Commercial Investment Real Estate

MAY-JUN 2014

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/306204

Contents of this Issue

Navigation

Page 34 of 54

30 May | June | 2014 Commercial Investment Real Estate grew as a result of the Base Realignment and Closure Commission, which created a lot of new demand for of ce and industrial space in the region. T e of ce market cooled along with sequestration. However, the retail growth in the past year has been tremendous in comparison to the past, notes Murray. T e increased population and growth in higher-income families that moved here because of BRAC has helped the city's retail and restaurant sector f ourish, he adds. For example, CBL & Associates Properties recently completed a nearly 50,000-sf expansion at its 1 million-sf Cross Creek Mall. Across the street, the new owners of Marketfair Mall are transform- ing the former enclosed mall to a higher-end outdoor lifestyle center. "It is drawing nationwide attention from a lot of retailers," says Mur- ray, who is the leasing agent on the project. Anchors include Carmike T eaters, Gander Mountain, and H.H. Gregg, and the redevelopment is scheduled for completion in October. Boise also has seen a spike in its retail development with nota- ble projects such as Eighth and Main, which opened this year and brought more than 29,000 sf of retail to the downtown area. Ruth's Chris Steak House opened in the new building in February and will be followed shortly by local concepts. CenterCal Properties also recently completed phase two of T e Village at Meridian, a 500,000- sf retail entertainment development. T e south phase, which opened last October, features lifestyle tenants new to market such as Charm- ing Charlie, Yard House, and the Kona Grill. One of the reasons that the Boise market is getting more attention from retailers now is that the MSA population has sur- passed 600,000. "It does put us on the radar a little bit for size," says LeAnn M. Hume, CCIM, CLS, managing director and retail and investment specialist at Cushman & Wakef eld/Commerce in Boise. Boise also has had its f rst Whole Foods and Trader Joe's open in the marketplace. "That catches the attention of other retailers and gives them an indication that it might be time to start looking at Boise," she adds. Such pockets of opportunities exist around the country. Another promising sign is that vacancies continue to improve in many metros. For example, cities such as San Francisco, Pitts- burgh, Salt Lake City, and Honolulu are some of the tightest markets, with retail vacancies dipping below 6 percent. As space becomes more dif cult to f nd, particularly in newer class A prop- erties, retail construction will gradually creep higher. However, there are no signs that activity will accelerate more rapidly in the next 18 months. A number of factors need to align to expand the development pipeline. T e biggest factor may be time. "Vacancy will continue to improve and rents will rise in those core MSAs that are enjoying job growth," says Rose of Marcus & Millichap. T e return of more wide- spread development will depend on the economy, stronger retailer demand, and available f nancing. "We have to continue to monitor job growth, which is becoming favorable," he adds. "We have to con- tinue to market to capital markets. If capital markets don't support new construction in certain markets, then we are not going to see signif cant new construction." Lastly, more robust development will weigh heavily on the retailer, particularly the department stores and big-box retailers that have the ability to anchor signif cant mall and shopping center projects, he says. Beth Mattson-Teig is a business writer in Minneapolis. -22 -19 -16 -13 -10 -7 -4 -1 2 5 8 11 14 2009Q1 2009Q2 2009Q3 2009Q4 2009Y 2010Q1 2010Q2 2010Q3 2010Q4 2010Y 2011Q1 2011Q2 2011Q3 2011Q4 2011Y 2012Q1 2012Q2 2012Q3 2012Q4 2012Y 2013Q1 2013Q2 2013Q3 2013Q4 2013Y 2014Q1 Completions Net Absorption millions SF 2014F Lowest-Vacancy Retail Markets Source: Marcus & Millichap San Francisco 110 New York City 720 Salt Lake City 200 Oakland, Calif. 40 U.S. Total 51,000 Pittsburgh 360 YE14F Completions 000s SF YE14F Vacancy Rate (%) 2 4 6 1.9 2.3 3.3 3.4 3.7 6.5 Retail Completions and Net Absorption Source: Reis 2 6 - 3 1 F - R e t a i l P u s h - T i e g _ A l t . i n d d 3 0 26-31 F-Retail Push-Tieg_Alt.indd 30 4 / 2 9 / 1 4 2 : 4 9 P M 4/29/14 2:49 PM

Articles in this issue

Archives of this issue

view archives of Commercial Investment Real Estate - MAY-JUN 2014