Top Stories

InterFace Panel: Parking Spaces Present New Opportunities for Developers

by Taylor Williams May 3, 2017

HOUSTON — As e-commerce continues its siege of brick-and-mortar retail, shopping center developers in Houston are re-evaluating and repurposing the space currently allotted for parking. Virtually all centers are seeing reduced need for parking space, which creates opportunities to reclaim that space for more efficient uses, like adding another in-line store. At the InterFace Houston Retail conference on April 18, moderated by David Luther of Marcus & Millichap, industry experts spoke at length about how retail developers are cutting their parking allotments in strip centers and power centers alike, largely because of convenience-oriented technologies. Apps like Postmates and TaskRabbit have made it possible to outsource running errands to other people. Online grocery delivery services like Instacart and Shipt allow customers to do their shopping with a few quick clicks. Even Uber has gotten into the game with delivery features like UberRUSH for errands and UberEATS for meals. According to Tom Lile, president of retail development firm Gulf Coast Commercial Group and a conference panelist, such products and services have already begun to influence Houston developers’ thoughts on parking. “Fifteen years ago, if you were building a power center, you absolutely had to have five parking spaces per 1,000 square feet …

May 3, 2017

Oklahoma Retail Texas Top Stories

Joint Venture Acquires The Outlet Shoppes at Oklahoma City for $130 Million

by Katie Sloan May 2, 2017

OKLAHOMA CITY — A joint venture between The Outlet Resource Group (TORG) and Singerman Real Estate has acquired The Outlet Shoppes at Oklahoma City, a 400,000-square-foot retail center located in Oklahoma City, for $130 million. The mall is the only outlet center in the state of Oklahoma, according to TORG. The center — which opened in 2011 — is home to more than 90 retail outlets, including Nike, Vera Bradley, Michael Kors, Polo Ralph Lauren, Brooks Brothers, Disney, Forever 21, The North Face, Bath & Body Works and Under Armour. A joint venture between Michigan-based Horizon Group Properties Inc. and Chattanooga, Tenn.-based CBL & Associates Properties Inc. sold the property. Richard Frolik of CBRE represented the sellers in the transaction. “We are excited to enter the Oklahoma City market,” says Lisa Wagner, principal of TORG. “The previous ownership established the center as a shopping destination, and we look forward to optimizing and improving the experience for shoppers and retailers.” The new ownership is currently reviewing all aspects of operations, and expects to rebrand the center in the coming months. Avison Young will handle property management. The Outlet Resource Group is a global alliance of experts focused on the acquisition, management, …

May 2, 2017

Features Multifamily Top Stories

Low Turnover, Higher Rental Prices Lead to Attractive Apartment Market for Landlords

by Kristin Harlow May 2, 2017

CHICAGO — Six in 10 apartment landlords say it is more profitable and attractive to be a landlord than it was five years ago, according to a new survey from TransUnion SmartMove, a tenant screening service for owners. The survey was conducted in March 2017 and included responses from 689 landlords across the country. At the close of the first quarter of 2017, property owners indicated it was easier to find qualified renters and that resident turnover had declined compared with the same time last year. Only 21 percent of respondents found it more difficult to find qualified renters. Data also shows that landlords utilized rent screening solutions to evaluate prospective tenants during the past year. “Our survey clearly shows it is a landlord’s market as the number of renters rises and these renters are remaining in units longer,” says Jason Norton, vice president of TransUnion SmartMove. “As a result, landlords are using sophisticated tools and screening solutions to evaluate potential long-term renters with greater certainty.” Six in 10 landlords reported that renters are remaining in their units for longer than they were a year ago. To ensure these residents are good prospects, the majority of owners (90 percent) conduct …

