Trends Archives | Page 14 of 19

Apr 18 No Comments

Medical Office Buildings Poised For Quick Recovery

Author: Admin

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 No Comments

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

Author: Admin

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 08 No Comments

Silicon Valley Heads To Wynwood’s Office Market

Author: Admin

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

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 No Comments

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

Author: Admin

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 No Comments

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

Author: Admin

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

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 No Comments

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

Author: Admin

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

Mar 18 No Comments

A Strategy For Successful Retail In A Changing Market

Author: Admin

Categories: Commercial News,Development,Retail,Trends

Millennials brought on a cultural shift built around valuing experiences over material things. This trend resulted in another movement—away from suburban sprawl and toward live-work-play and mixed-use environments.

Commercial Property Executive asked Scott Sherman and Ben Mandell, co-founders of Miami-based real estate investment firm Tricera Capital, how they choose the right neighborhoods for bringing more experiences and character to a city. Approximately one year ago, the firm acquired the Palm Beach Post building, a former printing press and newspaper headquarters located in West Palm Beach, Fla., with the intention to transform it into a mixed-use building encompassing retail and office space. The project is scheduled for completion in the first quarter of 2021.

The duo also talked about the way adaptive reuse and redevelopment projects can enhance and preserve the essence of a community by creating relevant retail experiences while honoring the history of a building.

The retail segment has been constantly changing for the past few years. How would you describe the sector today?

Sherman: It depends on the type of retail. Retail is definitely evolving, but not all retail is dying as you read in the media. Our focus on emerging and mature growth markets with a dense urban core has been proving out. Service and entertainment-focused retail is doing well, and larger national brands that have been quick to adapt, downsize and change merchandising and product offerings have also been performing well.

What kind of retail assets and tenants are you targeting in this late-cycle environment?

Mandell: We are focused on neighborhoods and cities in the Southeast U.S. with a strong population and job growth. Over the past decade, the national trend has shifted from suburban sprawl to live-work-play and mixed-use environments. With e-commerce thriving, we are focusing on retail uses that can’t be replaced online. Food and beverage and entertainment-type uses are thriving right now, but you need to balance that with a mix of other uses such as fitness, service and some dry goods as well.

Retail today is mostly about experiences. How do you make sure that your properties remain relevant for tenants and customers alike?

Sherman: I like to say we are in the business of betting on operators and concepts. We come across a lot of new operators and concepts and need to determine which ones we believe will be successful within our project, and which operators have the experience and ability to execute. When we find great operators in a market, we like to try and work with them to create new concepts that we believe will be synergetic with our tenants.

This is extremely important today, as the idea of “credit tenants” is not what it used to be. Most of these new experiential tenants are not AAA-credit, nor do they have significant balance sheets to put behind the lease.

What strategy do you use when choosing a new location for a retail investment?

Sherman: We take a more of a rifle than a shotgun approach when exploring a new market. We will first look for cities with an influx of residential and office density/job growth. If the job market is strong and the residential market is growing, we look to find the street, neighborhood or pocket that has the bones and character to be a vibrant and pedestrian-friendly retail area that we can start to assemble and merchandise.

We also understand that every city/market is unique, so we like to understand the demographics and type of residents living and moving there to better cater the retail mix to the residents. We also try to embrace the local tenants and operators and sprinkle in regional and national tenants where needed. Central Avenue in St. Petersburg, Fla., is a great example of a street and city that checked all the right boxes, and we have been successful in executing our strategy there.

Source: CPE

Mar 17 No Comments

Health Care Real Estate Could Be A Coronavirus Safe Haven

Author: Admin

Categories: Commercial News,Development,Healthcare,Trends

It’s hard to imagine many stocks will do well through the coronavirus pandemic. But health care stocks and real estate investment trusts tend to be defensive sectors that investors flock to because they pay huge dividend yields.

So what happens when you combine the two?

Health care REITs might be a good bet in this scary market environment. Many are positioned well to help manage the COVID-19 coronavirus crisis, particularly companies that own and operate hospitals, medical offices and life sciences and biotech facilities.

“Health care REITs are generally the most defensive, economically resilient property type in the REIT industry,” said CFRA Research analyst Kenneth Leon in a report last week. “The group offers steady cash flow, low risk of rental rate volatility, and stable occupancy levels.”

Leon said that three in particular that he’s recommending are Alexandria Real Estate Equities (ARE), Healthcare Trust of America (HTA) and Medical Properties Trust (MPW).

Healthy Dividend Yields Are A Big Plus In Uncertain Times

The recent interest rate cut by the Federal Reserve may also help boost health care REITs — and all real estate firms — because of their solid dividend yields.

The three healthcare REITs that Leon recommends pay dividend yields ranging from 2.7% to 5%. With the Fed widely expected to slash interest rates again at its meeting next week, perhaps all the way back to 0%, the income that REITs generate will become even more tantalizing to investors flocking to safe havens.

“While COVID-19 has created near-term economic uncertainty, the REIT industry’s strong earnings, solid balance sheets, and high occupancy rates demonstrate that they are entering this situation well-positioned to handle a potential economic slowdown,” said Steven A. Wechsler, president and CEO of the Nareit trade group.

Senior Living Centers Look Risky

But not all health care real estate firms will thrive. Leon thinks investors should avoid companies that run senior living centers, because they won’t be able to safely show their properties to prospective new residents. He noted that many went into lockdown mode during the flu season of late 2017 and early 2018. And the COVID-19 outbreak is even scarier.

“Coronavirus may limit senior housing operators from showing their properties to prospective residents,” Leon wrote. “Precaution is a top priority for health care operators to better control an elevated death rate from severe flu conditions for the elderly.”

Leon remains wary of companies that operate senior housing centers, most notably Healthpeak Properties (PEAK), Ventas (VTR) and Welltower (WELL). Their rental revenue and profit growth will probably be squeezed by the admission of fewer residents.

“Operators cannot conduct visitor tours and sign up new residents.
Senior housing is in effect quarantined to new prospective residents and their families,” Leon wrote.

Source: CNN Business

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.

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.

“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

“Health care REITs are generally the most defensive, economically resilient property type in the REIT industry,” said CFRA Research analyst Kenneth Leon in a report last week. “The group offers steady cash flow, low risk of rental rate volatility, and stable occupancy levels.”

Healthy Dividend Yields Are A Big Plus In Uncertain Times

Senior Living Centers Look Risky

“Coronavirus may limit senior housing operators from showing their properties to prospective residents,” Leon wrote. “Precaution is a top priority for health care operators to better control an elevated death rate from severe flu conditions for the elderly.”

“Operators cannot conduct visitor tours and sign up new residents. Senior housing is in effect quarantined to new prospective residents and their families,” Leon wrote.

What Can We Help You Find?

“Operators cannot conduct visitor tours and sign up new residents.
Senior housing is in effect quarantined to new prospective residents and their families,” Leon wrote.