- Real Property Alpha posted a look at nonperforming loans and their distribution among different kinds of banks. The largest 25 percent of banks account for 82 percent of non-performing loans, according to the blog’s chart.
- Retail Sails provided a rundown of August’s same-store sales results.
- Shopper Trak looked at patterns in traffic and sales during the back-to-school shopping season.
- The CRE Review had some observations about a recent CoStar piece looking at troubled commercial real estate loans at banks. CRE Review focused on the issue of mezzanine foreclosures.
- Motley Fool asked whether there is anything that can save retailers that got hammered during the back-to-school season.
- Property Magazine profiled the Golden Babylon Rostokino shopping center, which will be the largest chopping center in Europe when it opens this November.
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Nonperforming Loans; August Same-Store Sales; Largest Mall in Europe Readies for Opening (Holiday Weekend Roundup)
Outlooks On Back To School Season Vary; Westfield Mall To Feature A Grocery Store (Tuesday’s News & Notes)
There have been some encouraging developments in the commercial real estate industry this week. For example, Forest City Enterprises managed to extend a $557 million construction loan for a Westchester County project, while Westfield has been securing non-traditional tenants to fill up vacant spaces at its malls. But it still seems to be an uphill battle: results for this year’s back to school shopping season have been less than stellar and the holiday shopping season is not likely to be much better. We might be seeing sings of recovery in the retail sector, but it will be a long and slow one.
- ShopperTrak reports there have been small gains in weekly sales this back to school season.
- But analysts interviewed by Forbes offer a more pessimistic take.
- Supermarket News ponders the impact of all the price reduction strategies supermarkets tried out this season.
- Real Property Alpha posted another profile in its series on social media. This time the subject is David Stejkowski, the man behind the Dirt Lawyer’s Blog.
- Faced with hard-to-fill vacancies, mall owners have been discussing bringing in supermarkets as tenants for some time. Now, The San Diego Union Tribute reports that Westfield, which owns seven properties in San Diego County, has moved a supermarket into a former Robinsons-May space.
- In another sign that the credit markets are gradually thawing, developer Forest City Enterprises secured an extension and modification on a $557 million loan for the construction of a mixed-use center in the New York region, according to Crain’s Cleveland Business.
- Some retailers seem to have faith this year’s holiday shopping season will be better than the one we had last year. The New York Post reports that luxury seller Saks Fifth Avenue wants to avoid the massive discounts it offered last winter. The question is whether other luxury players will follow suit.
- It’s been a bad year for Starbucks. Supermarket News reports supermarket operators Stop & Shop and Giant-Landover plan to close 43 in-store Starbucks kiosks because of poor performance.
- Meanwhile, upscale department store chain Barneys New York is also battling major problems. Its debt has become so unmanageable, the chain is considering filing for bankruptcy, according to Bloomberg.
Apple Moving Uptown; Bank’s Commercial Real Estate Holdings; Top CRE Twitterers (Wednesday’s News & Notes)
This week, August doldrums continued in the world of retail real estate, with no major transactions being reported. Nevertheless, there have been some encouraging news items coming from selected retailers and intriguing takes on what the future holds for our industry.
- Several newspapers reported that Apple is now planning its fourth store in New York City. Apple already operates three supremely successful stores here, including locations on Prince Street in Soho, on Fifth Avenue and on 14th Street.
- The Big Picture provided a ranking of banks’ commercial real estate loan holdings.
- Real Property Alpha published an interview with Jay Rickey, who runs citybiz real estate, an online commercial real estate news service. It’s part of a series of interviews John Reeder is doing with his list of the top 100 Twitterers in commercial real estate.
- The New York Times ran a feature on Inland Real Estate Acquisitions, which has been the most active buyer of U.S. commercial real estate so far this year.
- The Wall Street Journal expects REITs to pick up the pieces from the current market downturn.
- Australian listed property trust the Westfield Group reported a decline of A$2.47 billion in the value of its portfolio in the first six months of the year.
- In a more positive development, apparel retailer Jos. A. Bank announced it planned to open up to 40 new stores in the next year.
The State of Florida Retail Real Estate
Our roundtable discussion of suburban Florida markets starts with a pithy quote: “Fortunately, our centers are not in Florida.”
That hurts. Florida has been in pain for a while. The bursting of the housing bubble has hit hard and the state entered into a recession in advance of the rest of the country. There is lots of vacant commercial and residential real estate up and down the entire state. So had bad is it really?
A walk through some recent Marcus & Millichap market reports gives us some results to chew on. Here are stats from five Florida markets–Tampa, Orlando, Miami-Dade County, Palm Beach County and Broward County–showing vacancy and rental trends by sub-market. The numbers show declines across the board, but the pace of declines is slowing in some markets. For example, in Orlando the vacancy rate is expected to end 2009 at 10.4 percent. That’s 200 basis points above where it ended 2008, which is greater than 250 basis point jump between 2007 and 2008. In Broward County, the firm is projecting the vacancy rate to end 2009 at 11.3 percent. That marks a 170 basis point rise from 2008, which is half the 340 basis point increase from 2007 to 2008.
