If you change the way you look at things, the things you look at change.
Wayne Dyer
NATIONAL REAL ESTATE INVESTOR Apr 4, 2016 BY Donna Mitchell
Retail properties are still recovering from the last economic downturn. The sector has posted positive net absorption rates three times since the recovery got underway in 2010, while balancing that out with vacancy rates that have dropped steadily. The result: asking and effective rents grew by 2.0 percent and 2.2 percent, respectively, during 2015, according to New York City-based research firm Reis Inc.
The current quarter vacancy rate stands at 10.0 percent for 80 metropolitan U.S. markets, with an average rental rate of $20.09, according to Reis. So far, so good: The question is, can landlords maintain their success for the rest of 2016, especially in a retailing environment where the customer experience is more important than ever?
“Retail is a nuanced story of the haves and the have nots,” says Ryan Severino, senior economist and director of research at Reis. He adds that while retail lags other sectors in keeping a healthy balance of vacancies and rents, two property types in particular—class-A malls and retail spaces on urban high streets should continue to support rent growth during this and future years.
The retail sector could see a 4.0 percent increase in rents in 2016, according to an estimates from commercial real estate services firm CBRE. While hotel and industrial rents are expected to outpace the retail sector by 4.7 percent and 5.6 percent, respectively, retail landlords are maintaining rent growth by delivering experiences that shoppers want, says Jeff Havsy, CBRE’s chief economist for Americas research and managing director of Econometrics Advisors. In a shifting retail landscape, that will help landlords succeed.
Class-A malls and high streets lead the field
Infrequently traded trophy properties tend to curb opportunities for investors looking to add precious items to their portfolios. For owners of class-A malls and urban high street locations these properties are like fabled fowls that keep producing golden eggs.
That’s particularly true if the center is located in a market like San Francisco, where CBRE estimates that rent growth could average 12.1 percent in 2016, or Denver, which could post an increase of 11.5 percent.
“In San Francisco, it is hard to build, so you don’t have a lot of supply coming at the moment,” Havsy says. “Supply is also an issue in Denver. There is supply in the pipeline, but it is not on-line just yet.”
The balance of property supply and demand is so critical in determining the direction of rents that the two factors often override other economic and demographic fundamentals, such as population growth and income growth, Havsy notes.
In Oklahoma City for example, the Simon Property Group-owned 1.1-million-sq.-ft. Penn Square Mall did a brisk $625 per sq. ft. in sales in 2014, according to the Oklahoma City 2014 Mid-Year Retail Market Summary, produced by real estate services firm Price Edwards & Co. The mall is an asset in a market whose economy has been buoyed in recent years by the shale oil boom. The effects of hydraulic fracturing, also known as fracking, however, are reverberating through the city’s economy at the moment. Oklahoma City experienced negative absorption rates of 201,000 sq. ft. in 2015, leaving the city with an availability rate of 13.1 percent.
Those conditions mean that Oklahoma City compares a little less favorably right now with Tulsa, its neighbor about 103 miles to the east. But don’t peg Tulsa as any ugly sister, please. It is sharing in Oklahoma City’s success with shale oil production. Net absorption there was 486,000 sq. ft. Retail supply is also tighter, with an availability rate of 12.4 percent. The city has experienced pretty good retail rent growth that does not look like it will slow down next year, Havsy adds.
What shoppers want
While the catalyst for economic booms and slowdowns might change, all savvy retail landlords understand that knowing what the customer wants and delivering it will be the key to success in any retail landscape.
That is important for all landlords to remember because while trophy properties are a must have for almost any portfolio, most of the shopping happens below the luxury center mark.
“There is a tremendous amount of spending power throughout the income distribution,” Havsy notes. “All these people want to rush to the high end, but if that is not who lives around you, then it is a problem.”
Fortunately, landlords have gotten much better at figuring out who is shopping at their centers and what those customers want. For instance, growing demand for organic produce in American kitchens means that malls with indoor and outdoor spaces will be able to reconfigure dormant portions of their parking lots to allow for a seasonal or permanent farmer’s market.
http://nreionline.com/retail/retail-rents-could-increase-40-percent-2016
FROM ME:
Phoenix Commercial Real Estate and Investment Real Estate: investors and Owner / Users need to really know the market today before making a move in Commercial Properties or Investment Properties in Phoenix / Tucson / Arizona, as the market has a lot of moving parts today. What is going on socio-economically, what is going on demographically, what is going on with location, with competing businesses, with public policy in general — all of these things affect the quality of selling or purchasing your Commercial Properties, Commercial Investment Properties and Commercial and large tracts of Residential Land in Phoenix / Tucson / Arizona. Therefore, you need a broker, a CCIM (Certified Commercial Investment Member) who is a recognized expert in the commercial and investment real estate industry and who understands Commercial Properties and Investment Properties.
