Retail

The major headlines dominating the greater Baltimore region this summer involved the unexpected resurgence of our beloved professional baseball team following nearly two decades of performing at a level below .500, and the logistical challenges facing the organizers of the second annual Grand Prix racing event scheduled for the Labor Day weekend. Connecting this news to the regional retail environment, we see a tremendous amount of winning and successful projects emerging throughout the area, combined with a great deal of noise and fast-moving activity. Fasten your seatbelts for a quick lap around the Charm City marketplace. Downtown CBD As General Growth Properties slowly emerged from bankruptcy, the company renewed its focus on re-energizing its retail assets lining the retail magnet known as the Inner Harbor by attracting new merchants and restaurants and upgrading the physical plant. The arrival of Bubba Gump Shrimp Co. and Ripley’s Believe It or Not Museum were among the notable adds. There is still some work to do with regard to reinvigorating The Gallery at Harborplace, which has lost some luster due to the emergence of Harbor East, but the improvements have been noticeable and well received. In Baltimore, the waterfront rules. The Cordish Company rebounded …

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The retail market in Greater Rochester has been active for the first three quarters of 2012, and we anticipate steady demand into 2013. The most active retailers in the market have been national restaurant chains, dollar stores, retail bank branches, medical (urgent care) and gas stations. Overall market vacancy is currently 7.47 percent with the southeast market at 4.77 percent, and the northwest market at 5.06 percent, showing the tightest vacancy levels. The southeast market includes both the 1.3 million-square-foot Eastview Mall corridor in Victor and the Monroe Avenue corridor in Pittsford. The Monroe Avenue corridor is centered at Pittsford Plaza and Wegmans’ flagship grocery store. The southeast market boasts the highest household income demographics in the region, which has attracted retailers like Trader Joe’s, which is opening in Pittsford Plaza in October; The North Face, currently under construction across from Eastview Mall; and Von Maur, which is currently under construction and replacing The Bon Ton at Eastview Mall. Benderson Development is completing construction of the small shop space at Victor Crossing, a power center anchored by a Walmart Supercenter and Kohl’s on Route 96 just south of Eastview Mall. New tenants include HomeGoods, PetSmart, Dollar Tree, and Famous Footwear. …

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Activity is picking up in the Indianapolis retail market, buoyed by a strengthening economy that has intensified retail expansion. Positive job growth, escalating new home construction and rising retail sales are attracting new stores and have instigated other retailers to consider additional locations in selective pockets around the metro area. The northern submarkets within Hamilton County are particularly active, especially around Exit 10 of I-69 in Noblesville, where new housing construction has fostered retail growth. In Carmel, the renovation and re-tenanting of The Centre and The Corner are moving forward. The 82nd Street corridor is also lively as the nearly completed expansion of The Fashion Mall has attracted new retailers to the state such as West Elm and Free People. Nearby, last year’s repositioning of Rivers Edge is initiating smaller new developments with Dairy Queen, Wendy’s and Famous Dave’s among the recent openings. The 127,000-square foot project will include an Earth Fare grocery, Walgreens and Panera Bread. Large spaces are being filled across the metro area. Jo-Ann Fabrics is taking 28,000 square feet along Highway 36 and Brickhouse Fitness has penned a lease for 15,000 square feet along Lafayette Road. Although retail construction is at near historic lows, smaller buildings …

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With tenant demand increasing and retailers looking to expand in Cleveland, positive net absorption and limited development have created a balanced retail market that will lead to improvement and growth in 2012, according to Marcus & Millichap. The construction levels are relatively low with only 260,000 square feet of shopping center space scheduled to be completed this year, more than doubling last year’s 121,000 square feet. By comparison, 2008 saw 1 million square feet in retail completions. “When you look at it and put it in perspective versus construction levels seen during the last 10 years, it’s significantly below the levels we saw at the height of the market,” says Scott Wiles, a director and vice president within Marcus and Millichap’s National Retail Group. “It was an expected trend that last year was the low point for construction levels in the submarket, and that stems from 2009 and 2010 being very inactive leasing markets,” Wiles says. This year’s limited construction will aid Cleveland’s retail growth, however, in light of an uptick in leasing. “The positive thing about Cleveland is that we never see the construction levels that some of the sexier markets see, so it doesn’t throw our supply and …

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Rhode Island is the smallest state in the United States in terms of geographic area. With a population of 1.05 million, it is the eighth least populous state; however, its small geographic area makes it the second most densely populated of all 50 states. This density of population is attractive to retailers looking to expand in The Ocean State. The city of Providence is the only major urban center in Rhode Island. As such, it serves as the cultural and economic hub of the state. Providence Place Mall, one of the most successful urban regional malls in the country, continues to serve as a strong anchor to the downtown area, bringing suburban customers in to the city of Providence to shop and eat at one-of-a-kind retailers and restaurants in the state, including Nordstrom, Cheesecake Factory, Dave & Busters, and Apple. Other than Providence Place, retail activity in the downtown market has been primarily focused on chain restaurants, such as Ruth’s Chris, The Capital Grille and McCormick & Schmick’s, continuing their presence and new local operators opening in the areas adjacent to the downtown core such as Federal Hill (Providence’s “Little Italy”) or along Thayer Street, which is the hub of …