In other markets, however, 2009 is looking rougher than 2008. In Tampa, Marcus & Millichap expects the vacancy rate to end the year at 10.3 percent–a 250 basis point jump from 2007. Between 2007 and 2008 the vacancy rate rose just 140 basis points. In Palm Beach County, the vacancy rate is expected to hit 10.7 percent, up 270 basis points from 2008. The year prior, the vacancy rate rose 250 basis points. Lastly, in Miami-Dade County, the vacancy rate is predicted to reach 8.5 percent by the end of the year. That’s a 180 basis point increase from 2008 on top of a 160 basis point increase in the previous 12 months.
You can view larger versions of the charts by clicking on the images.
Distressed Assets; Vornado Next Up For TALF; GGP’s Extension (Wednesday’s News & Notes)
Here are some news and notes on retail and retail real estate from around the Web today.
- NAI Global asks, “Will Distressed Assets Cause Rental Rates to Plummet?” That’s a great question. And the post does a good job starting the discussion.
- Fresh off Developer Diversified tapping TALF for some funding needs, Vornado Realty is reportedly following suit. It is said to be planning on raising between $550 million and $600 million through a bond sale that would be eligible for TALF.
- Supervalu has agreed to sell 36 stores in Utah to Associated Food Stores.
- Each day we seem to get a little more information on Microsoft’s brick-and-mortar stores. Today we found out where the first two stores will be located. It’s opening stores in California and Arizona. In one project it will go head-to-head with an Apple Store. Frankly, that makes sense to me. Why not compete head to head? It gives people a chance to comparison shop. It’s kind of like bunching up auto dealerships. It also indicates that Microsoft is pretty confident in its concept. The L.A. Times also chimed in on this latest development.
- You’ve been warned. Apparently, Goldman Sachs has been dumping its commercial real estate holdings. It did the same thing on the residential side before the bottom really fell out of the market and fared much better than its competitors. Will lightning strike twice?
- I haven’t seen a case of this in a while. But it’s something that happens from time to time. An owner of an existing center is trying to block the construction of a new center. This case is playing out in Westford, Mass. There, Westford Valley Marketplace Inc. has filed an appeal challenging the Planning Board’s approval for construction of a project called Cornerstone Square.
- General Growth won a six-month extension in its bankruptcy filing.
- New data from Real Capital Analytics indicates that up to $2.2 trillion worth of commercial property is at risk of default.
- Our July cover story, judged KKR’s buyout of Dollar General as one of the most successful private equity takeovers in the retail sector in the last few years. It’s worked out so well, in fact, that now KKR is reportedly considering taking Dollar General public again.
Thoughts on Cap Rates; a Sneak Peek at Microsoft’s Stores (Tuesday Morning Roundup)
I was in Chicago all day yesterday for our annual SADI Awards judging. I will post some thoughts on that later. It was an interesting day.
Here are some news and notes from yesterday. I will do another roundup this afternoon of today’s news.
- Retail News blog had a lengthy post about the difficulties in figuring out what cap rates are in the current market because of the lack of deal volume. It is definitely worth a read. RetailChatradded a few more observations in response to that post. We reported on the on the same topic last week.
- Gizmodo has a huge gallery of images previewing Microsoft’s stores. There’s been a lot of buzz on this concept for the past couple of weeks. The first locations are supposed to open this fall.
- American Medical News looked at the retail clinic trend and how the number of clinics has actually been declining of late. A lot of the concepts that had projected to open a lot of locations have struggled. The AM News story explores why the clinics have struggled to meet expectations.
- Almost $165 billion in commercial mortgages are due this year, according to a Bloomberg report.
- Centro Properties Group reported that its portfolio has declined in value by $2 billion this year.
- Ritz Camera won court approval to sell some of its assets.
Target’s Renegotation Requests; AIA Index (Weekend Roundup)
It’s been a few days since I posted. Here are a handful of notable posts and news stories from the past few days.
- There were a couple of posts looking at Target’s requests to renegotiate rents with developers. RetailChatr had something to say about this as did Calculated Risk. What’s interesting about the story is that Target is looking for reductions on rents on stores that haven’t even opened yet. But if they’re lowering projections on the kinds of sales the company thinks the stores will achieve, the reductions make sense. Still, this represents quite a blow to landlords. It’s one thing to renegotiate on existing stores. It’s another to change the rent on a store that hasn’t even opened yet.
- AIA’s Architecture Billings Index showed a decline in June. Calculated Risk charts the index. Reuters wrote about the results.
- The Wall Street Journal wrote about Developer Diversified Realty’s TALF deal.
- Inside Retailing has an interesting article on the “Masters of Store Closure.” The piece has advice for retailers on how to make the decision to close locations.
- Specialty Retail Report analyzed how mall kiosks can be a gateway to eventually opening stores.
- Lastly, RetailWire featured a discussion about how community-owned stores can fill some of the vacancies mall owners are experiencing in the current environment.
Macquarie Cashes Out of DDR JV; Buyer for Eddie Bauer; Deutsche Bank’s CMBS Outlook (Weekend Roundup)
Here’s a roundup of news and notes on retail and retail real estate from around the Web this weekend.
Trouble With Destiny USA?
There are some problems with the massive Destiny USA project in Syracuse. A local news report featuring an interview with the mayor sums up the current situation. Construction has stopped, in part because of a dispute between the developer, Robert Congel, and the lender, Citigroup.
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GGP Auctions Condos; CRE Investment at Lowest Level Since 1991; Starbucks Reduces Closures (Friday’s News & Notes)
by David Bodamer September 11th, 2009
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