Each Wednesday, The Wrap presents a compilation of recent noteworthy commercial real estate stories from a variety of publications. Below are five stories that caught our eyes in recent days.
• “Grocery-Anchored Shopping Centers No Longer the Safest Bet in Retail” by Elaine Misonzhnik of Retail Traffic.
In response to the recession, real estate investors fled to necessity-driven markets, including grocery-anchored properties. But the number of retail operations adding grocery products to their shelves and the growing pool of upscale supermarkets is creating strong competition in what was once considered a “safe” market, Misonzhnik reports.
“Everywhere you look, people are selling consumables, so if you don’t have a good reason for people to choose your store, you’ve got a problem,” John Rand, senior grocery analyst with Kantar Retail, told Misonzhnik.
Traditional mid-market grocers like Food Lion and Safeway are struggling, while high-end grocers like Whole Foods are expanding. Little to no growth in mid-market grocers is reflected in the vacancy rate for neighborhood shopping centers, which was the highest among all retail property types in the second quarter, according to CoStar statistics.
• “Work Resumes on Scaled-Back Buckhead Project” by Greg Bluestein of Atlanta Journal-Constitution.
Construction started again this week on the long-delayed Buckhead Atlanta project, an ambitious development that once called for the construction of five-star hotels and luxury shopping in an area previously known as the epicenter of Atlanta’s party scene. The project stalled in 2009.
The new developer, OliverMcMillan, has scaled back the project to a mixed-use property that will include 370 apartments, 100,000 square feet of office space and 300,000 square feet of high-end retail.
OliverMcMillan plans to piece together the pre-existing unfinished buildings and complete the project by late 2013 or early 2014, said the project’s development director Hunter Richardson.
• “Apartment Market Continues to Tighten” by Carisa Chappel of REIT.
The apartment sector showed favorable conditions for the sixth consecutive quarter, according to data from the National Multi Housing Council (NMHC).
Demand for apartments continues to outstrip new supply, said NMHC chief economist Mark Obrinsky, and therefore the rental market is tighter than last quarter, with lower vacancies and higher rents.
• “Why Wal-Mart Shut its South Side Convenience Store” by Brigid Sweeney of Crain’s Chicago Business.
Wal-Mart Stores has been actively introducing its new concept, the more compact Express store, to targeted urban markets, so it was surprising when one of the Express stores on Chicago’s South Side was abruptly closed after only a year in business, Sweeney writes.
Wal-Mart is claiming the store was too close to one of its newer supercenter stores, but analysts are predicting that the shift into the urban market isn’t going as well as Wal-Mart had planned.
“The supercenter was supposed to be the place for once-a-month big trips, and the Express would be for convenient fill-in trips during the week,” Leon Nicholas, director of insights at Kantar Retail, told Sweeney. “They weren’t supposed to cannibalize each other, so the fact that it didn’t work indicates the strategy was wrong.”
• VIDEO: “Retail REIT Sees Growing Tenant Interest” from REIT.
Dennis Gershenson, president and CEO of Ramco-Gershenson Properties Trust, sits down during the NAREIT’s Investor Forum to discuss shopping center fundamentals, how retail landlords can protect themselves in case of economic downturn and acquisition opportunities in the market.
Click here to view the video.