The Metropolitan Pier and Exposition Authority has recently announced it has started the process of choosing an architect to design the Event Center, a multipurpose project announced on May 16 by Chicago Mayor Rahm Emanuel and the MPEA.

The Event Center will house large business and professional meetings, DePaul University men’s and women’s basketball and a venue for concerts and special events. The project is scheduled for completion in the fall of 2016 and is set to be one of the key features of the master planned McCormick Place Entertainment District which will also include a 1,200-room hotel to serve as the centerpiece for conventions and trade shows, a 500-room mid-market hotel and numerous dining and entertainment venues.

The evaluation committee which will oversee the selection process will include three representatives from MPEA, DePaul and the City of Chicago. The nine-member committee will be assisted by two non-voting staff members and advised by three non-voting, neutral experts from architectural and other relevant fields. A community input meeting will also take place and the finalists will have a chance to receive feedback from community stakeholders. The final design of the Event Center according to MPEA has to be as “feasible and functional as possible to McCormick Place and the surrounding neighborhood.”

Photo Courtesy of: www.mpea.com

Apartments are coming to one of the oldest neighborhoods in Cleveland. Two recently announced projects are expected to deliver more than 250 apartments to Ohio City, a place where apartments are greatly needed.

A new, transit-oriented development will change the corner of West 25th and Lorain, where the Market Plaza shopping center is currently located. WKYC reported the new mixed-use building will be centered around the Greater Regional Transit Authority (RTA) train station on the corner of Gehring and Lorain. It will bring 200 apartments to the area and will have retail on the first floor. The Market Plaza shopping center will be razed to make way for the new construction.

The city of Cleveland has already approved the plans for the new apartment and retail complex. The RTA has committed funding to help the project along. A groundbreaking date has not yet been set but will be announced in the coming months.

Shortly after the announcement of the 200-unit, transit-oriented development, The Plain Dealer reported that a father-son team also has its sights set on Ohio City. Brian Koch, a local real estate investor, and his father, Charles “Bud” Koch, the former Charter One chairman & chief executive officer, plan to build a four-story, 62-unit apartment building on a longtime maritime-supply site along Detroit Avenue, just east of West 32nd Street.

Called Mariner’s Watch, the project will deliver 33 one-bedroom and 29 two-bedroom apartments, with rents starting at $975 and $1,239, respectively. Plans also call for a rooftop gym, home theater, 62 indoor parking spaces and a small visitor lot.

The total cost of the project was not disclosed, but Brian Koch told The Plain Dealer it will be “in excess of $5 million.” Also, the developers won’t ask for any public funding other than the tax abatement for new residential projects in the city. Work on the project could start in the next few weeks, with construction expected to be finished in mid-2014.

Marcus & Millichap reports that apartment vacancy in Cleveland have dropped to 3.7 percent in the second quarter. Average effective rents ticked up 0.6 percent to $781 per month.

Photo credit: Cleveland City Planning Commission

The Cincinnati City Council approved plans for a 30-story apartment tower at the northwest corner of Fourth and Race streets in the city’s downtown. The project is expected to cost about $80 million.

Flaherty & Collins, an Indianapolis-based company, is the project’s developer. It plans to demolish the dilapidated Pogue’s Garage and the vehicular and pedestrian skywalk bridge that connects it to the adjacent Tower Place Mall, and build a luxury apartment tower with approximately 300 units in its place. The project also calls for the construction of a 15,000-square-foot grocery store on the first floor of the residential tower and a new public parking garage with about 1,000 parking spaces, also part of the tower.

The city voted to lease the site to Flaherty & Collins and also agreed to grant a $12 million forgivable loan to the developer for the construction of the parking garage. Under the terms of the deal, the city will lease the garage to Flaherty & Collins for $1 per year for 75 years. The developer has the option to purchase the parking garage for $1 at the end of the 75-year term. The deal also requires that Flaherty & Collins keep the grocery store open for at least five years. If the developer fails to do so,  it will have to return the $12 million loan.

According to 9 On Your Side, rents in the apartment tower will be between $1,000 and $2,000 a month. Construction could begin later this year and would take about 24 months to complete.

Last Wednesday, the city council approved two deals that will bring $18 million in new development to the city’s Northside and Oakley neighborhoods.

Milhaus Development will buy from the city the former home of the Myron Johnson lumberyard in Northside and will use the 2.4-acre site to build a mixed-use complex with at least 100 apartments and 8,000 square feet of commercial space. The development represents about $10.5 million in private investment.

The Morelia Group will purchase three acres of land at the corner of Ibsen and the future Kennedy Avenue in Oakley on which to build a 15,000-square-foot daycare center and a 40,000-square-foot office building. The two projects represent $7.5 million in private investment and will create at least 150 new jobs.

Both Milhaus and Morelia Group agreed to purchase city-owned property at fair market value. “The neighborhoods of Northside and Oakley are getting two great projects that will put people to work,” said Odis Jones, economic development director. “We hope to continue this momentum into our other focused neighborhoods.”

Photo credits: Flaherty & Collins

By Adriana Pop, Associate Editor

Kamehameha Schools is planning to invest $30 million to redevelop a Kakaako site into a retail and restaurant village. According to the Pacific Business News, the mixed-use project will be presented to the Hawaii Community Development Authority on July 3.

The plan, called Salt in recognition of the neighborhood’s salt ponds of the mid-1800s, calls for approximately 80,000 square feet of specialty retail.

The developer proposes the adaptive reuse of all existing buildings along Auahi Street, between Keawe and Coral streets, as well as the addition of 20,000 square feet of open space, including a plaza, landscaping, paved walkways and seating.

If approved, the new development will be located behind Six Eighty Ala Moana, Kamehameha’s 54 loft-style rental unit development.

The Salt project is part of the developer’s 15-year master plan in Kakaako, which could bring a total of 2,750 residential units, including street-level urban townhomes, work-live units and high-rise condominiums.

Kamehameha Schools spokesman Kekoa Paulson told the newspaper there are currently 26 tenants on the block, many of them local, boutique retailers who have expressed an interest in remaining on-site.

“To the extent they wish to remain and become part of the restaurant/retail village, we want to accommodate them,” Paulson said in an email sent to the Pacific Business News. “For tenants whose use is not suited for Salt, we will work with them to find alternate locations either in Kakaako or elsewhere, on other KS property.”

INK Architecture is the project’s architect, in partnership with Pompei AD. A decision from the HCDA is expected on Aug. 7.

Photo credit: www.pompeiad.com

The Board of Aldermen is expected to pass a board bill to provide $4 million in tax increment financing to redevelop the Chemical Building in downtown St. Louis.

The St. Louis Business Journal reports Alderwoman Phyllis Young, who is sponsoring the bill, said LandWhite Developers LLC intends to spend $33 million to transform the Chemical Building and create 120 apartments and 7,000 square feet of street-level retail space. Lancaster Ventures Ltd., an affiliate of LandWhite Developers, is expected to pay off the TIF in 17 years or by 2030, according to Young.