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Retail operations have likely bottomed in Cincinnati and will show signs of modest improvement through the remainder of 2012. Encouraged by a more stable job market and restored savings accounts, consumers are beginning to spend more freely. National retailers, which stalled expansion plans during the recession, will capitalize on discounted rents to move into prime retail corridors in Hamilton County and Northern Kentucky. Anchored shopping centers will outperform due to their ability to draw steady shopper traffic, keeping vacancy at Class A properties tight. The revitalization of the CBD will attract young professionals, while the recent opening of The Banks project will boost visitor volume. Demand will pick up for inline space within the area as restaurants and boutiques look to capture the increase in foot traffic. Developers who built in outlying areas will struggle to backfill unanchored strip centers. Until single- family home sales pick up, lenders will be unwilling to provide start-up financing for local retailers, leading to a weak recovery in tertiary markets. By the Numbers Employment gains are driving modest improvement in the retail sector. Cincinnati employers created 10,400 jobs during the first quarter. On a year-over-year basis, 20,300 jobs were generated, an increase of 2.1 …

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The Idaho retail market is showing signs of growth. Boise and Twin Falls are experiencing new developments breaking ground and national retailers are expanding or moving into the area. Much of this new development is coming in from California, Utah, Colorado and Arizona. Tenants are making deals again. Anchor tenants in second-generation space are looking in that $8-per-square-foot to $11-per-square-foot range for larger spaces. Shop spaces in A+ locations are still demanding high $20 per square foot lease rates and even into the low $30 per square foot for the higher-end projects like Meridian Town Center and the Whole Foods/Walgreens developments in Boise. Local and regional retailers are making a strong push to secure prime space as they are seeing lease rates start to rise. Many tenants are more willing to lock into longer lease terms if they can keep a lower rate. Landlords are beginning to provide tenant improvement allowances so long as the lessees can prove financial stability. Idaho is also experiencing retail market trends that are similar to the rest of the country. Larger healthcare facilities are driving the expansion of surrounding retail developments in Nampa and Twin Falls. Additionally, a few of the big box retailers …

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Consumers are loosening their wallets in St. Louis, and the thaw in spending has given the local retail market a much-needed shot of adrenaline. The discount retailer is still king, but new concepts and developments are gaining ground. With positive absorption of space on the rise, investment sales are increasing. St. Louis is poised to see a major development in the central trade area at the former Hadley Township site. After several failed attempts at development in the past 10 years, Hadley seems destined for redevelopment at last. The 40-acre site is located on I-64 in the central suburb of Richmond Heights and will consist of an assemblage of 150-plus commercial and residential parcels. In the southern half of the development, Menards was selected by the city over Costco and will open one of its first St. Louis locations in early 2014. The site plan includes a 240,000-square-foot store with additional out parcels for retail and restaurant users. In the northern half, Pace Properties has received approval to develop a two-story, 400,000-square-foot, big-box store for an as yet unnamed retailer. This development will further enhance the desirability of the Richmond Heights/Brentwood area as a retail destination and will boost asking …

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San Diego’s retail market has remained relatively level for the past year in regards to leasing and sales of shopping centers. Last year the vacancy rate for San Diego hovered around 5.2 percent and currently is positioned at 5.1 percent. This will probably remain the same throughout the remainder of this year as we continue to see very few additional centers being built. A steady flow of tenants are also closing their doors as new tenants and entrepreneurs venture into new careers. Sales activity from the beginning of this year has been slightly slower but slightly better on a per-square-foot number than the same period one year ago. Year-to-date, we have seen 15 sales of centers that are larger than 10,000 square feet, with an average price per square foot of $193.50 and an average cap rate of 7.24 percent. This is compared to the same period last year which produced 22 sales at an average price per square foot of $170.39 and an average cap rate of 7.6 percent. As far as credit-tenant, triple-net investments in San Diego go, there is still a very strong demand for any product that comes on the market and typically results in multiple …

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While the Savannah retail market has felt the impact of the recent economic downturn, the overall market has maintained its equilibrium, driven by key economic engines such as the Georgia Ports Authority/Port of Savannah, Fort Stewart, Hunter Army Airfield, the tourism industry and The Savannah College of Art and Design (SCAD). The Savannah Area Chamber and Visitors Center announced that June 2012 was a record-breaking month with 87 businesses joining the Chamber. Savannah also consistently makes top ten lists for best travel destinations. These constants have served as a steadying influence as various segments of the retail market have reacted and adapted to the evolving marketplace. Though downtown Savannah and the Historic District have seen property values decline during the last 36 months, the retail market has taken steps forward and backwards, and the general arc seems to be positive. Levy Jewelers, an upscale local jewelry store, has acquired a prime location at Broughton and Bull streets, the nexus of the main shopping district. Marc Jacobs Boutique and Urban Outfitters lead a list of national retailers that have set up shop in the downtown area. Whole Foods will mark its entry into the Savannah market with a 35,000-square-foot store at …

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