Commercial News Archives | Page 61 of 69

Apr 18 No Comments

Medical Office Buildings Poised For Quick Recovery

Author: Admin Roy

Categories: Commercial News,Healthcare,Trends

While hospitals and health-care facilities have been inundated by an influx of COVID-19 patients, many medical offices that offer non-emergency services have seen the opposite occur.

The property type’s solid fundamentals prior to the virus, however, promise a relatively rapid rebound when the economy is up and running again, according to Marcus & Millichap’s April special report on medical office buildings.

With many shelter-in-place orders in effect, communities across the U.S. are avoiding unnecessary travel and exposure, including those patients seeking elective surgeries or nonessential surgical and dental procedures. As patients decide to reschedule their appointments until further notice, many medical offices aren’t generating revenue and have had to partially, or fully, close.

The Post COVID-19 MOB Market

The COVID-19 pandemic has already left its mark on different facets of commercial real estate like office leasing, construction and retail. While the medical office building market was not spared, its strong market fundamentals prior to the emergence of the new coronavirus offer signs of a healthy market after the pandemic ends.

The national vacancy rate for medical office buildings was 90 basis points below the trailing 10-year-average of 9.7 percent, according to the report. The U.S. market also saw 6 million square feet of medical office space absorbed in 2019. Following demand, the below-average availability of medical offices has led to a steady stream of new properties, with deliveries hitting 10 million square feet. The statistics have attracted the attention of private investors looking for assets between $1 million and $10 million.

Once the COVID-19 pandemic is under control and the economy recovers, the medical office building market is expected to bounce back. The combination of an aging population, expanded medical insurance coverage and new treatment options equate to a growing demand for health care and the medical offices that come with it. Once the economy begins to return to normal, the backlog of work due to closed offices and rescheduled or canceled appointments will likely bring a sudden influx of work for medical-office staff.

And once the market returns to normalcy, the report noted that well-located assets with the infrastructure to handle modern medical needs will be in high demand. Specifically, medical office building demand may grow in non-urban markets as younger Millennials begin to move away from urban centers.

Source: Commercial Property Executive

Apr 16 1 Comment

Touchless Fixtures, Food Cameras: How Retail May Change Post Pandemic

Author: Admin Roy

Categories: Commercial News,Retail,Trends

The glass partitions may stay up in stores at cash registers long after the pandemic leaves, as retailers aim to offer a variety of measures to make customers feel safe again, experts say.

Other such changes range from subtle — such as touchless doors and sink handles — to not-so-subtle, such as bringing some retail items behind a counter instead of open for everyone to touch. The ideas being bandied about show just how quickly the novel coronavirus has changed retail businesses, much of which had to shutter or reduce service due to stay-at-home orders.

These shutdowns have impacted revenue drastically, with some retailers on the brink of permanently closing their doors.Nationwide, about 630,000 stores have closed due to COVID-19, and $430 billion in revenue may disappear in the next three months, according to the Financial Times.

Businesses will have to adapt in order to survive and bring customers back, experts say. But these changes can’t move too quickly or be implemented in a way that would make it more cumbersome for customers. Still, many companies are going back to the drawing board right now with these new ideas, said Erin Simpson, business development and marketing for Orlando-based architecture firm Scott + Cormia Architecture + Interiors.

“Our culture already has bought into it — design just needs to catch up,” added Jose Lugo, vice president at Miami-based architecture firm Bermello Ajamil & Partners Inc.

Restaurants may see some noticeable changes. Tables and bar stools could be spaced out more. And cameras may beam back live video of the kitchen to monitors in a seating area for customers to see how their food is being prepared, said Cindy Schooler, senior vice president and market leader for Dallas-based SRS Real Estate Partners.

On the soft goods side, e-commerce will continue to disrupt retail delivery. But it remains to be seen if these retailers will want things returned, like clothes, if they feel they’ve been contaminated.

“The things I hear on calls now, I say, ‘Wow I never thought of that,'” Schooler said.

That said, no one knows how much brick-and-mortar retail will change. And — while some common sense measures may stick around — people may want to be closer to strangers again once they feel safe, said Drew Forness, president of Winter Park, Fla.-based Forness Properties.

“We’re all going to get back to some sort of normalcy,” he said.

Source: OBJ

Apr 14 1 Comment

Retail Landlords Are Creating A Blacklist Of Tenants That Aren’t Paying Rent

Author: Admin Roy

Categories: Commercial News,Leasing,Retail

While mom-and-pop retailers may be feeling the economic pain of coronavirus the hardest, some bigger companies have decided to forgo rent payments as well. But landlords aren’t buying it.

Owners of malls and shopping centers have been putting together a “blacklist” of financially stable tenants that haven’t met their April rent obligations, the Wall Street Journal reported.

“We think that it’s their duty to pay April rent,” chief executive officer of Kimco Realty CEO Conor Flynn told the Journal. “The customer base is going to recognize who the bad actors are.”