Currently the building, located at 721 Olive Street, has only one tenant, Kessler Mroz Jewelry Inc., on the ground floor. Built in 1896 the building was designed by Henry Ives Cobb with a later addition in 1902 which was designed by Mauran, Russel & Garden. The 17-story building was acquired by LandWhite Developers in September 2012 for $3.9 million after the building was marketed by Cushman & Wakefield/Gateway Commercial. The company purchased the building from Centrue Bank, which in March 2011 foreclosed on the property. Centrue purchased the property with a sole bid of $3.36 million.

Polsinelli senior partner, William Kuehling, represented LandWhite in the deal. He said, for the same source, the project is also eligible to receive $1.2 million in federal historic tax credits, around $1.2 million in Federal Brownfields Tax credits and $6.2 million in state historic tax credits.

The contractor on the project is Paric Corp., and Roseman & Associates will be the architect.

Photo Courtesy of: Steven Martin via Flickr./em

In recent years, the tendency to turn away  from the mega-resorts of the Las Vegas Strip toward projects of more modest proportions has seemed to mark a new direction. Yet the interest in developing projects on a monumental scale has hardly vanished. Case in point: the recent announcement by Eurasia Resorts International Ltd. for what it touts as a world-class entertainment initiative.

The company’s proposal would provide at least one element that Las Vegas has been seeking for some time, namely an international sports facility. Also part of Eurasia Resorts’ plan is a 15-million square-foot mall that would become the world’s largest retail center. \

Six hotels, 39 casinos and an additional six million convention center would rise, as well. Adding to the city’s inventory of exhibition and meeting space has come onto the radar this year with the announcement of plans for a makeover and expansion of the Las Vegas Convention Center.

Eurasia Resorts International and its partner, Global Financial Trust Ltd., say they will unveil details of their massive proposal during the first quarter of 2014.

]]> http://www.cpexecutive.com/property-types/retail/eurasia-resorts-seeks-return-to-super-sized-development/feed/ 0 http://www.cpexecutive.com/property-types/retail/eagles-to-spend-125-million-for-linc-revitalization/ http://www.cpexecutive.com/property-types/retail/eagles-to-spend-125-million-for-linc-revitalization/#comments Wed, 12 Jun 2013 21:29:20 +0000 veronicag http://synd.yardi.com/?p=138988 By Veronica Grecu, Associate Editor

Lincoln Financial Field, the Philadelphia Eagles’ home for ten years, is on track for a two-year revitalization process that aims to create an improved fan experience for the South Philadelphia venue, officials announced recently.

“Our main goal when we began this project was to dramatically enhance the game day experience for our fans. They deserve an exciting and fun experience when they visit Lincoln Financial Field and we are committed to that,” said Philadelphia Eagles president Don Smolenski.

Officially opened on August 3, 2003 with a soccer match between Manchester United and FC Barcelona, the $512 million sports venue was completed in two years as a replacement for the Eagles’ old Veterans Stadium which was imploded in March 2004. Dubbed The Linc, the 1.7 million-square-foot stadium has 68,532 seats, including 10,828 club seats and 172 suites. It was jointly designed by NBBJ, a global architecture firm, and Philadelphia-based Agoos Lovera Architects and it is located at 1020 Pattison Avenue as part of the South Philadelphia Sports Complex, the current home of the city’s professional sports teams.

The Eagles have retained architectural firm Gensler and Turner Construction for the $125 million redevelopment project. According to the Philadelphia Business Journal, the stadium will be completely revamped by 2014 but some of the changes will be finished in time for the 2013 season, when the Eagles will play against the San Diego Chargers.

Reportedly, these changes include enlarged entrance areas for easier access into the stadium for fans, an expanded stadium store, the installation of a new integrated wireless network with 600 access points that will be able to handle 45,000 simultaneous users, expanded and upgraded concession stands, two new HD video boards behind the end zone areas and a LED ribbon-board (pictured) placed along each side of the stadium that will offer 360 degrees of video, animation, real-time scores and statistics. Renovation plans for the 2014 regular season include new carpet, paint and furniture; 1,600 new seats installed in the stadium; a new escalator built on the West side; and two bridges constructed in the Southwest corner that will allow fans to easily walk from one side of the venue to the other.

Rendering via lincolnfinancialfield.com

Cushman & Wakefield | Thalhimer announced the sale of a Charleston County office asset for $340,000. Located at 3405 Salterbeck St., the office property is composed of two condominiums totaling 2,300 square feet and was purchased by MLD Properties, LLC from Charleston-based East Bay Company, LTD. Cushman & Wakefield | Thalhimer’s Mark Erickson represented the seller and was contracted by the new owner to stay on to handle leasing operations.

The asset is located in the Park West Development, a 1,700-acre premier planned development in Mt. Pleasant, SC. Park West is South Carolina developer LandTech, Inc.’s flagship mixed-use community composed of 29 neighborhoods. The project contains both single and multifamily developments (from townhomes to condominiums, live-work residences and senior housing including assisted living), as well as extensive commercial space such as retail and office space, and educational and healthcare facilities. The community features extensive recreational facilities such as pools, softball, baseball, football, soccer, lighted tennis courts, parks, playgrounds, walking, hiking and biking paths as well as indoor and outdoor swimming pools.

In other local news, Colliers International announced securing new assignments through its South Carolina chapter, thus growing its property management portfolio by 1.3 million square feet. The new additions include circa 100,000 square feet of office space, 400,000 square feet of distribution and industrial space and 800,000 square feet of retail and the following assets: The North Charleston Faber Centre, the West Columbia Westside Plaza, Parkland Plaza in Cayce and Wesmark Plaza in Sumter.

Located at 4000 Faber Dr., in North Charleston’s The Executive Park at Faber Place, Faber Center features 97,000 square feet of Class A office space and is Energy Star-certified. Tenants include SunTrust, Charleston economic Development, MetLife and Walgreens. Full-service commercial real estate developer Holder Properties developed the property. Durlach Associates has also been involved.

Image courtesy of Holder Properties

Chart courtesy of Cushman & Wakefield | Thalhimer

by Adriana Pop, Associate Editor

An affiliate of DNA Partners of Cold Spring Harbor, N.Y. has acquired the 40,524-square-foot Hope Valley Square retail center in Durham.

According to the Triangle Business Journal, Hawthorne Retail Partners of Charlotte sold the property for $7.7 million. Berkeley Capital Advisors represented the company in the sale.

Formerly known as Shannon Plaza, the shopping center at 3710 Shannon Road is anchored by one of the busiest U.S. Postal Service offices in the city. According to the newspaper’s quarterly Space survey, Hope Valley Square was nearly 100 percent leased during this year’s first quarter. Three popular restaurants, including Only Burger, Bull Street Gourmet & Market and Pop’s Backdoor South are also among the center’s tenants.

In 2007, Hawthorne Retail Partners acquired the property for $2.4 million. Through substantial renovations, the company has converted the distressed structure into a Class A neighborhood center. Upgrades included a façade enhancement, a new pylon sign, parking lot resurfacing, as well as parking lot lighting and landscaping improvements.

