Features

CBRE: Chicago Remains Most Green U.S. Office Market

by John Nelson November 5, 2019

LOS ANGELES — Chicago’s office market maintains its top status in the 2019 edition of CBRE’s Green Building Adoption Index, an annual report that measures the energy sustainability of the top 30 office markets in the United States. The index (GBAI) reviews the various office markets’ adoption of two green building certifications — the EPA’s Energy Star rating and the U.S. Green Building Council’s LEED certification. The GBAI is tracked in terms of both square footage and number of buildings. More than 167 million square feet of Chicago’s office space is certified green, or approximately 71.1 percent of the metro’s total office inventory (235 rentable million square feet). Coming in behind the City of Broad Shoulders is San Francisco (67.5 percent), Atlanta (59.3 percent), Minneapolis/St. Paul (57.1 percent) and Los Angeles (56.6 percent). Chicago is a growing and thriving office market. Tech firms such as Uber, Amazon and LinkedIn, as well as coworking concepts Spaces, Industrious and WeWork, have all taken down large swaths of office space in the metro area. According to third-quarter data from CBRE Research, more than 5 million square feet of office space is under construction in metro Chicago. “Going green is one key to any …

November 5, 2019

Features Heartland Feature Archive Retail

Mall Owners Scramble to Redevelop Properties in Face of Department Store Closures

by Alex Tostado October 31, 2019

The number of retail store closures nationwide in the first half of 2019 surpassed 7,000 and is on pace to reach a record 12,000 by year’s end, according to Cushman & Wakefield. Major retail bankruptcies over the last year have caused the power and regional shopping center sector to experience continued store closures and negative absorption of 2 million square feet in the first half of 2019. That said, discount retailers, entertainment and fitness concepts are still in expansion mode and help backfill vacant space. Mall and shopping center owners are scrambling to redevelop properties and incorporate a variety of uses. For example, this month CBL Properties will wrap up completion of a Sears redevelopment at Brookfield Square in Milwaukee. The project includes new-to-market entertainment operator WhirlyBall as well as a Movie Tavern by Marcus Theatres. Additionally, there are several new dining options and an Orangetheory Fitness location. “Our strategy is to transform our properties from traditional, enclosed malls to suburban town centers that offer a variety of uses, including entertainment, dining, fitness and in some cases office, hotel or multifamily,” says Stacey Keating, public relations and corporate communications director for Chattanooga, Tennessee-based CBL, which owns 108 properties totaling 68.2 …

October 31, 2019

District of Columbia Features Retail Southeast

Holiday Shoppers Plan to Spend 4 Percent More This Year, NRF Survey Shows

by Alex Tostado October 29, 2019

WASHINGTON, D.C. — American consumers plan to boost their holiday spending 4 percent this season on a year-over-year basis, according to the National Retail Federation (NRF) and Prosper Insight & Analytics. The projection is based on a survey of 7,782 adult consumers. Specifically, shoppers expect to spend an average of $1,047.83 this year, up 4 percent from last year’s total of $1,007.24, the survey findings show. Meanwhile, shoppers who are between the ages of 35 and 44 plan to spend an average of $1,158.63 this holiday season. Consumer spending is grouped into three separate categories: gifts for family, friends and co-workers, at an average $658.55; non-gift holiday items such as candy and food, decorations, greeting cards and flowers at $227.26; and other non-gift purchases that take advantage of the deals and promotions throughout the season at $162.02. “Consumers are in good financial shape and willing to spend a little more on gifts for the special people in their lives this holiday season,” says Matthew Shay, president and CEO of Washington, D.C.-based NRF, the world’s largest retail trade association. Furthermore, 52 percent of shoppers between the ages of 25 and 34 plan to purchase gifts for co-workers, and 82 percent of …