According to Marcus & Millichap, April rent collection has ranged from just 10 to 25 percent for mall owners with higher concentrations of nonessential tenants, to 50 to 60 percent for landlords with “essential” tenants such as grocery stores and pharmacies.

Large retail tenants that have failed to pay rent in full include Burlington Stores, Petco Animal Supplies, LVMH Moët Hennessy Louis Vuitton, Victoria’s Secret and Staples.

Staples, which has been able to keep many stores open in areas where it is considered essential, has told landlords that it will not pay rent because of a drop in sales. Dick’s will not pay rent at stores that were closed due to government orders, but will continue to pay rent for stores that it closed voluntarily.

While some mall owners have indicated that they plan to declare non-paying tenants in default, smaller landlords may be more hesitant to confront big tenants over rent payments. Retailers appear to recognize that they have the upper hand, but things could get messy.

“The retailers think they have leverage here and they’re trying to use it,” Green Street Advisors analyst Vince Tibone said. “I see it potentially becoming a fight and going into litigation.”

Source: The Real Deal

Apr 08 No Comments

Silicon Valley Heads To Wynwood’s Office Market

Author: Admin Roy

Categories: Commercial News,Leasing,Offices,Trends,Wynwood

Wynwood has changed quickly from the early 2000s, when it was home to a number of galleries that came alive the second Saturday of the month, to an established tourist destination with an active nightlife scene. Today, it has residents and short-term rentals, restaurants, breweries and bars, and hotels on the way.

Now, it’s also emerging as a new office submarket in Miami, even amid the coronavirus pandemic.

Wynwood is seeing a number of new office projects, as major developers target the artsy district, aiming to add hundreds of thousands of square feet of office space. Big name tenants have signed leases, like Spotify, Live Nation and WeWork. Apple Music, Google, Dentsu and other creative marketing agencies have also been looking in the market, brokers and developers say.

The office vacancy rate in Wynwood is expected to spike this year, when most, if not all of the office space is delivered. Already, there is 180,000 square feet of new space in the market, with another 350,000 square feet under construction. That doesn’t include 500,000 square feet more office space in the pipeline, according to Albert Garcia, chairman of the Wynwood Business Improvement District.

Garcia and others expect that the new supply will get absorbed.

“We’ve seen development happen evenly. We’re very pleased with how the market has reacted to zoning guidelines,” he said. “You have to remember, prior to that there was zero Class A office in the neighborhood. Over the next six to 24 months, you’re going to see new office leases moving within the market from Brickell, Doral, Coral Gables.”

Covid-19’s effects

And now, with the uncertainty surrounding the Covid-19 outbreak, Garcia and others believe that Wynwood will be well-positioned to attract new office tenants to the neighborhood.

“The good news is that these are all state-of-the-art office environments that will be adaptable and scalable in ways that the new office tenants are going to be looking for, places that are safe, that offer flexibility in workspace,” Garcia said.

Yet, some developers are pulling back, attorney Steve Wernick of Wernick & Co. said. The pandemic will likely cause a correction in the market and slow down office absorption, forcing landlords to adjust their pricing and the types of tenants they’re trying to attract.

“Wynwood is resilient, it always bounces back. We had Zika,” Wernick said. “Businesses that have capital and have long-term growth potential might be able to secure the office space they need that’s advantageous to them.”

Other market sectors

Brokers and developers expect space to also be absorbed in multifamily and other sectors of the market. Besides Related and East End, the Kushner Companies with Block Capital Group, as well as homebuilding giant Lennar Corp. have multifamily-anchored mixed-use projects in the works.

“At the end of the day, it’s a real neighborhood,” said Gaston Miculitzki of BM2 Realty, a Wynwood-based brokerage.

It’s unclear yet how deep the impact of coronavirus will be. Brokers Tony Arellano and Devlin Marinoff of Dwntwn Realty Advisors said the pandemic will eventually result in opportunities for tenants – and for investors.

“Now if you’re buying something, you’re buying it at a good value,” Arellano said. “All of the foam of the market got taken off.”

Grocery stores and major pharmacy chains are also eyeing the market, according to commercial broker Tere Blanca.

Office space supply

Sterling Bay, a Chicago developer that has built and leases space to McDonald’s Uber, Glassdoor and Twitter, officially entered the Wynwood market in 2018. Sterling Bay is building 545 Wyn, a 10-story, 325,000-square-foot Class A office building that will be completed later this year. It’s the biggest office project under construction in Wynwood.

Michael Lirtzman, director of leasing, said the developer’s aim is for tenants to move in by the end of the year. At 545 Wyn, the developer has secured Gensler, a major design and architecture firm, which signed a lease for 13,000 square feet.

Gross rents are in the high $50s and $60s per square foot for new construction in Wynwood, brokers and developers said.

Lirtzman said the push into a neighborhood like Wynwood is typical for Sterling Bay. “We tend not to go for the traditional downtown high-rise markets. We’ve gone into neighborhoods with a little more live, work, play,” he said.