In regional news, CVS has signed a 20-year ground lease to build a new, 13,000-square-foot stand-alone store on the vacant outparcel at the 113,000-square-foot Rams Plaza shopping center in Chapel Hill.

The 30-year-old retail property at 1728 Fordham Boulevard is owned by the Kalikow Group, through a joint venture entity known as Rams Plaza Associates L.L.C. The company purchased the center in December 2011.

Rams Plaza is currently 95 percent occupied and anchored by Food Lion. As a long-time junior anchor, CVS will continue to occupy 8,500 square feet of space within the center until the new store is completed.

The new lease marks the beginning of the second phase of a $3 million renovation plan. In March, the owners completed the first phase, which consisted of $1.5 million in upgrades to the facade, building structures, interior courtyard and parking areas.

“We are extremely pleased to announce this agreement with CVS, which allows us to complete our redevelopment of this shopping center,” said Edward Kalikow, president and CEO of The Kalikow Group. “Tenant retention remains very high in the area, which has significant barriers to entry, and we are gratified that CVS has chosen to expand at the new Rams Plaza.”

Photo credits: www.loopnet.com

Covington, La.-based Stirling Properties has formed a joint venture with JCH Development, a New Orleans-based boutique, to build the Magnolia Marketplace Shopping Center in New Orleans.

Expected to break ground in Central City at the intersection of South Claiborne and Toledano Streets in fall 2013, Magnolia Marketplace will be a 138,000-square-foot retail center upon its 2014 completion. As of now, the future shopping center has retail agreements in place for about 108,000 square feet of space with established national retailers and is in talks with further potential tenants for the remaining space. According to The Times-Picayune, the tenant roster includes names such as T.J. Maxx, Dress for Less, PetSmart, Shoe Carnival and Raising Cane’s, all paying premium rents for their respective leases.

Construction will start with a 6,000-square-foot structure located at the center of the future retail complex. Half of the building’s total surface will be taken up by a Capital One bank branch.

The project is expected to revitalize the neighborhood and attract further commercial development to the Claiborne Avenue Corridor.

“We are proud to bring a high-quality development to a severely underserved portion of the Claiborne corridor and return yet another vacant and blighted property in the city to commerce,” said development manager for Stirling Properties Jordi Goodman in a press release.

As previously reported on this page, Striling Properties has several high-profile retail developments in the pipeline for the Greater New Orleans area, such as the $38 million Mid-City Market along North Carollton Avenue and the 80-acre multiphase Summit Freamux project off I-10 in Slidell.

Image courtesy of Google Maps

By Adriana Pop, Associate Editor

A&B Properties, the real estate subsidiary of Alexander & Baldwin Inc., has agreed to acquire the Pearl Highlands Center in Pearl City for $141.5 million.

Located 12 miles west of downtown Honolulu, the 415,000-square-foot fee-simple retail center is 98 percent occupied. The property spreads across 13.5 acres and is anchored by Sam’s Club, Regal Theaters, Ross Dress for Less, 24 Hour Fitness and a soon-to-be-opened Buffalo Wild Wings.

The purchase price includes the assumption of a $59.3 million mortgage, which matures in September 2016. The closing of the sale, expected to occur in the second half of 2013, is subject to various conditions, including the lender’s approval of the loan assumption.

“The Pearl Highlands acquisition will represent a significant advancement of our strategy to migrate our commercial portfolio back to Hawaii,” said Christopher Benjamin, A&B’s president & COO. “The addition of Pearl Highlands will boost our total Hawaii commercial square footage over the 2 million square-foot mark—a 25 percent increase—and will make A&B the second-largest retail owner/operator in the state.”

Centrally located, Pearl Highlands serves more than 220,000 Hawaii residents who live within a five-mile radius of the center.

“The Pearl Highlands acquisition not only accelerates our Hawaii growth but it reaffirms our ability to leverage our market knowledge and relationships to acquire significant assets through off-market transactions,” Benjamin added.

In other news, Host Hotels & Resorts Inc. has acquired the 426-room Hyatt Place Waikiki Beach in downtown Honolulu for $138.5 million. The seller of the property was an affiliate of Chartres Lodging Group L.L.C. and Morgan Stanley Real Estate Fund VII Global.

Kokua Hospitality will continue to manage the hotel, in accordance with a franchise agreement with Chicago-based Hyatt.

The property underwent a $45 million renovation in 2011 and was converted to a Hyatt Place the following year. Located just 1.5 blocks from Waikiki Beach, the hotel offers guests easy access to the Waikiki Aquarium, the Honolulu Zoo and the Kalakaua shopping/entertainment district.

Photo credits: www.pearlhighlands.com

Glimcher Realty Trust, of Columbus, Ohio, plans to purchase, for about $112 million, the remaining interest in WestShore Plaza, Tampa, from its joint venture partner, an affiliate of Blackstone Real Estate Partners VI, the REIT announced Thursday. The purchase will put WestShore Plaza fully into Glimcher’s ownership for the first time in about three years.

In an unrelated transaction, both partners will sell their interests in Lloyd Center in Portland, Ore.

Both properties currently are held in a JV in which Glimcher holds a 40 percent interest and Blackstone 60 percent.

The sales are expected to close within 60 days, subject to customary closing conditions. After the closings, the JV will no longer own any real estate properties or other assets, other than certain liquid assets to cover post-closing obligations.

Glimcher will purchase the 60 percent interest in WestShore Plaza for $111.8 million: $40 million in cash and an assumption of Blackstone’s pro rata share of the $119.6 million loan. The purchase price will be funded initially by a combination of the proceeds from the sale of Lloyd Center and availability on Glimcher’s credit facility.

“Consistent with our long-term growth plan, we are pleased to regain full ownership of WestShore Plaza. With sales in excess of $410 per square foot, the center continues to perform well and … offers one of the best restaurant line-ups in the region, which research shows is increasingly important to our shopper,” Michael Glimcher, chairman and CEO of Glimcher, said in a release.

Built in 1967 at the corner of West Shore and Kennedy boulevards, WestShore was acquired by Glimcher in 2003. The JV with Blackstone closed in early 2010.

The center is anchored by Macy’s, JCPenney and Sears, with other stores including H&M, Ann Taylor, White House Black Market, Victoria’s Secret and Francesca’s. Restaurants include Maggiano’s Little Italy, Mitchell’s Fish Market, PF Chang’s China Bistro, The Palm Restaurant and Seasons 52.

The two buyers of the Lloyd Center, described only as “unaffiliated third parties” were not disclosed, and a Glimcher spokesperson was unable to provide CPE with further information.

After repayment of the existing loan on the property, Glimcher’s share of the net proceeds from the sale of Lloyd Center and four outparcels will be about $28.4 million.

Lloyd Center was developed in 1960 as the country’s largest shopping center. With nearly 1.5 million square feet of space, today it’s still one of Oregon’s largest shopping. It features six anchors, 180-plus shops, a 900-seat food court, four full-service restaurants, an indoor ice-skating rink and an eight-screen theater.

