News
Retail Returns
September 4, 2012
| It seems just last year that landlords were giving retailers free rent, higher TI, and check-out scanners that used lasers from Krypton (point being, whatever it took). Now retail is thriving in San Francisco. At Bisnow’s event on the subject last week, a panel of experts said a recent uptick in activity by tenants could give landlords an upper hand. |
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| Federal Realty Investment Trust’s Jeff Berkes says the pendulum swing in favor of the landlords means an increase in development. His company is opening the first Walmart Neighborhood Market in South Bay at Westgate Center, located on the heavily-trafficked Saratoga and Hamilton Aves. Federal Realty is also in construction with a 212-unit residential community in Santana Row and is obtaining a title for a 220k SF Class A office building to be built in the same area (corner of Winchester Boulevard and Olsen Drive). |
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| Cornish & Carey Commercial Newmark Knight Frank's Julie Taylor says Union Square’s vacancy rate is the lowest it’s been in 10 years. (Those of you who read our issue last week remember she recently completed a deal there to welcome Japanese retailer Uniqlo to the West Coast.) One lasting change: deals take longer. Julie says it used to take around three months to sign a lease; now the process can go on for as long as a year: “A yogurt deal in six months if lucky." (And six more to lose the calories.) She believes the lengthy process is due in part to two factors—city permit delays and undermanned staffs at retail firms which have thinned the ranks available to process deals. |
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| Kimco Realty’s David Jamieson says the Bay Area has seen a faster recovery because of job growth in the tech sector and natural geographic barriers that limit supply. He continues to see growth and expansion on the big box retail side with mom and pop shops lagging. David hopes that will change with the launch of the Kimco Entrepreneurs Year Start (KEYS) program. It places qualified applicants into Kimco shopping centers with a year’s free rent (and support through startup incubation). He’s seen an uptick in interest and is excited to see how it will improve small shop leasing. |
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| While the economic downturn has meant downsizing for most companies, it’s allowed for rapid expansion for Grocery Outlet Inc. says firm co-CEO MacGregor Read. As a discount grocer, it's taken advantage of this time to grow. MacGregor feels the market is robust, as he’s seen a healthy amount of competition for spaces he's interested in (even in some outlying areas like Sacramento). |
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| Retailers' biggest challenge? Internet shopping, says Madison Marquette’s Eric Hohmann. For commodity retail, he believes customers are driven by price and convenience, often opting for the Internet. (We also find shopping in one's underwar to be easier online, but just barely.) With specialty retail, Eric says customers are driven by place and experience. Madison Marquette has been devoting more time to this, working with architects to conceptualize cooler-designed projects. |