Wynwood, previously home to a number of industrial warehouses, is similar to Chicago’s Fulton Market district, near the west side of Chicago, where Sterling Bay is looking to sell the McDonald’s global headquarters building, Lirtzman added.

Amenities in Wynwood are comparable to those offered by residents of new apartment towers in downtown Miami, Edgewater and the Arts & Entertainment District.

Once completed, 545 Wyn will include a 4,700-square-foot fitness center with spinning and yoga, a 17,000-square-foot terrace on the fifth floor with a full kitchen and bar, and 26,000 square feet of ground-floor retail space for three large food and beverage and entertainment tenants.

The companies the developer is courting “want their people to be comfortable in the building,” Lirtzman said. “They’re using their real estate as a recruitment tool.”

More projects completed and planned

When Sterling Bay went under contract on the Wynwood land more than two years ago, the developer had no competition.

But now, new office projects are popping up throughout Wynwood. 545 Wyn is being built on the west side, fronting I-95, where larger office projects were or are planned. The Oasis in Wynwood, a mixed-use adaptive reuse project under construction at 2335 North Miami Avenue is east of that, on the northeast corner of the neighborhood.

In January, New York-based R&B Group broke ground on the Gateway at Wynwood, a 460,000-square-foot mixed-use building on the northern outskirts of Wynwood, at 2916 North Miami Avenue. The project will have about 195,000 square feet of office space, plus retail, a rooftop terrace and a garage.

About a year ago, CIM Group closed on a $71.2 million construction loan for a 12-story Wynwood Square mixed-use development at 2201 North Miami Avenue. The project, with 241 apartments and about 27,000 square feet of retail, will have about 60,000 square feet of Class A office. One Real Estate Investment is a co-developer of the project.

The Annex, a 52,000-square-foot office building that Related Group and East End Capital completed last year next to their Wynwood 25 apartment building, is west of Second Avenue, Wynwood’s “cultural spine,” said Garcia, of the Wynwood BID. Tenants there include Live Nation Entertainment, which took nearly 8,000 square feet.

Jonathan Yormak, founder and managing principal of East End Capital, said full service asking rents are about $57 per square foot at the Annex.

Directly across the street is Cube Wynwd, an eight-story, 86,000-square-foot Class A building developed by RedSky Capital and equity partner JZ Capital Partners. Regus was the first tenant to sign and open, taking 21,000 square feet at the Class A building.

In addition to tenants relocating from downtown Miami and Brickell, developers and brokers said there are a number of new-to-market companies looking to plant their flag in Wynwood.

WeWork opened last year at the Wynwood Garage, taking 30,000 square feet at 301 Northwest 26th Street, marking the largest office lease in the neighborhood, according to broker George Pino, president of State Street Realty. The office market in Wynwood is just now in its infancy, he said.

Wooing tenants

Some of the largest TAMI (technology, advertising, media and information) tenants have their eyes on Wynwood – but not necessarily on specific buildings.

Take Spotify. The music streaming company toured 545 Wyn and other projects in the neighborhood before deciding to take all of the 20,000 square feet of office space at the Oasis in Wynwood.

“What’s important about the Spotify lease is Spotify had identified Wynwood. It wasn’t like they were between the Oasis in Wynwood and two buildings in Brickell and Coconut Grove,” said David Weitz, co-founder of Carpe Real Estate Partners, developer of the Oasis.

Not every company is choosing to be in Wynwood, though. Yext, a New York City-based brand management technology firm, looked at Wynwood before deciding to open its Miami office at 600 Brickell Avenue, near Brickell City Centre, sources said.

Erik Rutter, co-founder of Carpe Real Estate Partners, said Spotify wanted to create a campus for its employees where the company could create programming. A rendering of the space shows a stage in front of the Spotify logo.

As a gateway to Latin America, Miami has long attracted a number of creative marketing agencies, but the tech scene has been much smaller, beginning with the LAB Miami, the first co-working space and first coding academy, Wyncode.

Now, that’s changing.

“Wynwood is very culture rich. A lot of submarkets in Miami, from an office market perspective, [prospective tenants] don’t feel like there’s a lot of character,” Weitz said. “I think the low-story pedestrian-oriented nature in Wynwood really makes it attractive. It has culture. It has character. It’s walkable.”

Source: The Real Deal

Apr 07 No Comments

Miami Commercial Real Estate Market Is Expected To Grow Despite Coronavirus

Author: Admin Roy

Categories: Commercial News,Development,Leasing,Multifamily,Offices,Retail,Trends

Life moves on in South Florida’s commercial real estate market, regardless of rain, shine or the coronavirus.

Avra Jain, the chief executive officer of the MiMo-based adaptive reuse consultancy firm Vagabond Group, and Scott Sherman, co-founder of the Brickell-based commercial property management firm Tricera Capital, see a steady market.

Jain and Sherman said in a Bisnow webinar on Thursday that new leases continue to be signed and construction is moving forward despite the coronavirus pandemic.

“The city of Miami has been functional in reviewing sites,” Jain said. “The city being functional says a lot about the city’s ability to move forward in a crisis.”