May 2, 2017

Healthcare Top Stories

Duke Realty Sells Medical Office Portfolio to Healthcare Trust of America for $2.8B

by Taylor Williams May 1, 2017

INDIANAPOLIS — Duke Realty Corp. (NYSE: DRE) has agreed to sell its entire portfolio of medical office properties to Healthcare Trust of America (NYSE: HTA) for roughly $2.8 billion. The transaction is expected to close in stages by year’s end. The portfolio totals approximately 6.6 million square feet of gross leasable space across 78 properties. Of those, 71 are in-service buildings, five are under construction and two are holdings of unconsolidated joint ventures in which Duke has interests. The sale also includes two parcels of land totaling 16.5 acres. Collectively, the assets were 94 percent leased at the time of sale. According to Duke CEO Jim Connor, the transaction signifies the company’s effort to focus exclusively on industrial properties. “Monetizing our medical office business is accretive to our net asset value per share and creates a more simplified business model with improved transparency,” says Connor. “This represents a long-term benefit to our stakeholders while we position the company as a leading, pure-play industrial REIT.” Proceeds of the sale will be used to pay off $1.2 billion in existing debt, fund new industrial projects and to pay dividends to shareholders. The terms of sale call for Duke to provide $50 million …

May 1, 2017

District of Columbia Office Southeast Top Stories

UNIZO Acquires Two Office Buildings in Washington, D.C. for $259M

by Kristin Harlow April 28, 2017

WASHINGTON, D.C. — UNIZO Holdings Co. Ltd. has acquired two Class A office buildings in Washington for $259 million. The buildings, 1325 and 1341 G St., total 440,419 square feet and are located two blocks from the White House. Built in 1969 and renovated in 2017, 1325 G. St. consists of 307,705 square feet. Originally built in 1903 and also known as The Colorado Building, 1341 G. St. consists of 132,714 square feet of office and retail space. Andrew Weir, Stephen Conley, Jim Meisel, Dek Potts and Matt Nicholson of HFF arranged the sale on behalf of the sellers, Westbrook Partners LLC and TIER REIT Inc. HFF also procured the buyer. In June 2015, HFF arranged the joint venture between Westbrook and TIER REIT. The partners repositioned the properties with a lobby renovation. Westbrook is a real estate investment management company with more than $14 billion of equity in over $50 billion of real estate transactions. TIER REIT (NYSE: TIER) is a real estate investment trust based in Dallas with a focus on owning quality office properties. With this sale, TIER REIT has announced its exit from the Washington, D.C. market. UNIZO is a real estate company based in Tokyo. …

April 28, 2017

Multifamily New York Northeast Top Stories

BRP, CNY Group Break Ground on $407M Transit-Oriented Development in Queens

by John Nelson April 27, 2017

NEW YORK CITY — Developer BRP Cos. and general contractor CNY Group have broken ground on The Crossing at Jamaica Station, a $407 million, two-building development in downtown Jamaica in the Queens borough of New York City. The 669-unit affordable housing development will be situated at the Metropolitan Transit Authority’s (MTA) Jamaica Station, which features a link to AirTrain JFK, John F. Kennedy’s International Airport’s mass transit line. The Crossing will feature a 30-story high-rise located at Archer Avenue and Sutphin Boulevard between the Long Island Rail Road and three MTA subway lines. The other building will span 15 stories. FXFOWLE Architects designed both buildings to achieve LEED Silver certification. In addition to housing, the property will feature 45,000 square feet of retail and community space and 187 above-grade parking spaces. The development is part of Greater Jamaica’s revival and represents the largest private investment in downtown Jamaica in decades, according to CNY Group. Goldman Sachs provided $300 million in construction financing on behalf of BRP. The developer will also use $41.6 million in Low Income Housing Tax Credit equity and $65.2 million in tax-exempt bonds issued by the New York City Housing Development Corp. The New York City Department …

April 27, 2017

Conference Coverage Features Top Stories

Food, Fitness, Entertainment Firms Will Save Houston Shopping Centers, Says InterFace Panel

by Katie Sloan April 27, 2017

HOUSTON — As brick-and-mortar retailers such as Sears, Macy’s and hhgregg continue to shutter stores throughout the country at a furious pace, Houston developers are rapidly warming to the idea of anchoring their shopping centers with restaurants, fitness centers and entertainment-based businesses. Retail executives throughout the Houston area convened at the InterFace Houston Retail conference on April 18 to discuss the impact of this trend and others on the metro’s retail real estate market. David Luther, first vice president and district manager at Marcus & Millichap moderated a panel of five industry experts who addressed everything from the threat of e-commerce to parking wars between tenants. In Houston, the rampant growth of e-commerce contributed to 1.3 million square feet of big-box space being returned to the market in 2016, according to CBRE. In addition, the first quarter of 2017 saw net absorption of only 182,000 square feet. The end result is that developers are being forced to repurpose shopping centers anchored by traditional big-box retailers. As such, they are increasingly turning to businesses that offer a lifestyle product or service to fill the void. Larry Levine, president of Houston-based development firm Levcor Inc. and a conference panelist, noted that big-box …

