Top Stories

Southeastern Ports Adjust to Expanded Panama Canal

by Jeff Shaw February 2, 2017

The Southeast’s top seaports and their surrounding industrial real estate markets have braced themselves for years for the larger post-Panamax vessels that can now pass through the newly expanded Panama Canal. The 102-year-old canal opened in late June 2016 following its $5.4 billion expansion, creating a shortcut for the larger ocean carriers coming from Asia. The opening of Panama Canal’s expansion was delayed by two years, missing the 100-year anniversary of its 1914 debut. Shipping companies had their larger vessels in place, though, and decided to ship those vessels to the East Coast via the Suez Canal, according to Walter Kemmsies, managing director, economist and chief strategist of JLL’s U.S. Ports, Airports and Global Infrastructure Group. “As the Panama Canal gets through the learning curve, we’re seeing the number of weekly transits increase, and we’re still in that phase and perhaps will be for the next six months,” says Kemmsies, who is currently engaged with three of the top five seaports in the United States on their master plans. “The ocean carriers are starting to scrap their smaller vessels and moving their services back from the Suez Canal to go through the Panama Canal. Right now the East Coast has …

February 2, 2017

Midwest Office Ohio Top Stories

Millennia Housing Development Buys Key Center, Marriott Hotel in Cleveland for $267.5M

by Nellie Day February 1, 2017

CLEVELAND — Millennia Housing Development has purchased the 1.3 million-square-foot Key Center office tower and adjacent 400-room Marriott Hotel in Cleveland for $267.5 million. The property is located at 127 Public Square and includes a parking structure. Key Center was built in 1991 and is 57 stories tall. The tower houses the headquarters of Key Bank and BakerHostetler law firm, among other tenants. The office tower was 82 percent leased at the time of sale. The seller, Columbia Property Trust (NYSE: CXP), had previously announced its plans to exit the Cleveland and Houston markets. Columbia has completed $1.2 billion of dispositions since January 2016 and $3.3 billion since January 2012. The firm will use proceeds from these sales to reinvest in high-barrier-to-entry markets such as New York City and San Francisco. “Key Center is the most recognizable icon on the Cleveland skyline, and we were determined to take a patient approach in order to identify the right buyer for this significant asset,” says Nelson Mills, CXP’s president and CEO. “Our diligence has now been rewarded, allowing us to exit the Cleveland market at a price within our expectations and accelerate our focus on high-barrier markets.” Columbia Property Trust owns and …

February 1, 2017

Retail Southeast Top Stories

CBL & Associates Acquires Five Sears Stores, Two Sears Auto Centers for $72.5 Million

by Katie Sloan January 31, 2017

CHATTANOOGA, TENN. — Chattanooga-based CBL & Associates Properties Inc. (NYSE: CBL) has closed on a sale-leaseback transaction for five Sears department stores and two Sears Auto Centers located at CBL-owned malls for $72.5 million. The five locations acquired include the Sears parcels at Cross Creek Mall in Fayetteville, N.C.; Brookfield Square in Brookfield, Wis.; Hamilton Place Mall in Chattanooga, Tenn.; Eastgate Mall in Cincinnati, Ohio; and Jefferson Mall in Louisville, Ky. The two acquired Sears Auto Centers are located at Northgate Mall in Chattanooga, Tenn., and Volusia Mall in Daytona, Fla. Sears will continue to operate the department stores under new 10-year leases, with CBL receiving an aggregate base rent of approximately $5.1 million. CBL will have the right to terminate each Sears lease at any time — except for November through January — with six months’ advance notice. In addition to CBL’s termination right, after a lock-out period of four years for the Sears store at Jefferson Mall, two years for the other four Sears stores and one-year for the two Sears Auto Centers, Sears may terminate each store lease upon six months’ notice. “We are proactively transforming our market-dominant shopping centers to meet the changing preferences of consumers,” says Stephen …

