Top Stories

What Retailers and Developers Want to Know in Today’s Market

by Katie Sloan December 22, 2016

Working with CBRE’s vast clientele of retailers and developers, Melina Cordero, the company’s head of retail research for the Americas, is constantly delving into trends and how they convert to dollars and cents. REBusiness Online’s sister publication Shopping Center Business recently met with Cordero to find out what trends retailers, shopping center owners and developers, and CBRE’s retail brokers are asking her to look into to get a glimpse of some national trends on the horizon. SCB: You spend a lot of time focusing your energy on trends for CBRE’s people in the field — and their clients. What are they asking you to look at today? Cordero: Today, it’s not just retail clients, it’s also clients who are thinking about incorporating retail into projects. They all want to know about placemaking. A lot of people are saying, ‘We know that we need to create these great places.’ To them, that is about curating a special mix of retailers, restaurants, entertainment, open spaces and other uses. There are no guidelines, rules or metrics for that. A lot of it is what is placemaking; how to create a destination; and what has worked for others? They ask us a lot to …

December 22, 2016

Walgreens Boots Alliance, Rite Aid to Sell 865 Rite Aid Stores to Fred’s Pharmacy for $950M

by Nellie Day December 21, 2016

DEERFIELD, ILL. AND CAMP HILL, PA. — Walgreens Boots Alliance (NASDAQ: WBA) and Rite Aid Corp. (NYSE: RAD) have agreed to sell 865 Rite Aid stores and some assets related to store operations to Fred’s (NASDAQ: FRED) for $950 million in an all-cash transaction. The agreement came about due to concerns by the Federal Trade Commission (FTC) in its review of Walgreens Boots Alliance’s proposed acquisition of Rite Aid, which was announced in October 2015. That transaction is scheduled to close in early 2017. The 865-store sale would make Fred’s one of the largest drugstore chains in the United States, with a significant presence in the South and on the East and West coasts. If the sale is approved, Fred’s will continue to employ all store associates and certain field and regional associates related to the operations. The stores will also continue to operate under the Rite Aid banner. Fred’s has also agreed to purchase additional Rite Aid stores if the FTC mandates additional divestments for the proposed merger. BofA Merrill Lynch acted as Walgreens Boots Alliance’s financial adviser. Sidley Austin LLP acted as legal counsel on transaction legal matters and Weil, Gotshal & Manges LLP acted as its legal …

December 21, 2016

Features Retail Top Stories

Cap Rates for Net Leased Retail Properties Increase for First Time in Three Years, Says Boulder Group Report

by John Nelson December 21, 2016

NORTHBROOK, ILL. — Cap rates in the fourth quarter of 2016 for the single-tenant net lease sector increased or remained the same for office, retail and industrial assets, according to The Boulder Group’s quarterly Net Lease Market Research Report. Retail cap rates experienced their first increase since the third quarter of 2013 to 6.19 percent. The nine-basis-point increase is the largest quarterly increase in retail cap rates since the second quarter of 2011. Cap rates for the office sector remained unchanged at 7.08 percent, while the industrial sector increased by 3 basis points to 7.17 percent. The Boulder Group attributes the increase in cap rates for the retail sector to the rise of treasury rates during the fourth quarter. During the fourth quarter, the 10-year Treasury yield increased significantly to 2.45 percent, up from 1.62 percent at the start of the quarter. During the fourth quarter, the spread between asking and closed cap rates for retail properties increased by five basis points. This was the largest spread between asking and closed cap rates for retail properties since the fourth quarter of 2013. Cap Rates Likely to Rise More in 2017 The net lease market is expected to remain active in …