I am marketing my listings on Costar, Loop-net CCIM, Kasten Long Commercial Group. I also sold hundreds millions of dollars’ worth of Investment Properties / Owner User Properties in Retail, Office Industrial, Multi-family and Land in Arizona and therefore I am working with brokers, Investors and Developers. I am also a CCIM and through this origination ( www.ccim.com ) I have access to marketing not only in the United States, but also international. Click here to find out what is a CCIM: https://en.wikipedia.org/wiki/CCIM
1
http://walter-unger.com/?p=15472
2
Click here to find Reasons to Consider me for Commercial Referrals
http://walter-unger.com/?p=15010
3
Click here to View My Listings and Profile
http://www.loopnet.com/profile/14101172900/Walter-Unger-CCIM/Listings/
4
Click here to find out what is a CCIM:
https://en.wikipedia.org/wiki/CCIM
5
Click here to view my website:
6
Interactive Map Of All 10+ Unit Apartment Listings in Metro Phoenix
http://www.easymapmaker.com/map/28cb3b8b3206c377a6f282d980dc7974
7
Interactive Metro Phoenix Map of New Apartment Construction by Completion Status
http://www.easymapmaker.com/map/955edc17e00b08ce270fb7afb1523cc2
8
4rd QTR 2015 GREATER PHOENIX APARTMENT OWNER’S NEWSLETTER Kasten Long Commercial Group.
9
Click her to join my mailing list :
Walter Unger CCIM – walterunger@ccim.net – 1-520-975-5207 – http://walter-unger.com
2016 Official Arizona Visitors Guide
http://walter-unger.com/?p=13391
1
Timeline of Phoenix, Arizona history
http://en.wikipedia.org/wiki/Timeline_of_Phoenix,_Arizona_history
2
http://en.wikipedia.org/wiki/Phoenix,_Arizona
3
Facts of Arizona – year 1848 to 2013
http://walter-unger.com/?p=9507
Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Properties in Phoenix, Tucson, Arizona.
walterunger@ccim.net 1-520-975-5207
Check out my professional profile and connect with me on LinkedIn.
https://www.facebook.com/ungerccim
https://twitter.com/Walterunger
https://plus.google.com/u/0/b/114560883588623379451/
Kasten Long Commercial Group tracks all advertised apartment communities, including those advertised by other brokerages. The interactive map shows the location of each community (10+ units) and each location is color coded by the size (number of total units).
Click here for Map of Apartments for Sale (10+units)
Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial / Investment Real Estate Broker in Arizona now for 20 years. If you have any questions about Commercial / Investment Properties in Phoenix or Commercial / Investment Properties in Arizona, I will gladly sit down with you and share my expertise and my professional opinion with you. I am also in this to make money therefore it will be a win-win situation for all of us.
Please reply by e-mail walterunger@ccim.net or call me on my cell 520-975-5207
Walter Unger CCIM
Senior Associate Broker
Kasten Long Commercial Group
2821 E. Camelback Rd. Suite 600
Phoenix , AZ 85016
Direct: 520-975-5207
Fax: 602-865-7461
Reasons to Consider me for Commercial Referrals
Delivering the New Standard of Excellence in Commercial Real Estate
- Commercial Real Estate Scottsdale
- Commercial Real Estate Phoenix
- Commercial Real Estate Arizona
- Commercial Investment Properties Phoenix
- Commercial Investment Properties Scottsdale
- Commercial Investment Properties Arizona
- Land Specialist Arizona
- Arizona Land Specialist
- Land Specialist Phoenix
- Phoenix Land Specialist
- Land For Sale Phoenix
- Land for sale Arizona
- Commercial Properties For Sale Phoenix
- Commercial Real Estate Sales Phoenix
- Commercial Properties Phoenix
- Commercial Properties Arizona
- Commercial Land Specialist Phoenix
- Commercial Land Phoenix
- Multifamily land Phoenix
- Retail Land Phoenix
- Industrial Land Phoenix
- Land Commercial Phoenix
- Land Retail Phoenix
- Land Industrial Phoenix
- Land Multifamily Phoenix
- Industrial Land for sale Phoenix
- Land Industrial
- P
- Investment Real Estate
Disclaimer of Liability
The information in this blog-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.