January 31, 2017

Features Mixed-Use Texas & Oklahoma Feature Archive Top Stories

Texas Developers Bet on Entertainment

by Jeff Shaw January 31, 2017

Recognizing that today’s retail environment stresses experience over shopping, developers of mixed-use communities in Texas are more frequently signing entertainment-oriented tenants to spaces that traditionally would have been reserved for department stores and inline soft goods retailers. Developers pursue different types of entertainment tenants, depending on the projects, their locations and their audience. All of the projects leverage a growing number of new options in the food and beverage category, including food halls, artisan markets and re-imagined restaurants and bars. Boutique movie theaters and bowling lounges — concepts that also strive to give patrons a unique food-and-beverage experience — are in demand, and are in expansion mode. Many landlords are adding specialty gyms or health-oriented services like yoga venues. And when it comes to pure retail, developers are enlisting operators that provide a differentiated customer experience across all categories, from beauty supply to sporting goods. For example, in 2015 beauty goods retailer Sephora launched in-store technology and education initiatives to enhance the customer experience, while newer Scheels sporting goods locations typically feature an indoor Ferris wheel, aquarium and other interactive attractions. Mixed-use developers are also creating Wi-Fi accessible public spaces with artistic and landscaping elements where customers, residents or workers …

January 31, 2017

Office Top Stories

Capital One Arranges $534.9M Loan to Finance Starwood’s Acquisition of 34-Property Medical Office Portfolio

by Jeff Shaw January 30, 2017

GREENWICH, CONN. — Capital One Healthcare has arranged a $534.9 million loan to fund Starwood Property Trust’s (NYSE: STWD) acquisition of 34 medical office buildings in 12 states. The 1.9 million-square-foot portfolio includes properties in California, Colorado, Florida, Georgia, Illinois, Indiana, Nevada, New Jersey, New York, North Carolina, Tennessee and Texas. The seller and purchase price were not disclosed. “This strategic acquisition provides us with a safe, resilient income stream and the opportunity to participate in the stable long-term growth of the medical office building sector,” says Barry Sternlicht, chairman and CEO of Starwood Property Trust. The acquisition represents Starwood’s first entry into the medical office sector, according to commercial real estate research firm CoStar. The company will also take over management of the portfolio. Capital One Healthcare is a financial services provider serving the healthcare industry. It is a subsidiary of financial holding company Capital One Financial Corp. Starwood Property Trust is an affiliate of Greenwich-based private investment firm Starwood Capital Group. Starwood Property Trust’s stock price closed at $22.34 per share on Friday, Jan. 27, up from $18.64 one year ago. — Jeff Shaw

January 30, 2017

Georgia Mixed-Use Southeast Top Stories

Batson-Cook, Regent Partners to Develop $400M Mixed-Use Project in Atlanta’s Buckhead Financial District

by Kristin Harlow January 27, 2017

ATLANTA — Batson-Cook Development Co. (BCDC) has formed a joint venture partnership with Regent Partners LLC to acquire a parcel in the Buckhead financial district of Atlanta and develop a $400 million mixed-use project. The office, retail and multifamily development will be located at 3354 and 3356 Peachtree Road, near State Route 400 and Buckhead’s MARTA train station. The four-acre property will consist of two buildings with more than 550,000 square feet of office and retail space, 60 condominiums and 300 multifamily units. Construction is expected to begin in 2018. The project will feature outlet roads leading to Peachtree Road, Piedmont Road and the Buckhead Loop. The new MARTA pedestrian bridge spanning Georgia 400 gives the project direct access to public transit. The Buckhead Community Improvement District has also proposed a nine-acre park on top of a half-mile stretch of Georgia 400 from the Buckhead Loop to Peachtree Road. Upon completion, the $245 million park will serve as the entrance to the joint venture’s new project. BCDC is a wholly owned subsidiary of Kajima USA, based in Atlanta. The company provides development and capital solutions, primarily through partnerships on commercial real estate projects in the Southeast. Atlanta-based Regent Partners is …

January 27, 2017

New York Northeast Office Top Stories

SL Green Sells Minority Interest in Manhattan Skyscraper Project for $525M

by John Nelson January 26, 2017

NEW YORK — SL Green Realty Corp. (NYSE: SLG), the largest office landlord in New York City, has sold a 29 percent interest in One Vanderbilt, a 58-story office tower under construction in Midtown Manhattan. SL Green sold a 27.6 percent interest to the National Pension Service of Korea (NPS) and a 1.4 percent interest to Hines Interest LP. NPS and Hines have committed no less than $525 million in combined equity to the project. “NPS is an extraordinary partner for us at One Vanderbilt and will help realize our shared vision for developing the best building in New York City,” says Marc Holliday, CEO of SL Green. “Hines has been with us at One Vanderbilt from the beginning and will be a terrific addition to the joint venture.” SL Green Realty Corp. and Hines are co-developing the building, and AECOM’s Tishman Construction is serving as the general contractor. Tishman broke ground on the project in October 2016. Upon completion in 2020, the skyscraper will be located adjacent to Grand Central Terminal. As part of the development, SL Green has committed $220 million for public improvements to the mass transit hub. In September 2016, SL Green closed on $1.5 billion …

