puri, NAI Sure Shot Suggestions’ Managing Director. “Through our new partnership with NAI Global, we will have access to new resources and technology to better serve both our local and international clients.”
“As India’s economy continues to expand, it is playing an increasingly important role in global trade. It’s vital for NAI to have a strong presence in India’s capital,” said NAI Global President & CEO Jeffrey M. Finn. “With the addition of NAI Sure Shot Suggestions, NAI now has a well-established partner to provide local knowledge, relationships and skills to our corporate and investor clients with interests in Mumbai and throughout India.”
NAI Sure Shot Suggestions ( India ) Pvt. Ltd. is located at 2A, Gomes Society, Gr. Flr., TPS-III, 4th Road, Santacruz (East) Mumbai 400 055, India.
1031 EXCHANGES GAIN TRACTION AS LENDING ACTIVITY INCREASES
Tax-deferred exchanges, which accounted for nearly 30 percent of investment sales during the industry’s boom years, slowed to a trickle at the lows of the recession. Today—fueled by a renewed availability of capital—those deals are reemerging.
In 2007, perhaps the frothiest year of the boom, $4.1 billion in tax-deferred exchanges were executed on 765 transactions nationwide. That velocity proved to be short-lived.
The subprime lending crisis led to a full-blown credit crunch that began to rear its ugly head during the first quarter of 2008. As a result, banks, conduits and other institutions shut off the capital spigot for all types of investments. Most significant was the near shutdown of the CMBS market, which accounted for almost half of all commercial lending during the first half of 2007.
Bill Rose
As a result, a high-leverage, speculative investment climate was replaced by a renewed focus on operations underwriting. Of the retail transactions that managed to secure financing and close during the global economic crisis, the majority were ...
Bland Distribution Services Expands Facility
McAllen Economic Development Corporation
Hidalgo County, Texas – Bland Distribution Services (BDS) of Donna, Texas announces the expansion of its cold storage and dock areas. The distribution center broke ground in January 2008 and after unprecedented growth in just 2 years, a decision was made to expand the BDS cold storage space.
That expansion has recently been completed and BDS now has 100,000 square feet of cold, dry, packing, dock and office space. Cold storage space is divided into eight separately controlled areas with a 3,100 pallet position capacity. Each area incorporates Airo-cide technology, an air filtration and anti-ethylene gas system, and state-of-the-art refrigeration computer controls. The expansion included an additional six refrigerated dock doors bringing the total to eleven doors. BDS also has six dry docks and office space for lease to customers.
“We are most excited about the new refrigerated space for reworking and repacking shipments which assures the cold chain for our customers,” said Nick Sanchez, General Manager of BDS. “The facility has now doubled the controlled temperature zones from four to eight, increased dock doors has brought the loading time from check in to completion down to one hour. This expansion allows BDS to once again grow with their customers and develop new business, as it has been at full capacity since December 2010.
BDS opened in November 2008 as a cold storage and distribution center for fresh, frozen and dry goods. BDS specializes in consolidating loads, layer picking shipments, reconditioning/repacking and ...
Monday, May 23, 2011
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