New adaptive use, boutique projects are moving forward, Jain said.

“I’m getting ready to sign another lease. Tenants are looking six-to-nine months out.”

Vagabond will move forward with a new adaptive use project soon, Jain said, with an added benefit of sliced prices for materials. Prices decreased for several construction materials, including copper and oil, she said. She expects to save about 10% on construction costs for her new project.

Vagabond completed two projects on time in recent days, she said. City officials reviewing job sites made changes to ensure safety and precaution, she said, including banning portable toilets and requiring the firm to allow construction workers to use the bathroom in the building, provide masks and hand sanitizer.

“I don’t see the construction industry being shut down,” Sherman said. “DeSantis and Trump have it in their interest to keep it going.”

Source: Miami Herald

Apr 03 2 Comments

In a Pandemic, Medical Office Properties Are Still Seen as a Safe Play

Author: Admin Roy

Categories: Commercial News,Healthcare

The medical office market appears to be a clear winner in a U.S. commercial real estate environment made murky by the coronavirus-generated economic nosedive.

“Generally, if you own a medical office building, you know that you’re going to probably survive the storm. I think [the medical office sector] is going to survive a storm stronger than most other asset classes,” says Fahri Ozturk, first vice president with commercial real estate services company Marcus & Millichap.

Among 18 commercial real estate sectors, medical office presents the lowest level of risk in a COVID-19 recession, according to a report released March 26 by Green Street Advisors LLC, a real estate research and advisory firm based in Newport Beach, Calif.

Simply put, the medical office market is recession-resilient, according to Chris Bodnar, vice chairman and co-head of health care capital markets at commercial real estate services company CBRE.

“It is a niche market, with significant demand by investors and with limited supply,” Bodnar says. “This supply-demand imbalance, combined with a very disciplined development market, will continue to provide stability … .”

A December 2019 report from CBRE indicated that demographic trends—namely an aging population—and shifts in the health care industry would support long-term demand for medical office space.

Through mid-2019, the U.S. medical office vacancy rate remained at 10.3 percent—its lowest level during the most recent economic expansion—and average asking rents stayed near record levels, the CBRE report noted. U.S. institutional investors, foreign investors and REITs have fueled demand for medical office properties.

One of the investors that continues to be sold on the prospects for the medical office sector is Harrison Street Real Estate Capital LLC, a Chicago-based investment management firm.

In late March 2020, well into the coronavirus crisis, Harrison Street bought The Woodlands Cancer Center, a class-A, 208,000-sq.-ft. medical office building in suburban Houston that’s fully occupied by the University of Texas MD Anderson Cancer Center.

The coronavirus-propelled economic downturn hasn’t dampened Harris Street’s enthusiasm for medical office properties. Christopher Merrill, co-founder, chairman and CEO of Harrison Street, says his firm will continue to be an active investor in medical office assets. Since its founding in 2005, Harrison Street has invested nearly $6 billion in the sector, representing 16 million sq. ft. across more than 250 properties.

“As essential service providers, many medical office facilities continue operating without disruption, regardless of the environment,” Merrill says.

Those essential services include imaging, laboratory testing, diagnostic services, cancer and disease treatment, emergency care and outpatient surgery.

Harrison Street isn’t the only investor forging ahead with medical office purchases in this uncertain economic climate.

In late March 2020, JLL Capital Markets announced it had wrapped up the $20 million sale of Bella Terra Medical Plaza, a 59,354-sq.-ft. medical office building in Huntington Beach, Calif. The buyer was Manhattan Beach, Calif.-based Manhattan Real Estate Holdings Inc.; the seller was Los Angeles-based Vibe Inc. The class-A asset is about 90 percent leased to a number of medical tenants.

One key aspect that makes medical office properties appealing to investors like Harris Street and Manhattan Real Estate Holdings is this: Many tenants stay put for 20 to 30 years, according to Marcus & Millichap’s Ozturk. Medical office tenants often don’t want to move because patients have become familiar with the office locations, he says.

In the short term, though, the medical office market might face trouble, as some offices have temporarily shut down during the coronavirus pandemic and might struggle to pay rent, Ozturk says.

But patient traffic at medical offices will bounce back, driven by overall growth in health care spending and the ongoing trend of medical procedures being performed at outpatient facilities rather than hospitals, according to Britton Costa, senior director of credit ratings agency Fitch Ratings Inc.

“We’re interested to see whether this time is the catalyst for greater adoption of telemedicine for certain specialties as regulatory barriers are removed and patients are more willing to try it, given the lack of alternatives,” Costa says.

Amid the coronavirus crisis, some real estate investors are ratcheting down their activity in hard-hit sectors like retail and lodging. But CBRE’s Bodnar says most of his deals for medical office properties are going ahead despite challenges with coordinating tours and arranging third-party inspections.

“Given the current market environment, investors are looking to invest more in defensive industries like medical office,” Bodnar says. “The current market environment has put a spotlight on the need for health care facilities and the demand for services by patients.”