April 27, 2017

Florida Multifamily Southeast Top Stories

Harbor Group International Buys 700-Unit Apartment Property Near Miami for $158.5M

by Nellie Day April 26, 2017

PEMBROKE PINES. FLA. — An affiliate of Harbor Group International LLC has acquired the 700-unit Montage at City Center in Pembroke Pines, a suburb of Miami, for $158.5 million. Montage at City Center contains 12 mid-rise buildings and 28 townhome buildings. The community offers a mix of one-, two- and three-bedroom units. The property is currently 95 percent leased with an average market rent of $1.55 per square foot. Montage at City Center was built in two phases between 2014 and 2015. Unit interiors feature formica countertops, espresso cabinetry, stainless steel appliances and hard-surface flooring. Property amenities include a LEED Gold-certified clubhouse, two resort-style pools, a fitness center, business center, game room and demonstration kitchen. Private garages and storage units are also available for rent. The multifamily complex is located adjacent to Pembroke Pines City Center, a 47-acre mixed-use project that will feature retail, office and residential components. Terra Group is developing the project. Phase I will deliver 200,000 square feet of retail anchored by a 45,600-square-foot Publix. Phase II will add 450 apartments and 100,000 square feet of office. The City of Pembroke Pines is also building a $60 million civic and cultural center, which includes a new city …

April 26, 2017

Hospitality Texas Top Stories

Joint Venture Breaks Ground on $79M Marriott Hotel and Conference Center in Odessa, Texas

by Katie Sloan April 25, 2017

ODESSA, TEXAS — A joint venture between the City of Odessa, Eofficial Enterprises and Gatehouse Capital has broken ground on a Marriott Hotel and conference center in Odessa. The development will include a seven-story, 218-room hotel, 67,500-square-foot conference center, 365-stall parking garage and full-service Starbucks Coffee. Plans also include the refurbishment of Ector Theater, a historic performance and event venue originally built in 1951. The theater is located next to the new development. Construction is expected to take approximately 18 months, and will cost $79 million. Funding for the project will include $48 million from Sondra and Toby Eoff with Eofficial Enterprises, and $31.6 million from city officials. The development team includes general contractor UEB Builders; architect RTKL; hotel operator Aimbridge Hospitality; hotel brand Marriott Hotels and Resorts; structural engineer DCI; and interior designer Duncan Miller Ullman. Founded in 1997, Gatehouse Capital is a national real estate investment and development firm that has launched major mixed-use lifestyle developments, including hotels in the Hilton, Marriott and other brand families totaling more than $1 billion in completed development. — Katie Sloan

April 25, 2017

Features Top Stories

The Current and Future State of Class B Regional Malls

by Katie Sloan April 25, 2017

There’s no question that regional malls, especially those outside major metropolitan areas, are feeling the brunt of market disruption. The brick-and-mortar retail environment has long been fighting the battle against e-commerce encroachment, shifting consumer habits and changing demographics. In the last five years, based on CoStar data: Retail rents in general have grown only 1 percent on average annually since 2011 while multifamily and office rents have seen 5 percent increases during that same time period. Class B and C regional malls have experienced a negative annual average growth of -3 percent; rents are down by approximately 19 percent. Also decreasing is the square footage being leased, from approximately 17,000 square feet on average to 11,000 square feet between 2010 and 2015. Currently, one-fifth of all U.S. malls have vacancy rates above 10 percent as department stores retrench. On the flip side, CoStar reports regional mall asset sales volume has risen significantly over the past three years, demonstrating that these properties can still-be attractive investments, particularly among private equity investors and REITs. They are buying Class B malls at relatively high capitalization rates at times approaching 8 percent or 9 percent (compared to a sub-6 percent cap for Class A …

April 25, 2017

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