December 21, 2016

Multifamily New York Northeast Top Stories

Emerald Equity Group Acquires 47-Building Multifamily Portfolio in Manhattan for $357.5M

by Katie Sloan December 20, 2016

NEW YORK CITY — Emerald Equity Group has acquired a portfolio of 47 multifamily buildings from Fairstead Capital and E+M Associates for $357.5 million. The properties total 712,571 square feet and are located in Manhattan, predominantly within the neighborhood of East Harlem. Fairstead Capital and E+M Associates acquired the portfolio from a special servicer in 2013 for an undisclosed sum. The portfolio includes 112 E. 103rd St., 411 E. 118th St. and 291 Pleasant Ave. in East Harlem. British investment firm Dawnay Day owned the portfolio until the properties fell into foreclosure in September 2009, according to reports by The New York Times. The now-defunct firm acquired the properties in 2007 for $225 million. Brookfield Property Partners (NYSE: BPY) provided nearly $300 million in financing for the acquisition, according to reports by The Real Deal. A team led by Ariel Property Advisors’ Victor Sozio, Shimon Shkury and Michael Tortorici represented the seller and procured the buyer in the transaction. Mitchell Taras of Sadis & Goldberg provided legal representation to the seller, and Jeffrey Zwick of Jeffrey Zwick & Associates PC provided legal representation to the buyer. Emerald Equity Group is an investment and management firm specializing in rental apartments in …

December 20, 2016

Features Top Stories

Tips for Creating a Vibrant Retail Streetscape

by Katie Sloan December 20, 2016

Streetscapes create a sensation of depth and charm that beckon to passersby. People are drawn to lush landscapes, open green spaces and great tree canopies. They feel welcomed in these spaces and want to share them with others. Many new developments aim to provide streetscapes and open spaces that create holistic connections, enhancing their projects with authenticity and community. Here are some insights into how to create these. Building Community Through Authentic Connections + Open Spaces Strategically integrating retail and open spaces brings benefits beyond the satisfaction of the immediate customers. It contributes to the entire district or neighborhood as these elements are knit into the urban fabric. Thoughtful planning should address more than tenant mix and leasable space; it needs to consider quality of open space and the surrounding environment. Today’s consumer has an appetite for quality. Young professionals are flocking to new developments that support a work-life balance. An individual who lives or works near a new development can bring his or her family and friends to dine, shop, run errands, and play, extending their time spent together and within the development. Retail can benefit from this type of place-making by creating destinations that people want to stop and use …

December 20, 2016

Multifamily New York Northeast Top Stories

The Durst Organization Acquires 77-Story Multifamily Development Site in Queens for $173M

by Jeff Shaw December 19, 2016

NEW YORK CITY — The Durst Organization has acquired the development site of Queens Plaza Park in New York City for $173 million. The project is a 77-story residential tower currently under construction in the Long Island City submarket of Queens. The 1 million-square-foot building will feature approximately 1,000 residential units. The project also includes a one-acre public park and renovations to the Queens Plaza subway station entrance. The seller was a joint venture between Property Markets Group and Kamran Hakim, a New York-based real estate investor. The building is expected to open in 2019. Development plans call for assistance under New York’s 421-a tax exemption program, which will require at least 25 percent of the units to be affordable per New York City guidelines. As part of the acquisition, The Durst Organzation also purchased the landmark Queens Clock Tower Building, which is situated adjacent to the new development. Built in 1927, the property was once the tallest building in New York City outside of Manhattan, though it will now be dwarfed by the new project. Rosenberg & Estis served as legal counsel to The Durst Organization on the acquisition, as well as the $90 million first mortgage loan on the …

December 19, 2016

Arizona Office Texas Top Stories Western

Columbia Property Trust Sells $109.5M Office Portfolio Near Dallas, Phoenix

by Kristin Harlow December 16, 2016

CHANDLER, ARIZ. AND IRVING, TEXAS — Columbia Property Trust Inc. has sold CVS Health Tower in Irving, a western suburb of Dallas, and SanTan Corporate Center in Chandler, a southern suburb of Phoenix, for $109.5 million. With the sales, Columbia has exited the Dallas and Phoenix markets and will use the profits for reinvestment in its target markets. The buyers were not disclosed. CVS Health Tower is a 315,000-square-foot, Class A office building located at 750 W. John Carpenter Freeway. The building is primarily leased to CVS Caremark, an independent pharmacy benefit management provider. IBM also maintains a lease at the property. The 12-story building was completed in 1999 and acquired by Columbia in 2006. SanTan Corporate Center consists of two office buildings totaling 267,000 square feet, completed in 2000 and 2003. Columbia acquired the buildings in 2006. Both buildings are 100 percent leased. Toyota Financial Services fully occupies SanTan Corporate Center I, while multiple tenants occupy SanTan Corporate Center II. With these sales, Columbia has completed $660.5 million of dispositions in 2016. Atlanta-based Columbia Property Trust owns and operates Class A office buildings. The company’s portfolio includes 21 office properties and one hotel. -Kristin Hiller