A brand new development was recently unveiled in the Crenshaw Corridor, bringing the spotlight to an area of the city that has been in serious need of a makeover. The $8.5 million investment was handled by the West Angeles Community Development Corporation and Union Bank and is located at 3501 Jefferson Boulevard.

The West Angeles Plaza development includes 15,000 square feet of grocery space, a 4,500 square-foot Union Bank, as well as 5,000 square feet of retail, commercial and community space. The development is paramount for the Crenshaw Corridor, and the West Angeles Community Development Corporation had an important role in the financing project, attracting $2 million from the federal American Recovery and Reinvestment Act, CIM Group and other sources.

The project was supported by a number of local authorities and according to Los Angeles City Council President, Herb Wesson, “the development is also an economic shot in the arm bringing as many as 150 construction-related jobs, 50 grocer-related jobs, 25 bank jobs, and possibly as many as 30 office jobs in addition to attracting additional small businesses.” The project is reportedly relevant to local policies and its success is driving the empowerment given to community economic development.

The West Angeles Community Development Corporation was created in 1994 as an outreach program of West Angeles Church of God in Christ. At the time, with a 15,000-strong congregation, the church created the CDC to expand its operation in an attempt to fight the rising poverty in L.A.’s Crenshaw District.

Rendering courtesy of cimgroup.com

A 10,106-square-foot corner parcel located at 644 East 14th Street in the East Village neighborhood of Manhattan is being marketed by Avison Young’s New York-based investment sales team led by principals Neil Helman and Charles Kingsley. According to a press release from the company, the property is occupied by a one-story building—a former R&S Strauss auto parts store that closed in early 2009.

The site has over 65,000 square feet of development rights for residential, retail and community space use, and its development potential is enhanced by more than 200 feet of frontage on 14^th Street and Avenue C, which means that separate entrances can be created for different uses.

“Well poised for redevelopment, this corner lot is ideally suited for a multitude of uses, including residential (condos or rentals), retail, and community facility use—including dormitories for student housing, making this a great opportunity for schools and other non-profit institutions,” said Neil Helman in an official statement.

The additional 70,000 square feet of unused development to the west of the property from 626 to 642 East 14^th St. can be incorporated onto the site with a zoning lot merger. According to Helman, the site has no restrictions on height limitations. This means that a tower could be erected here, which would take advantage of the great East River views.

EV Grieve, an East Village real estate blog, reports that in 2009 the building was sold for $12.3 million to Arun Bhatia, a private investor who wanted to demolish the existing structure and construct a new 11-story building. His plans were rejected by the city in 2010, and the site remained unchanged ever since.

For more market data from New York City, please click here.

Image via Avison Young

Regency Properties increases the square footage of its Florida portfolio fivefold with the purchase of the 170,000-square-foot Oak Station Shopping Center in Marianna. The seller, a private developer based in Arizona, had owned the retail center since 2010.

Sited on 17 acres along Highway 90, Oak Station is 98 percent occupied, with Save-A-Lot, Big Lots, Fred’s, Bealls Outlet, Citi Trends & Goodwill serving as anchors. Commercial real estate services firm Cassidy Turley marketed the asset on behalf of the seller and found no shortage of interested investors. As Drew Fleming, a vice president and principal with Cassidy Turley, told Commercial Property Executive, hopeful buyers were lured in by the fact that, “90 percent of the GLA is leased to national and regional tenants and the property had recently undergone physical upgrades.”

Approximately $2 million in renovations were completed at the 24-year-old Oak Station, and there’s more to come.  Christopher Folz, leasing representative with Regency, told CPE that the new ownership is planning its own makeover with the renovation of the shopping center’s façade.

Oak Station also offers outparcel development potential in a market with just 675,000 square feet of multi-tenant retail spread across eight shopping centers, and an average vacancy rate of 8.2 percent, which, Fleming noted, is below the national average. “The market is healthy due to the fact that there has been little to no major speculative retail construction in this area for a long time,” he added. 

For Regency, the acquisition of Oak Station marks its second purchase this year and its second property in the Sunshine State. Regency also owns the 35,400-square-foot Green Acres Shopping Center in Havana, which the real estate company bought in 2011. 

As for shopping around for more additions to its portfolio, Regency will continue to stick with the program. “We target county seat communities in the Midwest and Southeast,” Folz said.

Inland Real Estate Corp. acquired the 50 percent ownership stake in IN Retail Fund held by its joint venture partner, New York State Teachers Retirement System, for $121 million in cash, making it the sole owner of the 2.3 million-square-foot Midwest retail center portfolio.

IN Retail Fund was established by Inland, an Oakbrook, Ill.-based REIT, and NYSTRS in 2004. It currently has 13 shopping centers, most located in the Chicagoland area, and is valued at approximately $395.6 million. The acquisition capitalization rate is 6.7 percent. The portfolio has total current outstanding mortgage debt of about $152.2 million, plus other related assets and liabilities, according to an Inland news release.

Clarion Partners, the real estate investment manager representing NYSTRS, issued its own news release stating the sale was for $197.3 million.

“The difference between $121 million in cash noted in our release and NYSTRS’s number of $197.3 million is NYSTRS’ portion of secured debt on the portfolio,” an Inland spokesperson told Commercial Property Executive.

“While we have enjoyed a successful partnership with Inland, the opportunity to exit at this pricing level on a highly efficient basis was very compelling,” Mark Weld, a managing director at Clarion Partners in charge of the portfolio for NYSTRS, said in the Clarion release.

Inland President and CEO Mark Zalatoris also used the word “efficient” in his comments about the transaction.

“This venture has been a capital-efficient way for the company to acquire premier retail assets while enhancing our yield on investment,” he said in the Inland release. “However, the opportunity to acquire NYSTRS’ interest at this time advances our strategic goals to increase the size and quality of our consolidated portfolio, simplify our ownership structure and strengthen our balance sheet.”

As of March 31, the portfolio was 97.5 percent leased. It is comprised of 11 neighborhood, community and power shopping centers in the Chicagoland area; one neighborhood retail center in a suburb of Minneapolis-St. Paul; and one community retail center near Racine, Wis. The acquisition increases the amount of total assets owned by Inland to $1.6 billion. Inland’s consolidated portfolio now derives 65.1 percent of its net operating income from properties in Illinois and 16.3 percent of NOI from Minnesota properties. Wisconsin assets will comprise approximately 5.7 percent of NOI, according to Inland.

The REIT’s top five retail tenants are Roundys, 5.8 percent of the consolidated portfolio’s annual base rent; Safeway, 3.8 percent; AB Acquisitions (Jewel Food Stores), 3 percent; CarMax, 2.9 percent, and TJX Companies, 2.8 percent.

The largest shopping center in the IN Retail Fund portfolio is Orland Park Place, a 592,495-square-foot power retail center in Orland Park, Ill., that includes Old Navy, Bed, Bath & Beyond, Dick’s Sporting Goods, Marshall’s and Ross Dress for Less. Two other Chicagoland shopping centers with more than 200,000 square feet each are Randall Square in Geneva, Ill., which also has Marshall’s, Old Navy and Bed, Bath & Beyond as tenants, and Woodfield Commons E/W in Schaumburg, Ill., which features Toys R Us, REI and Hobby Lobby.

