Commercial Investment Real Estate

JUL-AUG 2017

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.

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July | August 2017 31 A daptation is the key to survival and competi- tive advantage in biology — and commercial real estate. With markets changing rapidly, several commercial real estate professionals are fi nding new ways to adapt successfully to these con- stant evolutions. Trends such as vibrant downtowns, alternative lending, property and land reuse, and international investment in the U.S. can be ideal springboards for new business opportunities. Nationwide, individual cities are changing character, with an infl ux of millennials coming in and baby boomers moving back. "Indianapolis used to be a fl yover market for commercial real estate; now we are on the radar," says Angela Wething- ton, JD, CCIM, vice president of asset management and development at Browning in Indianapolis. "The greater Indianapolis metro area has seen tremendous growth and activity in urban expansion and diversifi cation." Developing Vertical Villages Progressing beyond traditional urban renewal, develop- ers in Memphis, Tenn., are strengthening its downtown neighborhoods. Two years ago, Shawn Massey, CCIM, became involved as a leasing broker in transforming the Crosstown Concourse from an abandoned 10-story Sears distribution center into a vertical urban village. "I saw a niche for third-party retail leasing representa- tion for urban and mixed-use projects in Memphis," says Massey, a partner at The Shopping Center Group LLC in Memphis. "Only a few developers had leasing teams with experience in urban projects. By leveraging our fi rm's success in the Atlanta market, I became involved with the Crosstown Concourse." The 1.1 million-square-foot redevelopment created a mixed-use property, with 620,000 sf of commercial and offi ce space, 265 residential apartments, and 65,000 sf of fi rst-fl oor retail space. The new retailers include a health- care provider, a high school, an urban grocer, several local specialized restaurants, a bank, a pharmacy, and a credit union. As of May 2017, the offi ce and residential spaces were nearly 100 percent leased and more than 85 percent of the retail space has been leased. "I had the opportunity to collaborate with a team that wanted to create a great neighborhood in a 10-story space," says Massey, who got to know the developers when he set up a tour for members of the Memphis CCIM Chapter in 2014. "A community has to include open green space and a sense of space. Those involved included an art history professor, architects, and a local real estate developer." Great neighborhoods with an urban feel create a great experience for shopping, so they can compete with online experiences, according to Massey. He credits his work with the Crosstown Concourse for giving him a new perspective about neighborhood development in urban settings. More important, this project has become the springboard to his fi rm's new business niche in Memphis. Spurring Reuse Development As markets swiftly evolve, commercial real estate pro- fessionals are adopting new ways to change properties to different uses, which, in turn, are transforming their communities. For example, in most of California, prop- erty values are sky-high, making development tough for all but companies with deep pockets. Opportunities, however, abound in repurposing properties for the high- est and best use. William Shopoff, CCIM, seeks less expensive prop- erties for redevelopment in transitional neighborhoods, those that require repurposing, or need environmental cleanups. For a recent mixed-use project in Newport Beach, Calif., Shopoff and his team are building urban $0 $400 $800 $1,200 $1,600 $2,000 Flex Industrial Retail Multifamily Office Total U.S. $ billions Big Six Primary Markets Secondary Markets Potential Investment Universe, by Market Classifi cation Sources: CoStar and PwC teekid

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