As such, Bodnar foresees a positive future for the medical office sector.

“There will always be a need for medical office buildings, and technology will have a bigger impact on where these facilities are to be built and how they will be designed in the future,” he says.

Source: NREI

Apr 03 No Comments

Brokers Should View $2.2 Trillion Relief Package As A Client Service Opportunity

Author: Admin Roy

Categories: Commercial News,Development,Leasing,Offices,Retail,Trends

The $2.2 trillion relief package (CARES ACT) is an opportunity for commercial real estate brokers and consultants to connect clients with banks and other lending sources participating in the program that earmarks $350 billion to assist small business.

“This is a great opportunity for commercial real estate brokers and consultants who may have been sidelined during the coronavirus outbreak to be a valuable resource for their clients,” said Gabe Beukinga, the newly named president of Radius Bank’s guaranteed government loan division which will be facilitating the loan process for Radius.

Among the key elements of the paycheck protection program that people should be aware of, according to Beukinga, are eligible businesses which include those with 500 employees or fewer. Some covered industries may have different thresholds based on Small Business Administration (SBA) guidelines. Not for profit entities may also eligible for the program.

The maximum loan amount is the lesser of $10 million or 250 percent of the average total monthly payments for payroll and benefits costs. Eligible uses for the funds include: payroll costs, costs for health care benefits, employee salaries, commissions, mortgage payments, rent, utilities and interest on any other debt.

The loan will be deferred for 6 to 12 months and is non-recourse. Any portion of the loan not forgiven will be up to a 10-year amortization at 4 percent.

According to Beukinga, small businesses are the backbone of the American economy and are in desperate need of this payroll protection plan.

“The small business portion of the relief effort has those companies in mind—businesses that may occupy 50 to 75,000 square feet of industrial space, or less than 10,000 square feet of office space,” he said. “This relief effort is a significant and necessary step in supporting the daily operational needs of small businesses in every community across the country that have been devastated by the impact of coronavirus.”

Those involved in SBA lending programs are preparing for an onslaught of calls and questions about the relief program, because of the magnitude of impact the coronavirus has had on the economy overall. Beukinga said the most important thing for lenders is to be adequately prepared for unprecedented activity as small businesses look to put relief funds to work as quickly as possible.

“Radius Bank has expanded our staffing in anticipation of this program and the important work that is to be done for businesses across the country,” Beukinga said. “We are poised and ready to help small businesses, and the men and women behind them, during this challenging time.”

Radius Bank provides a full complement of accounts and services to meet the needs of consumers and businesses nationwide. The digital bank has assets of approximately $1.4 billion and its online banking platform helps to further expedite the loan process, a distinct advantage to help expedite activity under the relief program.

Source: RE Journals

Mar 31 1 Comment

For Retail Sector, Liquidity And Communication Key To Surviving Coronavirus Crisis

Author: Admin Roy

Categories: Allapattah,Aventura,Commercial News,Miami Beach,Retail,Trends,Wynwood

Measures to contain the spread of coronavirus are still shifting by the day — and so are responses by investors, developers, builders, banks and buyers. To track the impact in real-time, RE|source Miami is asking area real estate professionals in various sectors for on-the-ground reports.

Today we hear from Michael Comras, president & CEO of the Miami-based Comras Company, which specializes in the development, leasing and sale of urban and suburban retail properties across South Florida.

As a principal in various development entities, Michael has also been involved in shaping retail in high-profile destinations including Coconut Grove, Miami Beach’s Lincoln Road, Design District, Wynwood, and Downtown Miami.

Q: How is the South Florida retail sector coping with the unfolding coronavirus crisis, and the economic slowdown we are experiencing?

In the short term, the market has been significantly impacted due to the government mandates requiring that all restaurants and non-essential retailers close their doors to curb the spread of COVID-19.

As a community, we need to acknowledge the challenging times ahead and recognize that by working collectively we will get through the pain and ensure that the retail and restaurant community lands on its feet. Now more than ever, tenants and landlords need to work in unison toward a common goal: sustaining business and our retail and restaurant economy.

Everything that existed prior to the coronavirus pandemic will exist again, but there is no silver bullet to solve the economic slowdown. The building blocks to recovery will depend on solid relationships and positive collaboration amongst all stakeholders.

Landlords do not want widespread vacancies and tenants want venues where they can grow their business and thrive. Fusing these objectives into a cohesive goal will allow the retail sector to reemerge stronger, faster. In addition, banks and lenders need to work closely with developers and property owners to make sure liquidity continues to flow. State and Federal financial relief will also provide necessary support.

What is the state of construction in Miami-Dade? Are real estate projects still getting built, and have timelines been delayed due to the virus?

The good news is that most construction projects in Miami are making headway and moving forward as planned, to the extent that the work can be completed in a safe manner. Construction firms are following strict guidelines to ensure social distancing inside job sites.