Several grocery stores are included in the portfolio, including Food 4 Less, Jewel Food Stores, Whole Foods Market, Cub Foods and Pick ‘N Save.

“The joint ventures we have established with institutional partners such as NYSTRS, have been instrumental in advancing our growth objectives,” Zalatoris said in the Inland release. “Since its formation in 2004, the IRC-NYSTRS joint venture has added more than $300 million in gross value to our total portfolio and provided approximately $8.5 million in high-margin fee income as of March 31, 2013.”

The REIT is paying for the acquisition with the proceeds of a public offering expected to have net proceeds of between $91.6 million and $105.3 million, before expenses, as well as cash on hand and its $175 million credit facility.

Inland is a self-administered and self-managed publicly traded REIT that owns and operates open-air shopping centers and single-tenant properties primarily in the Midwest.

NYSTRS is the second largest public investment system in New York and one of the largest systems in the United States.

Clarion Partners, based in New York City, has offices throughout the U.S. and in Mexico, Brazil and England. It has more than $28 billion in total assets under management. Also this week, Clarion acquired 100-104 Fifth Ave., a 17-story, 277,412-square-foot, Class A, office property in New York City’s Midtown South submarket for $230 million.

As Gold Krown LLC recently sold its 147,417-square-foot Publix-anchored shopping center in Vero Beach, developer Stiles has broken ground on a $35 million Publix grocery store-anchored retail shopping center in Hollywood, Fla.

South Vero Square traded this week in a $7.8 million deal, with David Donnellan, Todd Weintraub, Casey Rosen and Dennis Carson of CBRE representing seller Vero Beach Shopping Center Associates Limited Partnership, a Florida-based investor managed by Gold Krow. Indian River Holdings LLC is the new owner of the neighborhood shopping center located at the intersection of U.S. Highway 1 and Oslo Road (9th Street SW).

Built in 1989, the shopping center is anchored by a 42,112-square-foot Publix grocery store and was 61.5 percent occupied at the time of the sale, with a 35,244-square-foot vacant anchor space. South Vero Square has three outparcels occupied by Wendy’s, McDonald’s and Seacoast National Bank, which were not included in the sale.

Yet a new Publix-anchored retail center is now underway on the corner of Sheridan Street and S. Federal Highway at 1700 Sheridan St. in Hollywood. According to Stiles President Doug Eagon, West Lake Commons is planned to initiate the renewal one of Hollywood’s most visible commercial and residential areas, trafficked by more than 50,000 cars per day. The project will bring several quality retailers alongside Publix to bear, including Pollo Tropical and Starbucks.

“This is a proud moment for Stiles, our partners and lenders, as well as the city of Hollywood,” said Eagon. “This groundbreaking represents the redevelopment of a highly visible area in Hollywood, which will create value for the city and provide an urban pedestrian experience for the local community.”

West Lake Commons will be a transformation of the former Hollywood Lincoln Mercury Dealership, which is situated on a 14-acre site that serves as a gateway into the city. The project will be anchored by a 54,000-square-foot Publix, which will feature an expanded gourmet selection and liquor store. Overall, the project will encompass 26,000 square feet of inline retail space and up to 20,000 square feet of out parcels. Completion is expected second quarter 2014.

Image courtesy of Stiles

For more Miami market data, click here.

The American Institute of Architects Illinois has awarded top prizes at the 2013 Honor Awards to Randolph Tower, the Hairpin Lofts and Hairpin Arts Center—all projects of Hartshorne Plunkard Architecture. The evening’s highest project honor, the Louis Sullivan Award, went to Randolph Tower in Chicago. The adaptive reuse project succeeded in transforming the landmark Steuben Club Building into a mixed-use residential community in the heart of Chicago’s Theater District.

Standing at 463 feet tall, the circa 1929 building is one of the tallest terra cotta-clad towers in Chicago, featuring numerous Gothic Revival architectural elements such as ornate buttresses, gargoyles and arches. Designed to house offices, retail stores and a private German social club, the building was shut down in 2001 by city officials due to hazardous conditions.

The building remained abandoned for over a decade until it was adapted into a mixed-use development with 313 mixed-income apartments, commercial office space and retail storefronts.

Brandy Koch, 2013 AIA Illinois president—who convened the national jury and served as an ex officio member, said: “The jury recognized the daunting challenges of the rehabilitation of Randolph Tower and was impressed by its ambitious scale and complexity.”

The award was accepted by Paul Alessandro, a partner with HPA and the company’s director of interior design, George Valdez. Alessandro told the audience: “This project was 13 years in the making, and getting it completed took one of the most amazing public-private partnerships ever assembled. Both of us will be proud of this project for the rest of our careers.”

The second award won by HPA, the Crombie Taylor Honor Award, was for the Hairpin Lofts and Hairpin Arts Center in Chicago. The award recognizes a project that has enhanced the natural and built environments of a community through preservation and restoration.

The rehabilitation of the former Morris B. Sachs Building converted a commercial office and retail structure into a multi-use development with a 6,000-square-foot community arts center, 7,000-square-foot of retail storefronts and 28 loft apartments—out of which 25 units were dedicated as affordable housing.

The circa 1929 flatiron building, listed on the National Register of Historic Buildings and a Chicago landmark, is well known for its triangular footprint and camel logo of the original occupant—the Hump Hair Pin Manufacturing Company.

The project is LEED Gold certified and features rooftop solar panels that provide heat for domestic hot water; a high-performance building envelope; a green roof; and ground-source heat-pump wells.

Photo Credits: Randolph Tower – Leslie Schwartz; Hairpin Lofts – Patsy McEnroe

Pennrose Properties and City Center Investment Corp. have teamed up to develop a $45 million high-end, mixed-use complex in Allentown to capitalize on the explosion of new construction driven by the city’s Neighborhood Improvement Zone (NIZ).

As reported by The Morning Call, this will be the joint venture’s first project under the city’s NIZ, which allows private developers to finance their projects via a combination of federal and local tax incentives.

The complex will be located on 7^th Street and will feature a five-story building with 160 luxury one- and two-bedroom apartments with rents starting from $1,000 a month. Project plans also include 30,000 square feet of premium retail, café and restaurant space on the building’s first two floors, as well as 125 high-end underground parking spaces and a rooftop pool.

The project is part of a major development plan called City Center Lehigh Valley that’s meant to transform downtown Allentown into one of the most vibrant urban communities in the region. The master plan calls for three Class A office buildings, the rehabilitation of several buildings on Hamilton Street, a 200-room full-service hotel and the adjacent 8,500-seat PPL Center hockey arena that is currently under construction.

According to a project description on Urban Land Institute (ULI) Philadelphia’s website, Allentown-based City Center Investment Corp. has already invested over $500 million in the redevelopment project. It is estimated that in the next two years more than a billion dollars will be invested in the city of Allentown through this project.