October 29, 2019

Features Heartland Feature Archive Retail

F&B Dominates Discussion at ICSC’s Chicago Deal Making

by Kristin Harlow October 24, 2019

CHICAGO — The food and beverage industry dominated much of the programming and sessions at this year’s Chicago Deal Making, hosted by the International Council of Shopping Centers (ICSC). In fact, the keynote speaker was Fabio Viviani, a celebrity chef and hospitality developer. Examples of other food-oriented workshops and panels included “How to Craft Restaurant Deals,” “From Automation to Ghost Kitchens, Understanding the Trends Reshaping F&B” and “Small Bites: New Restaurant Concepts.” The two-day ICSC event took place at Navy Pier on Wednesday and Thursday, Oct. 16-17. The show kicked off with an hour-long session in which retailers pitched their expansion plans in the Midwest. An overwhelming number of participants were restaurants. “Chicago is recognized for being a gastronomical center, not one or two really good chefs and restaurant tours but many,” said Steven Weinstock, first vice president and regional manager of Marcus & Millichap’s Chicago Oak Brook office. “We win as residents of Chicago because they keep trying new concepts.” Weinstock cited the influx of residents in Chicago’s River North, Streeterville and West Loop neighborhoods for helping grow the food industry within the city. This younger, affluent crowd views restaurants as a source of enjoyment and entertainment, he argued. …

October 24, 2019

California Features Multifamily Seniors Housing Western

NIC: Seniors Housing Occupancy Ticks Upward to 88 Percent as Construction Slows

by Alex Patton October 22, 2019

ANNAPOLIS, MD. — Seniors housing occupancy increased to 88 percent in the third quarter of 2019 from its lowest level in eight years (87.7 percent) recorded during the previous quarter, according to data from the National Investment Center for Seniors Housing & Care (NIC). NIC is an Annapolis-based data firm serving the seniors housing industry. Of the 31 metropolitan markets that comprise NIC’s Primary Markets, San Jose (95.5 percent) and Minneapolis (91.3 percent) experienced the highest occupancy rates in the third quarter. Las Vegas (82.3 percent) and Houston (81.5 percent) recorded the lowest occupancy rates. San Antonio experienced the largest occupancy increase from a year ago, rising from 80.2 percent to 84.6 percent. Baltimore saw the largest year-over-year decrease, falling from 92.5 percent to 90.6 percent. “San Jose retains the distinction of having the highest occupancy rate of any major market in the country, as significant barriers to entry constrain development,” says Chuck Harry, NIC’s head of research and analytics. “Houston, on the other hand, places fewer restrictions on development, which is pressuring occupancy.” During the quarter, net new unit demand totaled 4,977 units, the greatest number of new units in any quarter since NIC began reporting the data in …

October 22, 2019

Features Loans Multifamily Seniors Housing

Expect Seniors Housing Lenders To Boost Deal Volumes

by Alex Tostado October 17, 2019

The sharp drop in interest rates over the past several months has not only lowered the cost of capital for borrowers, but it has also helped offset higher operating costs at a critically important time, say seniors housing lenders. At the close of business on Oct. 16, the 10-year Treasury yield — a benchmark for long-term, fixed-rate permanent financing in commercial real estate — stood at 1.75 percent, down about 125 basis points from the start of 2019. Meanwhile, the 30-day London Interbank Offered Rate (LIBOR), which is used to help set interest rates on construction loans, registered 188 basis points as of Oct. 16, a drop of about 60 basis points since the beginning of the year. Adding an element of drama and complexity to the overall picture is the inverted yield curve scenario, the point at which the 10-year Treasury bond falls below the level on the two-year bond. That’s precisely what occurred in mid-August, resulting in high volatility on Wall Street. Historically, an inverted yield curve is a strong indicator that the risk of recession is increasing. It means that investors are concerned about the economic outlook in the short term, but it provides no guarantee that …

October 17, 2019

Features Retail

Assessors Fail to Recognize Challenges Facing Shopping Center Landlords

by Taylor Williams October 15, 2019

As retailers rise and fall in the age of Amazon, property taxes remain one of retailers’ largest operating expenses. That makes it critical to monitor assessments of retail properties and be ready to contest unfairly high taxable valuations. Assessors — and property owners attempting to educate those assessors — must understand how the changes taking place in the retail sector affect property value. Assessors must adjust their models to reflect new market realities, and property owners or their representatives must be able to explain why previously held valuation assumptions could no longer be valid. No Going Back Changing consumer tastes have always required retailers to adapt in order to survive, but traditional retailers are facing a different kind of challenge today. The increasing role of e-commerce in overall sales reflects a fundamental change in consumer behavior that will not reverse course with the whims of fashion. The ability to shop online is resetting consumer expectations, and retailers are struggling to adapt and stay competitive. This struggle is evident in store closings that in 2019 are outpacing closings from the prior year. In addition to the threat of e-commerce, some economists believe a recession is coming in 2020. Falling retail sales, …