We expect to see delays in lease negotiations and leases that have not been executed. The permitting and approval process required for tenant interior buildouts will also take longer, and projects currently undergoing inspections may lag as there are new restrictions that will limit on-site inspections. In addition, the plan approval process will be extended by cities prohibiting the “walk-through” of plans. A process that provides for a quicker review of buildout plans.

Many retail tenants have shut their businesses. How are you counseling regarding landlords and rent concessions?

Communication is key. There is no one-size-fits-all strategy to resolve these issues. Every landlord has a unique relationship with their tenants and the parties must openly communicate to arrive at a sustainable solution that can work for both sides.

Local retailers and restaurateurs are integral to the fabric of our community and, unfortunately, they are the ones being most affected. In the spirit of working through a difficult time, all sides must be honest and transparent. Often, landlords are not privy to tenant sales figures, which is the main indicator of how a business has been performing. It will be important for tenants and landlords to look at the sales trends prior to the crisis to strategize towards a successful resolution.

Access to information can help guide landlords when evaluating potential rent concessions for their tenants. Solutions may include rent abatement, deferrals or other payment structures that allow both the tenant and landlord to navigate this hardship and remain open for business.

Do you anticipate that this outbreak will have a long-term, lasting impact on the way real estate projects are planned and designed?

Prior to COVID-19, retail was already going through a major transition, becoming more experiential and interactive. This will only become further pronounced as we emerge from this pandemic. At the same time, people are becoming even more accustomed to ordering goods online – since they have no other option at this time – and this could have a ripple effect on select brick-and-mortar businesses. Retailers will need to continue to improve their business’s online capabilities.

Miami is a unique “city of villages”, a series of walkable destinations such as The Miami Design District, Wynwood, Miami Beach, Brickell, Coconut Grove, Downtown Miami and South Miami. Connectivity, walkability, and revitalization will continue to fuel our local real estate economy. As human beings, we are social creatures who thrive on congregating and being a part of something greater than ourselves. Experiential retail will perfectly align with the pent-up demand people will have to enjoy experiences from dining and shopping to family entertainment once these stay-at-home measures are lifted.

There is no city as resilient as Miami. We’ve endured natural disasters with devastating hurricanes, deadly diseases with Zika and H1N1, and now the novel coronavirus – but with each setback we’ve come back stronger and have continued to thrive. This is a serious crisis that we will overcome. By supporting one another and working together, we will once again come out on top.

Source: Miami Herald

Mar 27 No Comments

Health-Centered Communities May Start To Resonate In Coronavirus Era

Author: Admin Roy

Categories: Commercial News,Development,Healthcare,Trends

Health-centered communities, neighborhoods where millennials, baby boomers, technological advances, and new health care delivery models all converge, can be the blueprint of urban and suburban planning even in the age of COVID-19 and especially post-COVID-19, says Dennis Frenchman, Director of the MIT Center for Real Estate and the Class of 1922 Professor of Urban Design and Planning.

“Baby boomers are looking for convenient, affordable, aging-in-place health care options. Millennials, meanwhile, are pursuing physical environments that support their well-being and community-centric values,” Frenchman tells GlobeSt.com. “Our goal is to provide a blueprint for how to navigate these complex and profound demographic and cultural shifts taking shape throughout our society.”

Frenchman and his colleague, Stanley Shaw, plan on offering the course, Developing Health-Centered Communities: The Next Revolution.” in Real Estate in the Fall.

Baby boomers are aging and healthcare is foremost on their mind while most millennials are trying to lead healthy lifestyles by eating healthy foods and leading active social lives.

“These two generations are colliding in terms of health and wellness,” observes Frenchman.

Another plus to these communities for baby boomers how older buildings relate to their health.

“Living and working in an older, poorly ventilated building can negatively contribute to your health and longevity,” explains Frenchman. “If you have better quality air, sunlight and an overall healthy environment, landlords and developers can get premium rents.”

For these and other reasons, millennials are now suggesting their parents move to a health-centered community where parents can age in place instead of assisted-living facilities. As a result, the younger generation has more contact with the older generation, Frenchman says.

These communities tend to feature health centers in addition to the ubiquitous clubhouse. The developers also encourage walking around the community instead of driving everywhere. Instead of flattening hills, developers keep them intact to promote more exercise and movements.

“Health-centered communities also feature bike trails, social opportunities, horse stables and wellness programs,” says Frenchman. “Developers who offer these products will garner a lot of interest from all age groups.”

COVID-19

People are naturally social animals and the coronavirus has thrown a wrench in attending or hosting social events. In this age of social distancing however, healthy-centered communities can easily adapt to not interacting or engaging at any given time.

“Technology will solve some of the need but not necessarily all. However, it can work for a period of time,” explains Frenchman. “With digital technology, and in a health-centered community, patients are monitored remotely in their own environment. They can actually monitor their own oxygen, pollutants, carbon monoxide, etc. These tests are important for many reasons but it also shows you the physiological response of people as they live on their own environment.”

Frenchman believes these health-centered communities are simply a better way of living.