Rendering courtesy of Pennrose Properties

Construction has begun on the latest San Gabriel Valley mixed-use development. Hutton Companies recently announced that its new project, La Verne Village, has broken ground and is set to meet its construction deadline in Q1 2014.

The developer is investing approximately $43 million into the luxury apartment community, which will be located at 2855 Foothill Blvd. along the Historic Route 66 in the city of La Verne. According to RENTV.com, Ontario-based NAI Capital is currently handling retail leasing for the property.

Designed by KTGY Group Inc., Architecture + Planning, La Verne Village will offer 172 residential units, as well as 15,000 square feet of integrated retail and dining space. Set to be built on a 7.7-acre site that once housed an auto dealership, the community will offer a great location for tenants in the dining industry, as well as other services.

The community will feature Contemporary Craftsman architecture and tuck-under garages, offering a variety of floor plans including one-, two- and three-bedroom units—with sizes varying between 670 and 1,200 square feet. In-unit features at the complex include washer/dryer units in every residence.

La Verne Village residents will benefit from a wide amenity package that includes fitness facilities, a movie theater, pool and spa, and business center, while state-of-the-art cable and internet access will be available for all willing residents. Alternative transportation will be encouraged at the new community, with electric vehicle charging stations and a bicycle storage facility also available to all residents.

Rendering courtesy of huttoncompanies.com

IAGM Retail Fund I Member, L.L.C., a wholly owned subsidiary of Inland American Real Estate Trust Inc., has formed a new retail joint venture with PGGM Private Real Estate Fund, a €133 billion ($172 billion) Dutch pension fund service provider.

“The deal with Inland fits perfectly in the strategy PGGM is pursuing in the U.S., investing in income generating defense assets in selective regions,” Guido Verhoef PGGM’s head of private real estate, told Commercial Property Executive. “PGGM prefers to build and maintain long term relationships with best in class local real estate operators in which both parties are fully aligned. The deal with Inland is a follow-up deal that has not so much to do with timing but more with a continuation of the relationship based on a good portfolio of retail assets.”

The $600 million joint venture will focus on stabilized necessity-based, multi-tenant retail shopping centers in Texas and Oklahoma in its investment plan. Inland American will take on a majority equity stake of 55 percent and as the managing member and retain property management rights.

“We are delighted to establish this partnership with PGGM, one of the world’s largest and most respected pension fund administrators and asset managers,” Michael Podboy, Inland American Business Manager & Advisor, Inc.’ senior vice president of non-core asset management, said in a company statement. “This partnership is a strategic fit with Inland American’s long-term business and investment strategies and provides a strong platform for future growth in our core retail sector, while maximizing the benefits to our stockholders.”

The partnership had PGGM contributing nearly $79.4 million of equity and Inland American bringing in a portfolio of 13 stabilized necessity-based retail assets, totaling approximately 2.3 million square feet. The properties, located in Houston, Dallas, San Antonio and Oklahoma City, have anchor tenants such as H-E-B, Kroger and Target. PGGM will also contribute $50.7 million for new acquisitions in the targeted markets.

According to Steven Zeeman, senior investment manager of PGGM Private Real Estate, the deal fits the company’s investment criteria, which is to provide its clients with responsible, stable investments. Cap rates are expected to range from 6.5 percent to 8 percent, with most of the acquisitions expected to fall in the $20 million to $60 million range.

Jones Lang LaSalle assisted PGGM for property due diligence on contributed Inland American properties. Inland Institutional Capital Partners Corporation assisted Inland American with the transaction.

David LaRue

David LaRue, Forest City Enterprises’ president and CEO, has been tapped as the new chairman of the International Council of Shopping Centers for the 2013-2014 term.

He succeeds Brad Hutensky, president & principal of Hutensky Capital Partners in Hartford, Conn., who remains on the ICSC Executive Committee.

LaRue was elected by the organization’s Board of Trustees at RECon, the ICSC’s annual meeting in Las Vegas.

“Being named chairman of ICSC is a significant honor and I will strive to build on the work of prior chairmen to advance the organization’s mission and service to members,” LaRue said in an ICSC release. “I look forward to the opportunity to get closer to our members in the U.S. and abroad over the next year.”

Michael P. Kercheval, ICSC president & CEO, pointed to Forest City’s diverse real estate holdings as one of the reasons why LaRue’s election as chairman of the ICSC was a good choice.

“Our members are building shopping centers, mixed-use and other kinds of projects; they are everywhere and working in every kind of real estate,” Kercheval said in a news release.

“David heads a company that owns property across multiple categories in its core markets, and therefore his experience meshes with that of just about every one of ICSC’s members in one way or another,” Kercheval added. “Forest City is also a leader in sustainable and innovative development, all of which makes David’s nomination an exciting one as we, as an industry, embrace the future.”

Forest City, headquartered in Cleveland, owns about $10.7 billion in retail, office and residential properties around the United States, including 46 retail properties, 47 office properties and 122 residential communities. The company’s retail holdings include regional lifestyle, neighborhood and enclosed centers as well as urban, big-box and, entertainment properties. The firm’s Brooklyn, N.Y.,-based subsidiary, Forest City Ratner Cos., recently opened the Barclays Center, sports and entertainment arena that is part of the $4.9 billion, 22-acre, mixed-use Atlantic Yards development in downtown Brooklyn.

LaRue succeeded Charles A. Ratner as head of Forest City in June 2011. He has been with the company since 1986 and held numerous roles including Chief Operating Officer and Executive Vice President from March 2010 until June 2011.

An active member of ICSC for almost 20 years and a trustee since 2008, LaRue has served on the ICSC Global Task Force, which undertook a review of the organization’s programs and services. He has also been an advocate of ICSC’s Global Public Policy Efforts in Washington, D.C.

One of the priorities LaRue and ICSC will focus on during this coming year will be to push for federal legislation requiring online retailers to collect sales taxes in those states in which brick-and-mortar retailers are required to. Known as the Marketplace Fairness Act, the bill passed in the Senate earlier this month but has yet to be considered by the House of Representatives.

“Traditional physical stores cannot continue to be discriminated against by this tax policy,” LaRue said in the ICSC release. “Reform in this area would also benefit cash-strapped state and local public coffers.”

In addition to naming LaRue ICSC chairman, six members were named to the Board of Trustees. They are: William B. Horner, CFO, Fitness International; James J. Lampassi, vice president, real estate and construction, Petco; Carlos Medeiros, CEO, BR Malls; Mark L. Myers, executive vice president, head of commercial real estate, Wells Fargo Bank; Brian Smith, president and COO, Regency Centers; and Arturo Sneider, SCLS, partner, Primestor Development.

Left to right: Bill Hughes, Joe Dykstra, Joseph McKeska, Tom Roberts and Hessam Nadji assess the state of retail real estate during Marcus & Millichap’s annual panel discussion at RECon.

