Each Wednesday, The Wrap presents a compilation of recent noteworthy commercial real estate stories from a variety of publications. Here are five items that caught our eyes in recent days:
• “Slip In First Quarter Warehouse Demand Tied to Slowing U.S. Economy” by Randyl Drummer of CoStar.com. The first quarter of 2012 brought both some good news and some not-so-great news to the U.S. industrial real estate sector. First, the good news: aided by a continued lack of new supply and retailers’ demand for distribution space, the sector’s national vacancy rate dropped 20 basis points to 9.4 percent, according to Drummer’s summary of new CoStar data.
Now, the not-so-great news: although net absorption remained positive in the first quarter, it declined by about 33 percent when compared to fourth-quarter 2011.
Still, Rene Circ, director of industrial research for Property and Portfolio Research (PPR), CoStar’s analytics and economic forecasting division, didn’t seem too concerned. “We definitely saw a slowdown in demand during the first quarter of this year," she said. “[But] It was a slight slowdown and we do expect it to pick up."
• “Clash of the Titans: Regional Mall REITs Fight for Limited Outlet Development Opportunities” – by Elaine Misonzhnik of National Real Estate Investor. While many retailer spots are struggling in the current economic climate, outlet centers have held their own, capitalizing on consumers’ recession-fueled desire for discounts.
However, most areas can only support one outlet center, meaning retail REITs now find themselves in intense competition to acquire the land and the tenants for new developments, Misonzhnik reports. Developers like Taubman and Simon find themselves aggressively competing for the biggest names in outlets, such as Saks Fifth Avenue OFF 5th, Coach, Polo and Neiman Marcus Last Call. These key stores attract other retailers, making or breaking a prospective outlet development, Misonzhnik says.
• “How Florida is Adapting to the Changing Retail Landscape” by Carrie Smith of Franklin Street for REBusinessonline.com. Florida is experiencing a particularly slow economic recovery, and that has forced shopping center owners and commercial real estate developers to adjust to the state’s “new normal,” Smith writes.
With the state’s unemployment continuing to hover above 9 percent, consumers are predictably cautious about spending their disposable income. However, chain restaurants with recognizable brand names and discount retailers are doing good business, and landlords are anxious to sign these tenants, according to Smith.
Retail landlords also are reducing leasable space and have become more discriminating in the tenants they choose, preferring to sign national retailers and even medical office tenants. Smaller, independent retailers are viewed more suspiciously by shopping center owners and must therefore look to Class B and C spots.
Like so many other states, Florida is also experiencing the urban infill trend, and retailers are looking to lease space in centrally located, walkable environments.
• “Novare Plans New Midtown Tower” – by Douglas Sams of the Atlanta Business Chronicle. More evidence of the continuing popularity of urban, mixed-use properties emerged recently in Atlanta, where developer Novare Group unveiled its proposal for a 23-story apartment tower in the city’s Midtown district. The tower would include up to 320 apartments.
“Midtown is one of the most prominent cosmopolitan centers in the Southeast, where people, business and culture come together to create a true live-work-play community providing a quality of life very dear to its residents,” said Jim Borders, president of Novare Group, in a press release.
This project would capitalize on the evolving “rentership society” in the United States, wherein more people, especially those in their 20s and 30s, are looking to rent and live within the city, rather than own a home in the suburbs, Sams writes.
* VIDEO: “Retail Not Without Challenges”– from GlobeSt.com. In the clip below, Don McLellan, senior managing partner at Faris Lee Investments, examines the current retail real estate market, which he says has some major strengths that bode well for both sellers and buyers. He also explains some of the factors that could derail the sector’s recovery in the coming months.