Commercial Investment Real Estate May/June 2017 - Page 30

Average Annual Retail Sales Growth grocery-anchored centers and vertical mixed-use and infill development in urban and close-in sub- 2005–2010 2010–2014 2014–2016 urban neighborhoods. Despite some soft spots in the market, con- Electronic shopping and struction has returned to some areas of Rochester. mail-order houses “There is more development than has taken place in a long time,” Korn says. Restaurants A new REI store is proposed off I-390 that is scheduled to open in fall 2018. New construc- Autos and gasoline tion also is occurring in the city’s College Town, a mixed-use district near the University of Roch- General merchandise, food, clothing, ester and University of Rochester Medical Center. health, and pharmaceutical stores College Town features new student housing and a Furniture, electronics, sporting goods, hotel, along with retail and restaurant tenants such building materials, and miscellaneous as Barnes & Noble, Verizon, Jimmy John’s, and -$20 $0 $20 $40 $60 $80 $100 Texas de Brazil steakhouse. Source: Reis Las Vegas also has seen retail development return along with its accelerating recovery. Some of the deliver that,” Graul says. “So that has become the real focus older big box developments that stalled out in the recession for new development.” are now getting brought back to life. For example, Innovative Concepts Associates consulted Two of the hottest submarkets in Las Vegas are South- on the redevelopment of Springfield Town Center in the west and Summerlin. Both areas have seen existing spaces Washington, D.C., metro that involved remerchandising fill in and new developments emerge. “Retailers are flocking 60,000 sf into new restaurant space. The new restaurant to these areas because of the healthy demographics,” says component now serves as a new anchor for the project, with Chris Jackson, CCIM, CPM, a broker at North American tenants that include Yard House, Nando’s Peri, Zinburger, Commercial in Las Vegas. and Dave & Buster’s, among others. However, some of the new projects coming to fruition are different in nature. Some developers are replacing Slowing New Development traditional anchor tenants with an extra pad site that can Retail development remains thin by historical standards. accommodate a single tenant, such as a daycare or auto New construction in the U.S. specific to neighborhood center, or a building that can house two to five smaller and community centers totaled just 9.6 msf in 2016, tenants. according to Reis. However, development is returning on “So, there are different types of footprints than we have a select basis, with some bright spots for growth, including seen in the past,” according to Jackson. That neighborhood center space is in demand from mobile phone pro- viders, restaurants, and fitness centers, among other tenants. “There is definitely still demand for Trends in Retail Niches space, even if it is not credit tenant based,” he says. 7.5% Many retail markets have weathered the Great Power Center Recession and have stabilized, but they are still Big Box 7.0% battling headwinds from e-commerce, changing Grocery consumer behavior, and shifting demographics. 6.5% Retail experts also are keeping a close eye on Single Tenant Malls retailers that may not be able to execute on new 6.0% Drug Store strategies that will help solidify their position in Lifestyle Center the new retail marketplace. 5.5% “I think there is some volatility ahead of us, and I think the retail landscape as a whole is going 5.0% Urban/Store Front to change due to what’s happening with online 4.5% sales,” Jackson says. Nominal, in millions -60% -50% -40% -30% -20% -10% 0% YOY Growth, 12 Months to Feb 2017 Source: Real Capital Analytics 28 May | June 2017 10% 20% 30% Beth Mattson-Teig is a business writer based in Minneapolis. COMMERCIAL INVESTMENT REAL ESTATE