News
Retail Winners and Losers
October 1, 2012
| Retail is healthier than last year, but lackluster job growth spells trouble for secondary and tertiary markets. That's from CBRE West Coast retail chief Jeff Moore, who one of 4,000 people at San Diego's Convention Center for ICSC's annual Western Division Conference. (We talked to them all... even if they weren't listening.) |
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| Here's Jeff and colleague Jacqueline Bayley. There's still plenty of work for brokers: CBRE recently picked up leasing and management for The Shops at Anaheim GardenWalk and is repping tenants from Dick's Sporting Goods to Total Wine. When Jeff isn't at the office, he's likely planning for his annual 100-mile horseback ride in the Sierra Nevadas; “we get to be cowboys for four days,” he laughs. |
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| At their office, we caught up with CBRE National Retail Investment Group-West’s John Read, Patrick Toomey, Phil Voorhees, and Megan Read. “Demand for Orange County retail properties continues to outpace supply, and we’re seeing strong pricing from all investor types, including institutional, private, overseas, and even owner-user buyers,” John tells us. Five of the retail investment group’s 29 retail property closings so far this year have been in OC, with the largest being the $122M sale of The Orchard in Lake Forest. |
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| Don't expect the elections to slow retail investment, Colliers International's Chris and Dave Maling tell us. Especially active are 1031 exchange investors. “The spread on the 10-year is anywhere between one-and-a-half and one-and-a-quarter,” he says, “and you can buy properties with cap rates of five, six, or seven, and take advantage of that structure.” How these two brothers have worked together since 1997: “We never argue,” says Chris. |
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| LA-based Westwood Financial's Randy Banchik tells us opportunities to buy stabilized retail properties in SoCal are “very few” thanks to an influx of institutional buyers. “It's almost impossible to be competitive because every REIT in the country that's in retail wants them,” he says. Compared to pre-recession levels, pricing for the best-quality assets are at historic highs—which is why his firm is focusing on distressed properties and loans. Markets he's focused on: Texas, Atlanta, the Carolinas, and Chicago. |
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| Marcus & Millichap national retail group head Bill Rose tells us the combination of cheap debt and tough underwriting standards means investment in quality retail—and CRE in general—is unlikely to abate soon. “We haven't seen debt like this since 1951,” he says, and real estate is fast becoming the favorite asset class of institutional and individual investors. (Our favorite class of the 1950s included Potsy and Chachi.) His firm anticipates closing about $60B in business nationwide this year, up 30% from 2011. That being said, everything isn't rosy (except for Bill's last name). There's a substantial amount of legacy debt, which he says is being dealt with more conservatively than in the S&L days. |