“There are less ER visits and less hospital stays,” says Frenchman. “Encouraging people to use their body and minds and overall just take care of themselves in this age of COVID-19 is always a good thing and it can also result in profits.”

Source: GlobeSt.

Mar 26 1 Comment

Supermarkets Are Packed. How Will REITs That Own Grocery-Anchored Centers Perform In The Long-Term?

Author: Admin Roy

Categories: Commercial News,Retail,Trends

As Americans flock to grocery stores during the coronavirus crisis to stock up on essentials, foot traffic at grocery stores has soared. Placer.ai, a platform that tracks retail activity, found year-over-year traffic spiked by 40 percent at Albertsons stores and by 36 percent at Kroger stores on March 13 through 15.

At the same time, stock prices of publicly-traded owners of grocery-anchored shopping centers have cratered. For instance, the stock of New York City-based retail REIT Brixmor Property Group Inc. tumbled from a 2010 peak of $21.33 on Feb. 20 to $12.40 on March 17. That’s a decline of 41.9 percent.

Jericho, N.Y.-based retail REIT Kimco Realty Corp. saw a similar drop—its stock plummeted from a 2020 high of $20.45 on Jan. 23 to $10.86 on March 17. That works out to a decrease of 46.9 percent.

Brixmor and Kimco aren’t the only retail REITs being punished by the stock market. As of March 17, year-to-date total returns had plunged 42.7 percent for all retail REITs, according to the Nareit trade group. Regional mall REITs have been hit hardest, with a 56.4 percent fall in year-to-date total returns. The dive in total returns was 38.9 percent for shopping center REITs and 33.3 percent for those with free-standing stores.

A boost for grocery-anchored retail?

Despite tanking stock prices, America’s dependence on grocery stores could provide a long-term lift to Brixmor, Kimco and similar REITs.

In the short term, though, grocery chains could experience a temporary dip in foot traffic as people stay close to home, Placer.ai researchers note.

“That being said, this [recent] momentum could play a role in making this uncertain time easier to get through, giving grocery chains a bit of a boost before a more difficult period,” according to Placer.ai. “The strongest players will find ways to conduct business and continue building on customer loyalty, with timely restocking and home delivery options.”

This scenario should, in turn, help REITs with large portfolios of grocery-anchored shopping centers survive over the long haul—particularly compared with malls and other retail properties that lack necessity retail componenets.

Aside from Brixmor and Kimco, other publicly-traded REITs with a substantial amount of grocery-anchored shopping centers include:

San Diego-based American Assets Trust Inc.
Cincinnati-based Phillips Edison & Co. Inc.
San Diego-based Retail Opportunity Investments Corp.
Beachwood, Ohio-based Site Centers Corp.
Greenwich, Conn.-based Urstadt Biddle Properties Inc.
Houston-based Weingarten Realty Investors.

Still open for business

Among publicly-traded REITs that own grocery-anchored centers, lower-levered REITs will likely “outperform,” notes Evan Hudson, a partner at New York City-based Stroock & Stroock & Lavan LLP whose specialties include REITs. Furthermore, Hudson anticipates those that can tap into lower-interest borrowing will try to expand their portfolios.

However, not every tenant at a grocery-anchored shopping center will thrive during the coronavirus pandemic.

“Even if people are dissuaded from shopping for non-essential goods or going to the movies, the grocery stores and pharmacies are open for business,” Hudson says. “Of course, grocery-anchored real estate companies generally aren’t pure plays—the non-grocery components of the centers will see flagging performance…”

‘Reliable cash cow’

If—as many economist predict—the U.S. enters a recession, grocery-anchored retail centers will be more recession-proof than, say, strip retail centers, says Alan Cafiero, director of the national retail group and net leased properties group at commercial real estate services company Marcus & Millichap. Grocery stores “will survive and perhaps even thrive in a time like this,” he says.

“This type of pandemic tells us that it’s essential human needs that underscore the importance of a grocery tenant in a shopping center,” Cafiero says. “If you know that your anchor is functioning on all cylinders, you know that the majority of your income in that shopping center is secure. This is why the grocery-anchored centers are the most desirable retail in the market.”

The weakening of bricks-and-mortar retail makes every center vulnerable to economic slumps, notes Jerry Reichelscheimer, chairman of the retail leasing and development practice at Miami-based law firm Akerman LLP. But for owners of shopping centers, grocers are a “reliable cash cow,” he says.

“Although a grocery store might not be as attractive as an Apple store or otherwise produce the same high rental stream as some of the more flashy retail tenants, it is a steady revenue source,” Reichelscheimer says.

Strings attached

But that cash cow comes with a caveat. Reichelscheimer says any landlord of a retail center must explore the viability of a grocer before leasing space to it. For example, a grocery store should be able to adapt to shoppers’ demands for amenities like home delivery and order pickup, he says.

“The grocery chain needs to be very flexible, able to move and change quickly, and have the economic background to withstand disruptions to their stores,” Reichelscheimer notes. “A weak grocery store chain that doesn’t have vision is just as vulnerable as other retailers.”