October 15, 2019

Conference Coverage Features Multifamily Student Housing

The Importance of Reputation Management in Student Housing

by Katie Sloan October 11, 2019

DALLAS — It’s no secret that today’s students spend a lot of time on their phones, perusing social media and scanning the internet. With such a high level of importance placed on digital content, what people are saying about your community through online reviews is becoming more powerful than ever. As an owner or operator, it’s imperative to handle negative reviews quickly and efficiently, and to bolster the amount of positive reviews left about your community. A panel of reputation management strategists weighed in on best online reputation practices during the session, “Review and Reputation Management: Who Should be Managing Your Reputation? What are Best Practices? And Creating an Effective & Efficient Strategy for your Teams,” at the second annual LeaseCon: A Social Media, Digital & Traditional Marketing Boot Camp, held at The Westin Galleria in Dallas in September. “There is a direct correlation between online reputation and how well your assets are performing,” says John Hinckley, CEO of Modern Message. “Building the right strategy around reputation management is key. It’s been interesting to watch over the last eight years and see the industry change from turning a blind eye to reputation to incorporating it as an important component of …

October 11, 2019

Features Northeast Retail

New Tenant Mixes Fuel Retail Redevelopments

by Taylor Williams October 9, 2019

A persistent need for a tenant mix that is resistant to e-commerce and which facilitates a unique, authentic experience is prompting owners of older retail centers and malls to assume high levels of risk and redevelop their properties. While there can be a plethora of non-tenant-related factors that spur redevelopment projects — the basic need to charge higher rents, the structural and aesthetic deterioration over time, a desire to restore the public perception of vibrancy — the ultimate success of almost every retail redevelopment project hinges on the tenancy. “Modern consumers are attracted to experiential concepts and properties that are destinations, meaning those with a roster of diverse and dynamic tenants,” says Joe Coradino, CEO of Philadelphia-based retail investment firm PREIT. “Diversifying our tenant mixes across all our properties and markets is key to differentiating them.” PREIT has several redevelopment projects underway in Pennsylvania. The company is repositioning the anchor space at the Plymouth Meeting Mall, which was previously occupied by Macy’s, to house several new tenants, including Michael’s, Miller’s Ale House, Burlington, Edge Fitness and DICK’s Sporting Goods. PREIT has also transformed the former Macy’s anchor space at the Moorestown Mall into four box spaces that will house tenants …

October 9, 2019

Features Office

Despite Healthy Economy, Office Vacancy Rates Still Stuck in the Mud in Several Markets

by Jeff Shaw October 8, 2019

NEW YORK CITY — The national office vacancy rate held steady at 16.8 percent in the third quarter compared with the prior quarter, and was up 10 basis points from the same period a year ago, according to Reis, which tracks commercial properties in 79 metropolitan markets. Net absorption was a healthy 4.5 million square feet in the quarter, partially a result of historically low unemployment (3.5 percent in September, according to the U.S. Bureau of Labor Statistics). However, a robust pipeline of new construction — 4.4 million square feet in the quarter — offset the absorption, leading vacancy to hold fast. The net effect has been modest rent growth. The average effective rent per square foot grew from $27.49 in the second quarter to $27.65 in the third quarter, a 0.6 percent increase. The year-over-year increase was less than $1 per square foot. Individual markets have also shows signs of softness, with 39 of the 79 metros tracked by Reis seeing increased office vacancy so far this year. “Office occupancy growth has been sluggish throughout this expansion as firms lease far fewer square feet per added job,” the report states. “Rent growth has also disappointed owners.” The report does …

October 8, 2019

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