New retail development was the topic of a panel discussion
moderated by Hartman Simons partner Bob Simons earlier this week. Panelists
included Jeff Fuqua of Fuqua Development, Charlie Hendon of Hendon
Properties and Mark Toro of North American Properties.
The discussion was held at the Sandy
Springs, Ga., headquarters of the Atlanta Commercial Board of Realtors (ACBR).
The International Council of Shopping Centers (ICSC) and ACBR sponsored the
discussion, which was part of a daylong continuing education session.
Below are four of the many interesting
points made during the hour-long discussion.
for New Development is Available But Lenders Are Demanding.
Hendon noted that developers can obtain financing for new construction but said
lenders are “still a little nervous and hesitant.”
Lenders “are a lot more detailed and
thorough than they were,” Hendon added. “You’ve got to have all your T’s
crossed, and you’ve got to have a tremendous amount of equity and pre-leasing.”
Lenders typically are looking for
developers to bring 30 to 35 percent of the project cost to the table.
Governments Are Friendlier to Developers. Neighbors … Not So Much. The
need for tax revenue and the desire to pump up their local economies has made cities
and counties more willing to accommodate new retail properties, Fuqua and
“Generally speaking, municipalities are
better and easier about [new development],” Fuqua said. However, Fuqua added
that’s not necessarily the case with residents who live near proposed projects,
noting that a mixed-use development he’s working on in Denver has made met with
considerable “not in my backyard” sentiment.
On the other hand, Toro said his firm’s
Avalon project in Alpharetta, Ga., was embraced by the public before it was by
city councilmen, although the council did end up unanimously approving the
Rate Compression Set to Continue. Simons noted that
retail capitalization rates have now reached 2007 levels, and the panelists
agreed the rates for core assets should continue to drop for a while.
By “core,” Hendon said, he means “well-located [properties
with] credit tenants and high barriers to entry.”
The relatively small amount of new retail construction
should keep cap rates low, Fuqua added.
• Give ‘Em Something to
Do. With online retail sales growing, retail centers must take extra steps
to attract shoppers, Toro explained.
North American Properties’ Atlantic Station in Atlanta
hosted more than 160 events last year, he said, including a “Yoga in the Park”
day. “Provide [shoppers] something to do and teach them something,” he said.