The panel’s moderator, Marcus & Millichap managing director Hessam Nadji, set the stage for the Monday evening discussion by pointing to retail’s broad recovery. “The consumer that was supposed to go hide in the corner—and never be back—is back,” Nadji told an audience of several hundred real estate professionals Monday at the Renaissance Hotel in Las Vegas.

Nadji noted that retail sales volume is 12 percent higher than it was at the economy’s pre-recession peak in 2007. Centers of technology, energy and trade are producing growth that is fueling job growth and retail. In another positive sign, forward-thinking retailers are meeting the challenge by embracing technology to complement their brick-and-mortar stores, he said.

Asked to speculate about vacancy trends during the next 12 months, Cole Real Estate Investments’ executive vice president Tom Roberts suggested a modest change. “The pace of vacancy reduction will pick up a bit,” he said. He expects both cap rates and interest rates to remain relatively stable during that period, a view shared by Joseph McKeska, senior vice president of real estate for Supervalu. Bill Hughes, senior vice president of Marcus & Millichap Capital Corp., responded that interest rates will likely rise during the next 12 months. Fellow panelist Joe Dykstra, executive vice president and head of acquisitions and dispositions for Westwood Financial Corp., predicted that interest rates will edge downward.

Panelists likewise commented on evolving retail real estate strategies. Prospects for financing retail are still decidedly mixed. Bill Hughes, senior vice president of Marcus & Millichap Capital Corp. cited the rising profile of securitization in retail finance. This year, CMBS accounts for 64 percent of retail financing by dollar value, a significant increase from 45 percent last year, he noted.

Citing loan terms reminiscent of the last boom, such as multiple years of interest-only payments, Hughes said, “There’s a little bit of froth out there.”  But he added that lenders are largely sticking to the more conservative credit standards that took hold after the recession. Hughes agreed with the widespread perception that many capital sources to keep a tight handle on the retail finance spigot. “Commercial banks and private funds are looking for deals to put dollars into, but it’s got to be a great story,” he explained.

Joseph McKeska, senior vice president of real estate for the grocery wholesaler and retailer Supervalu, urged the audience to view credit standards more broadly. “There’s a lot of emphasis on financial underwriting, but I think it’s also important to understand the grocer’s business plan,” he said. “You are becoming a business partner to that grocer.” In March, Supervalu completed the $3.3 billion sale of five of its grocery brands to a consortium led by Cerberus Capital Management L.P. Part of Supervalu’s restructuring strategy, the sale included $3.2 billion in assumed debt and $100 million in cash.

Other panelists also tempered their generally upbeat outlook with a strong note of caution. “The big value-add plays are really behind us,” Dykstra said. Capital sources, as well as investors, must now carefully weigh their risk tolerance. As a rule, Dykstra added, “We will not buy properties at less than a 6 cap rate. We will buy very, very few properties at less than a 7-cap.”

Locally based real estate investment manager Amstar has partnered with Allied Orion Holdings, a Texas- and Colorado-based apartment developer, and announced it will start construction on a 332-unit apartment project in the Highlands/Jefferson Park neighborhood of Denver. The project, dubbed 2785 Speer, is scheduled to break ground this month and expected to be completed in the spring of 2015.

“We are excited about the opportunity to partner with Allied and build a Class A apartment community to fill the growing demand for housing in the highly desirable Highlands/Jefferson Park neighborhood,” said Kim Sperry, managing director at Amstar. “The community will be unique, with unparalleled views and amenities.”

He added: “The location is unmatched as it provides quick access to I-25 and I-70, and it is also within walking distance or a short bike ride to restaurants, nightlife, and entertainment centers in the Highlands and Downtown.”

The developer of the project will be Lauren Brockman of Allied Orion Holdings, while Martines Palmeiro Constructions will act as general contractor. Orion Real Estate Services will serve as the property manager of the completed community.

The new five-story project will offer numerous floor plans including studios, one-, two- and three-bedroom units. Residents will benefit from various amenities such as a swimming pool, spa, dog run, bocce ball court, bike workshop and outdoor entertainment deck.

The apartment project will also feature around 10,800 square feet of retail space on the ground floor on Speer Boulevard. The retail space is planned to include at least one restaurant that will offer outdoor patio seating along Bryant Street. The buildings are designed to achieve LEED certification.

For more market data from Denver, click here.

Rendering Courtesy of: 2785Speer via Twitter

WinCo Foods is about to open two brand new stores in the Las Vegas area with a tentative opening slated for March of this year. One of the two stores is being rapidly developed at the Stephanie Street and Wigwam Parkway location. The Las Vegas Sun reports that the new stores will open with a number of 150 to 200 employees each.
The Stephanie St. store is being constructed according to plan and will most likely open the 92,000 square feet to customers at the beginning of March. Another WinCo Foods store is set to open in a location at the Las Vegas Beltway and Decatur Boulevard. WinCo Foods handles fresh produce, meats, fish and goods at discount prices.
In other real estate news, statistics indicate that 2011 has set a new record for home sales as 2009’s 46,879 transactions were overtaken during last year’s market. However, the new record, of 48,186 sales is no indication of an improving market. In fact, new home sales have taken a very serious fall from 2006 when 39,000 new homes traded hands. In 2011, only 4,000 deals were perfected for new homes.
2011’s figure is, according to BusinessInsider.com, the lowest new home sales have seen ever since tracking by the Home Builders Research first began in 1988. Las Vegas still is the national leader in terms of foreclosures and the fact that this is the year with more transactions than at the height of the bubble is telling to the peculiarity of the Vegas housing market, Business Insider pointed out.

Surging demand, new retail concepts and stirrings of new development were the talk of the Las Vegas Convention Center on Monday during the first day of RECon, the International Council of Shopping Centers’ annual spring convention. It is impossible to tell how many deals will emerge from the event, but as thousands of real estate professionals roamed the vast halls of the 3.5 million-square-foot facility, participants reported a sense of renewed optimism about the market.

“Going into the show, we have more meetings this year than last year,” said John Bacon, vice president of marketing with Cole Real Estate Investments. As of Monday morning, the firm’s acquisition team had scheduled about 240 meetings and the leasing team had about 110 meetings on the calendar. “Our leasing people were getting calls as late as Friday night” from attendees hoping to schedule meetings at the last minute, Bacon added.

Conversations with a variety of attendees revealed optimism fueled by stepped-up interest in investment sales, leasing and development. “The net-lease industry as a whole is hot,” said Stan Johnson Co. managing director Harold Briggs Monday morning at the firm’s booth in the convention center’s south hall. The company’s net-lease retail transaction volume posted a 50 percent year-over-year increase during the first quarter, outperforming the company’s office and industrial sales growth by a considerable margin. One noteworthy net-lease retail trend is the participation of institutional investors, particularly in the $50 million to $100 million range, Briggs reported. “You’ll see five or six institutional buyers compete for portfolios of 15 to 20 assets,” he said.

Owners exhibiting at the show confirmed on Monday that renewed tenant interest is pushing them to adjust their tactics. Scott Prigge, senior vice president of property operations for Regency Centers Corp., said that pet supply stores, fitness centers and fast-casual restaurants are leading the way. Quick-Service restaurants, said Prigge, “can’t get enough space.”

