Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/128835
SHOPPING CENTER FUNDAMENTALS Vacancy % 12 10 8 6 4 Asking rent 2012 Q4 2012 Year-End 2012 Q3 2012 Q2 2012 Q1 2011 Q4 2011 Year-End 2011 Q3 2011 Q2 2011 Q1 2010 Q4 2010 Year-End 2010 Q3 2010 Q2 2010 Q1 2009 Q4 2009 Year-End 2009 Q3 2009 Q2 2009 Q1 2008 Q4 2008 Year-End 2008 Q3 2008 Q2 2008 Q1 2007 Q4 2007 Year-End 2007 Q3 2007 Q2 0 2007 Q1 2 $ 20.00 19.75 19.50 19.25 19.00 18.75 18.50 18.25 18.00 17.75 17.50 17.25 17.00 16.75 16.50 16.25 16.00 Effective rent Source: Reis Hausman attributes this problem, in part, to a lack of a national Internet sales tax, which leaves brick-and-mortar retailers at a disadvantage. In March, members of the Senate voiced support for broader sales-tax collections on online purchases, but it's unclear whether such a law will be passed. Internet shopping competition has caused shopping center owners to rethink the formula for stability in recent years. "Our defnition of a retail tenant has changed," Massey explains. "We are seeing more nontraditional users go into shopping centers, including medical, educational, and ftness centers." Most of these companies ofer services and/or experiences that can't be purchased online — at least not yet. In addition, "Formerly prohibited uses, such as massage spas and motor scooter shops, are now viable additions to shopping centers, so landlords are compelled to approach anchor tenants for permission to pursue these leases," says George C. Larsen, CCIM, of Larsen/ Baker in Tucson, Ariz. Te medical tenants are perhaps the most notable. Healthcare users such as radiology centers, dialysis centers, or physical rehabilitation spaces were once only seen in multistory ofce buildings, says David J. Ahn, CCIM, CPM, vice president of asset services with MEI Real Estate Services in Los Angeles. Now those users are moving into community and neighborhood shopping centers, which ofer advantages such as adequate parking, easier access, and better exposure. Tis migration is a boon for shopping center owners, according CCIM.com to Bob Matias, senior vice president of retail at Equity in Columbus, Ohio. "Healthcare tenants tend to be strong credit, sign long-term leases, have a very low default rate, and drive daytime trafc to the center," he explains. Hausman cites a recent lease of 5,000 sf in a Louisville community center to a hospitalowned physician group. "Other tenants are ase trafc, thrilled with the increase in trafc," he adds. Ahn expects this trend to continue for many years, driven by the baby boom generation's increasing need for convenient medical services. nts Triple-net retail tenants that traditionally favor free-standing properties — T-Mobile and Dunkin' Donuts, for example — have also begun to backfll space created by the increase in shopn ping center vacancy. "It makes t ally," more sense economically," says esident Randy Blankstein, president of Te Boulder Group in Northbrook, Ill., which specializes in single-tenant net lease properties. "Shopping center hopping May | June | 2013 29