May 22
A visitor to RECon this week could tour real estate markets around the country without ever setting foot outside the Las Vegas Convention Center. Amid the customary whirl of dealmaking, educational sessions and social events, some of the 35,000 professionals attending the International Council of Shopping Centers’ annual spring convention paused to shed light on the latest trends in their local markets. What follows is a sampling of their insights.
Philadelphia: Youth Movement Sixty percent of Center City’s population is aged 35 and younger, an example of the Millennial influence on the nation’s urban core, reported Brandon Famous, national retail lead for CBRE Group Inc., who is based in the City of Brotherly Love. As one effect of that trend, “Neighborhoods that people would not have considered living in four or five years ago are being gentrified,” reported. In addition, he said. On the retail leasing front, strong categories include grocery stores, restaurants, fitness and active wear, such as Under Armor’s recent lease at 16th and Walnut.
Los Angeles: Year of the Hotel As downtown L.A.’s residential community comes into its own, development ranges from institutional-caliber mega-projects and creative adaptive reuse projects on the outskirts. “As these parking lots go away, the downtown councilman wants to see some greater density,” said Derrick Moore, principal and retail specialist in Avison Young’s downtown L.A. office, part of a team of senior professionals who met with CPE.
Moore predicted that 2016 and 2017 will both be “the year of the hotel,” led by Downtown L.A.’s megaprojects is the Wilshire Grand Center, Korean Air Lines’ $1 billion tower. When it opens in 2017, the 73-story hotel/office building will be the tallest structure west of the Mississippi River.
Washington, D.C.: Capital Ideas Bethany Kazaba Scanlon, principal & co-founder of Washington Retail Group, came to RECon in part to drum up interest in several properties in the capital region. Among them is 14th & G, the former home of the National Bank of Washington, located blocks away from the White House and the Capitol. Scanlon believes that the cluster of offices, hotels and high-quality retail in the area will make the renovated property a good fit for flagship retail.
Scanlon is also identifying expansion opportunities for Inova Health System’s urgent care facilities in Washington and in northern Virginia. Despite the growing demand for affordable alternatives to hospital emergency rooms, retail center owners are slow to accept them. The challenge, Scanlon said: “Transforming the thinking of landlords today and getting them to understand that it’s a very, very credit-worthy tenant.”
New York City: About Town CBRE’s Famous speculated that rents have peaked on Fifth Avenue and Manhattan’s other High Street retail corridors. He also noted the announcement on May 13 that the city is getting its first Wegmans. The grocery chain will anchor $140 million redevelopment of Admiral’s Row at the Brooklyn Navy yard. Steiner L.L.C., the project’s developer, also 78,000 square feet of additional retail, 126,000 square feet of light industrial space and 7,000 square feet of community facilities.
New Orleans: Crescent City Comeback In the decade since it was ravaged by Hurricane Katrina, the Crescent City has proved its resilience, attracting tourists, investors and a new wave of downtown residents, noted Kirsten Early, partner & director of retail for SRSA Commercial Real Estate Inc., a diversified services firm headquartered in Metairie, La.
At 1200 Poydras St., local developer Christopher Robertson is planning a six-story parking garage topped by a 40,000-square-foot Dave & Buster’s, the restaurant chain’s first New Orleans. Nearby, Robertson is developing New Orleans’ first Hyatt House, a 194-key hotel scheduled to open this year on eight floors of a redeveloped 24-story office building at Poydras Street and Loyola Avenue.
Houston: Silver Lining The nation’s energy capital is feeling the effects of the recent tumble in oil prices. Dozens of multi-family development deals are on hold, reported Kenneth Katz, a principal and co-founder of Baker Katz L.L.C., a tenant representation and development company. “As soon as oil prices collapsed, equity (investors) pulled back and said, ‘No more projects.’”
Yet Katz maintains that the price decline is a blessing in disguise. Had the price decline cooled off Houston’s feverish growth much later, developers, investors and lenders would likely have been in the midst of building multi-family product for a much softer market. “It is a very good thing for Houston to experience this collapse in oil prices,” he said. “I think there is a sentiment that we avoided what could have been” a far worse situation.