December 16, 2016

Industrial Midwest Missouri Top Stories

CVS Pharmacy to Build $110M Distribution Facility in Kansas City

by John Nelson December 15, 2016

KANSAS CITY, MO. — CVS Pharmacy, the retail division of Woonsocket, R.I.-based CVS Health (NYSE: CVS), plans to build a 762,000-square-foot distribution center within Skyport Industrial Park in Kansas City. Development costs are estimated at $110 million. The 71-acre facility will be situated at 108th Street and North Congress near Kansas City International Airport and I-29. CVS Pharmacy expects to break ground on the project in January and begin operations in 2018. The new distribution center will support the service and fulfillment needs of more than 370 CVS Pharmacy stores throughout the Midwest. The new distribution center is expected to create more than 360 new jobs, as well as up to 100 additional jobs that will be outsourced to local businesses. The Kansas City Area Development Council (KCADC) worked closely with CVS Pharmacy in bringing the new distribution center to the Kansas City region. Other key members responsible for attracting CVS Pharmacy include the State of Missouri, The Missouri Partnership, Economic Development Corp. of Kansas City, Platte County Economic Development Council, Cushman & Wakefield, NorthPoint Development, KCP&L, Port KC, Metropolitan Community College, Focus Workforces, IMKO Workforce Solutions, QPS Employment Group, Full Employment Council, Missouri Division of Workforce Development, UPS, Scarbrough …

December 15, 2016

Modera by Mill Creek-Morningside, Atlanta

Features Multifamily Southeast Feature Archive Top Stories

Multifamily Opportunities Lie in Niche Product, Amenity-Rich Neighborhoods

by Jeff Shaw December 15, 2016

Following years of frenzied development across the country, the multifamily industry is entering a slowdown period where developers have fewer starts and even fewer completions. As of the end of October, multifamily starts are down 1.8 percent year-to-date compared to this time last year, according to the U.S. Census Bureau and the Department of Housing and Urban Development. Year-to-date completions are down 3.1 percent in that same time frame. “We’re entering a more normalized market going forward, as opposed to an aggressive development market of the past few years,” says Steven Shores, president and co-founder of Pollack Shores, an Atlanta-based multifamily developer. “I don’t view it as a negative. In a lot of respects, we were trying to catch up with demand in the years immediately following the recession where there was no new development.” Core submarkets within major metros saw the bulk of new multifamily construction in the years following the downturn as developers were answering renter demand to live within close proximity of employment centers, dining, shopping and entertainment. Construction in those submarkets is now slowing as those sites have become more difficult to come by, in addition to the existing governors of construction such as the industry’s …

December 15, 2016

Midwest Retail Top Stories Wisconsin

Milwaukee Symphony Orchestra Seeks to Buy, Renovate Former Warner Grand Theatre for $80M

by Nellie Day December 14, 2016

MILWAUKEE — The Milwaukee Symphony Orchestra (MSO) is hoping to purchase and restore the former Warner Grand Theatre in downtown Milwaukee in time for its fall 2019 season. An anonymous donor is leading the initiative to purchase the vacant theater, which would be converted into a concert hall. The renovation would include bathroom modernizations and updated seating to fit a capacity of 1,750. The theater’s acquisition and renovations are expected to cost between $70 million and $80 million. The MSO is hoping to acquire the site in fall 2017. The project is part of a $120 million MSO fundraising campaign that would also raise bridge financing and increase the organization’s general endowment. The MSO brought in $17 million in revenue during its 2015-2016 season. The symphony’s 80 full-time musicians perform more than 135 concerts each season. The orchestra currently performs at the Marcus Center for the Performing Arts on North Water Street. The 12-story Warner Grand Theatre is situated on West Wisconsin Avenue. The MSO is the only major orchestra in the nation without control over its own performance venue, according to the MSO’s president and executive director. The Art Deco-style theater was built in 1931 and was last occupied …

December 14, 2016

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