January 26, 2017

Features Top Stories

Cushman & Wakefield: Property Markets Will Receive Boost under Trump Administration in 2017

by Kristin Harlow January 26, 2017

NEW YORK — Following a turbulent year in 2016, the U.S. economy and property markets are positioned to perform well in 2017, according to Cushman & Wakefield’s U.S. Macro Forecast. Although it will take time for policy to form, Cushman & Wakefield expects that President Trump, alongside a Republican-controlled House and Senate, will deliver fiscal stimulus measures that will further boost the U.S. economy and property markets. That said, some of the expected growth in fiscal policy will be negated by tighter monetary policy, higher interest rates, higher inflation and more global volatility, according to Kevin Thorpe, global chief economist at Cushman & Wakefield notes that. Cushman & Wakefield forecasts the U.S. real GDP will grow by an upwardly revised 2.3 percent in 2017, and will hit 3 percent in 2018. The forecast predicts the following implications for the commercial real estate sector: Office: With 730,000 estimated new office-using jobs in 2016 and an additional 438,000 and 508,000 expected throughout 2017 and 2018, respectively, there is still runway for the office market. In 2016, total net absorption is forecast to end the year at 50.2 million square feet. Absorption is projected to increase to 54.9 million square feet in 2017. Vacancy …

January 26, 2017

New York Northeast Office Top Stories

GIC, Paramount Group Buy Wall Street Office Tower for $1B

by Nellie Day January 25, 2017

NEW YORK CITY — A joint venture between GIC and Paramount Group has acquired a 1.6 million-square-foot office tower in New York City for $1 billion. The 47-story tower is located at 60 Wall St. in the Financial District of downtown Manhattan. The property is fully leased. It serves as the U.S. headquarters of Deutsche Bank. GIC, a sovereign wealth fund based in Singapore, has a 95 percent stake in the joint venture, while Paramount Group holds the remaining 5 percent. Paramount managed and owned about 5 percent of the property through its ownership in certain private equity funds prior to the acquisition. The joint venture also received $575 million in financing for the property in relation to the acquisition. “This investment reflects our long-term confidence in downtown Manhattan, which is benefitting from over $30 billion of recent public and private investments in infrastructure and new construction,” says Adam Gallistel, GIC’s regional head of Americas. “We believe 60 Wall St. is one of the top buildings in downtown and is poised to benefit from the ongoing downtown renaissance.” Deutsche Bank announced plans to renovate the office space in late 2016. It purchased the asset from J.P. Morgan & Co. in …

January 25, 2017

California Retail Top Stories Western

Joint Venture to Redevelop East Hills Mall in Southern California

by Katie Sloan January 24, 2017

BAKERSFIELD, CALIF. — A joint venture between C & C Properties Inc. and MarkChris Investments has announced the redevelopment of East Hills Mall in Bakersfield, roughly 110 miles north of Los Angeles. The 414,000-square-foot enclosed regional mall will be transformed into a 350,000-square-foot, open-air lifestyle center. A state-of-the-art movie theater will anchor the development, which is set to feature a collection of restaurants, retail and entertainment space. Renovations will include the addition of a large outdoor plaza, water fountain, and seating and landscaping around the movie theater complex. Development plans also include the addition of several buildings along Mall View Road for shops, restaurants and services. The buyers acquired the mall from a joint venture between Retail Equities LLC and El Corte Ingles in late December 2016. Duane Keathley, Vince Roche and Josh Sherley of Cushman & Wakefield | Pacific Commercial Realty Advisors represented both the buyer and seller in that transaction, and have been retained by the new ownership to lease the redeveloped center. Construction is expected to begin this year, with completion scheduled for fall 2018. — Katie Sloan

January 24, 2017

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