News
DISCOUNT IS THE NEW BLACK
December 13, 2011
| Oh, pardon us, we must have misread that. Discount is what will get you IN the black. The retailers that are making today's economy work are the TJX brands, Bed Bath & Beyond, Nordstrom Rack, and Ross Dress for Less. And to get them in your shopping center, you need to be prepared to offer cash for build-outs and improvements. |
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| Yesterday at Bisnow's Baltimore Retail Real Estate Summit, Kimco Northeast and Mid-Atlantic head Tom Simmons (who swears he wasn't reading crib notes on his hand) said these box retailers need to invest a good amount in their locations and are thus selectiveabout their landlords. About four years ago, the same number of retailers would have checked out one of his box locations. Now it's one or two. Still, Baltimore retail vacancy matches the national average. That means that no, it's not near the 2% you'll find in some pockets of New York City, but it's better than Atlanta's 10%. |
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| Brown Craig Turner Architects? Bryce Turner (center, with St. John Properties' Bill Holzman and Chesapeake Real Estate prez Neil Tucker) says plastic is what seems to be king around Harbor East, considering how full the restaurants always are. He says the big box is going urban, and urban-stacked retail is the biggest chunk of his business now. What excites him are brownfield redevelopments like The District at Canton Crossing, which bring new retailers to Baltimore. |
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| New concepts entering Baltimore like Blink Blanco (also opening at National Harbor in DC soon) and Angst from White House | Black Market creator Rick Sarmiento. Yesterday, we snapped Harbor East?s White House | Black Market (now owned by Chico?s). Bryce also says Anthropologie is headed for Harbor East. |
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| Continental Realty Corp prez Gene Parker (with Bryce and our moderator, Miles & Stockbridge?s Michele Cohen) says rental rates on renewals are actually climbing, while the new tenants are the ones often still sitting in the driver?s seat. They're where the TIs and other concessions are needed (though his firm won't ?invest? in just any tenant). One in-demand tenant that really needs TIs: restaurantsretrofitting other retail spots. |
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| Bill adds that restaurants are taking over. People want to get out,socialize, be entertained, he says. The fast-casual ones saved the day by expanding during the downturn. Other retailers helping fill out shopping centers: medical like urgent care and dentists, fitness, and frozen yogurt shops. (Word to the wise: FroYo is a terrible idea right after going to the dentist.) |
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| JPB Partners' Mike Kalinock serenades the crowd about restaurant revenue, causing a wistful Tom to daydream about the future of his firm's new investment in Owings Mills Mall's redevelopment. Mike, whose firm represents Greene Turtle in its Mid-Atlantic expansion, was saying restaurant year-over-year sales hit bottom in the middle of '09 but are improving as consumers gain confidence. |
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| On the investment side, Tom says it's hard to get lenders even to offer quotes on Class-B and C. The cap-rate compression happening in Class-A isn't trickling down as expected. That's why Continental, which specializes in B and C, is setting up its own fund but is keeping it low ($100M to $150M) because it's hard to find centers to buy. Gene says his firm's investors want immediate returns, so there's no point in raising more than it can invest profitably. |