The coronavirus pandemic promises to reshape our long-term shopping behavior, including how we buy groceries, as homebound Americans depend more heavily on e-commerce and grow accustomed to it, adds Patrick Healey, founder and president of Caliber Financial Partners LLC, a financial advisory firm in Jersey City, N.J. As a result, grocery chains and other retailers will need to undertake competitive tune-ups.

The future of online grocery shopping

Still, many people don’t feel comfortable buying groceries online, as they want to see and touch fruits, vegetables and other goods, Healey notes. A Gallup Poll taken in July 2019 showed that 81 percent of Americans had never ordered groceries online.

“Sectors that are able to capitalize on the switch to e-commerce and deliver that way will do better than others, but there’s no doubt retail is one of the areas that will suffer significantly,” Healey says.

The current “grand experiment” of staying indoors to avoid coronavirus exposure could spur a long-term shift in the way we shop for groceries, according to Scott Crowe, chief investment officer at Plymouth Meeting, Pa.-based CenterSquare Investment Management LLC. This could harm retail REITs and other owners of grocery-anchored shopping centers, although Crowe says it remains to be seen whether coronavirus-imposed changes in consumer patterns will stick.

In a March 13 survey by New York City-based Gordon Haskett Research Advisors LLC, one-third of shoppers said they’d purchased groceries online during past week, according to Bloomberg. Of those consumers, 41 percent were buying groceries online for the first time.

“Consumers have been slow to adopt e-commerce as a way to shop for groceries, but consumers today, in an effort to quarantine as much as possible, have shown significant adoption of online grocery shopping,” Crowe says.

Source: NREI

The Post COVID-19 MOB Market

“Our culture already has bought into it — design just needs to catch up,” added Jose Lugo, vice president at Miami-based architecture firm Bermello Ajamil & Partners Inc.

“The things I hear on calls now, I say, ‘Wow I never thought of that,'” Schooler said.

“We’re all going to get back to some sort of normalcy,” he said.

“We think that it’s their duty to pay April rent,” chief executive officer of Kimco Realty CEO Conor Flynn told the Journal. “The customer base is going to recognize who the bad actors are.”

“The retailers think they have leverage here and they’re trying to use it,” Green Street Advisors analyst Vince Tibone said. “I see it potentially becoming a fight and going into litigation.”

Covid-19’s effects

“The good news is that these are all state-of-the-art office environments that will be adaptable and scalable in ways that the new office tenants are going to be looking for, places that are safe, that offer flexibility in workspace,” Garcia said.

“Wynwood is resilient, it always bounces back. We had Zika,” Wernick said. “Businesses that have capital and have long-term growth potential might be able to secure the office space they need that’s advantageous to them.”

Other market sectors

“At the end of the day, it’s a real neighborhood,” said Gaston Miculitzki of BM2 Realty, a Wynwood-based brokerage.

“Now if you’re buying something, you’re buying it at a good value,” Arellano said. “All of the foam of the market got taken off.”

Office space supply

More projects completed and planned

Wooing tenants

“What’s important about the Spotify lease is Spotify had identified Wynwood. It wasn’t like they were between the Oasis in Wynwood and two buildings in Brickell and Coconut Grove,” said David Weitz, co-founder of Carpe Real Estate Partners, developer of the Oasis.

“It is a niche market, with significant demand by investors and with limited supply,” Bodnar says. “This supply-demand imbalance, combined with a very disciplined development market, will continue to provide stability … .”

“As essential service providers, many medical office facilities continue operating without disruption, regardless of the environment,” Merrill says.

“We’re interested to see whether this time is the catalyst for greater adoption of telemedicine for certain specialties as regulatory barriers are removed and patients are more willing to try it, given the lack of alternatives,” Costa says.

“Given the current market environment, investors are looking to invest more in defensive industries like medical office,” Bodnar says. “The current market environment has put a spotlight on the need for health care facilities and the demand for services by patients.”

“There will always be a need for medical office buildings, and technology will have a bigger impact on where these facilities are to be built and how they will be designed in the future,” he says.

“Radius Bank has expanded our staffing in anticipation of this program and the important work that is to be done for businesses across the country,” Beukinga said. “We are poised and ready to help small businesses, and the men and women behind them, during this challenging time.”

“These two generations are colliding in terms of health and wellness,” observes Frenchman.

“Living and working in an older, poorly ventilated building can negatively contribute to your health and longevity,” explains Frenchman. “If you have better quality air, sunlight and an overall healthy environment, landlords and developers can get premium rents.”

“Health-centered communities also feature bike trails, social opportunities, horse stables and wellness programs,” says Frenchman. “Developers who offer these products will garner a lot of interest from all age groups.”

COVID-19

“There are less ER visits and less hospital stays,” says Frenchman. “Encouraging people to use their body and minds and overall just take care of themselves in this age of COVID-19 is always a good thing and it can also result in profits.”

A boost for grocery-anchored retail?

Still open for business

‘Reliable cash cow’

Strings attached

The future of online grocery shopping

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