Underscoring his point, a variety of fast-casual restaurant brands like Subway, Smashburger and Jersey Mike’s are using RECon as a bully pulpit to bring attention to their expansion programs and identify suitable space for new locations. Demand for space in desirable locations has improved to the point that Regency aims to backfill a vacant space with the best possible tenant. This year the company is also rolling out a company-wide campaign to review best practice in customer service.

Other restaurant niches besides are commanding the attention of RECon attendees. Chef-driven restaurants are catching on, especially as part of redevelopment in core urban areas that appeal to members of Generation X and Generation Y, according to James McCandless, director of retail for Streetsense, a diversified Bethesda, Md.-based consulting, design and development firm that is a member of the X Team network of service providers and consultants. Another X Team member, Legend Retail Partners, recently rolled out its new Urban Legend affiliate in an effort to tap into the growing chef-driven restaurant market, reported Legend partner David Larson.

Real estate investment is increasingly becoming a global business, with widening competition as more players place money around the globe. Depending on investment goals, players may be drawn to the recovering U.S. markets or the lagging European markets. And while U.S. investors seek opportunities in Asia, local investors there are already well entrenched.

Foreign investors are so eager to pursue opportunities in U.S. real estate that they are racing to join the biggest deals, making it sometimes difficult to differentiate between clients and competitors. That was a conclusion among speakers on the Urban Land Institute Spring Meeting keynote panel, “Capital Markets: Who Has the Capital and Who is Getting It,” which was moderated by Christopher Ludeman, CBRE Group Inc. president of brokerage services and the capital markets. Capital is flowing in from around the globe, ranging from the top-ranking Koreans—now permitted to invest abroad and only held back in the U.S. by FIRPTA limitations—to those from the Middle East and Canada, noted LaSalle Investment Management global head of the capital markets Jon Zehner. And he is keeping an eye on China and Australia as capital sources.

The Japanese, too, are eager to invest outside their slow-growing borders, noted J. Michael Stedman, senior executive vice president of Union Bank, whose employer is owned by Bank of Tokyo/Mitsubishi.

Meanwhile, some big U.S. investors see more opportunity overseas than in their own backyards. Zehner observed that the spread between assets in primary and secondary markets is now 75 to 100 basis points in the U.S. and Canada but 250 to 350 basis points in Europe. In fact, his company is representing a major Asian financing source venturing with a regional European fund to invest in U.K.-located residential property. The U.K. economic cycle is six to 12 months behind the U.S.’s, according to Charles Fedalen Jr., executive vice president & group head of the Wells Fargo CRE Institutional and Metro Markets Group and the Wells Fargo Real Estate Banking Group.

Elsewhere, John Miller, senior managing director for Tishman Speyer, pointed to a fund his company recently put together using Chinese currency to invest in that country. He noted a lot of pent-up demand there.

Wherefore Art U.S. Returns?

Speakers on “The Next Best Bet: Making the Case in a Capital Constrained Market” all expressed interest in European investment. But they also see opportunity in various segments of the U.S. market, although with the U.S. recovery at something of a midway point, identifying risk-adjusted returns can be challenging, they said.

The multi-family sector continues to attract attention, and PIMCO vice president Chris Flick is no exception. He said he still sees room for growth even though the best deals were done two years ago. Damian Manolis, managing director at Prudential Real Estate Investors, advised seeking out micro areas that work, even in more concentrated cities like Seattle and Washington, D.C.

Starwood Capital Group senior vice president Mark Deason, however, sees more opportunity in recovering sectors such as the office market, where he said you can still achieve cash-on-cash returns in the double digits (although largely only as much as 10 percent). Pricing is far ahead of fundamentals in the primary markets but more closely aligned in secondary markets, he noted, although he confessed to remaining focused on the primary cities. And Manolis pointed to the recovering job market and lack of development as contributing to a more solid office sector, even while companies are pursuing smaller space-per-person ratios and hoteling to minimize office size. Flick was less optimistic about the sector but allowed that opportunity could increase as conditions improve.

The panel as a whole was less optimistic about retail and industrial property, although Flick suggested a “barbell” model to retail opportunities, with high- and low-end properties offering the best bets. Grocery-anchored centers, he said, are too popular to offer good deals. That makes it necessary to focus on in-line retailers for growth—and that, the panel agreed, requires strong relationships with national retailers, the better to identify expansion plans. As for industrial, only development offers returns, Flick affirmed.

It is also challenging to find good hotel deals, especially in the limited-service segment, Deason said, although his company has been an active hotel buyer. The panel agreed hotels may have hit the bottom of the cycle and are about to turn upward again.

A series of audience polls turned up continued favor for the multi-family, industrial and retail sectors, with office and hotel eliciting a more negative response.

By Suzann D. Silverman, Editorial Director

While the Baby Boomers and Gen Y sit at opposite poles, that doesn’t make it necessary to choose between them as targets for housing or retail. In fact, according to analysis at last week’s Urban Land Institute Spring Meeting, the two groups—those in the process of entering the ranks of seniors and their children—complement each other.

That’s good news, considering they represent the two biggest generational groups in America—and when it comes to housing, the two biggest buyer groups, according to Alan Mark, CEO of The Mark Co. During a panel comparing the two generations, he quoted the Baby Boomers as comprising 47 percent of buyers, with Gen Y at 35 percent, Gen X at 14 percent and the 64-and-older group at 4 percent.

Comparing the two groups is complicated by the fact that the beginning and end of the Baby Boomer generation are more easily identified and their composition is more clearcut. A larger group than their children, they are mostly native born and mostly white, for instance, while Gen Y includes a significant immigrant population, from a variety of countries, making them less unified, noted Robert Lang, director of Brookings Mountain West at the University of Nevada at Las Vegas. That said, Gen Y is a more tolerant generation, not fearing change and, having never been through the urban exodus of the 1970s, more drawn to cities than their parents, who prefer privacy and space.

“What’s different is the pace of change,” added Jamie Gutfreund, chief strategy officer for The Intelligence Group, who noted that the bar continues to rise. She emphasized the need to look ahead to who this group will be as they continue to age. Already, she noted, quoting her Cassandra Report, 82 percent would rather live in a city than a small town, and they are highly entrepreneurial (49 percent want to bypass traditional companies in favor of startups). And they rely on the opinions of family and friends.

Many say they want to live with their parents, yet Mark noted that a lot of them are second-home buyers. Everything about them is different, observed Jeff Kreshek, vice president of West Coast leasing for Federal Realty. “They want to be challenged … they want the experience, but in a very different way.” And they want experience shopping even when they don’t want to interact with people, he observed. In the retail sector, properties that offer a “sense of place” will have a better chance of succeeding, he said, pointing as an example to his company’s Santana Row in San Jose, Calif.

Despite the differences between the two generation, mixing the generations is important, according to Mark, who said the younger group doesn’t want to live only with other members of Gen Y. And he sees room for combination. For instance, both groups like high-rises, although for different reasons. Baby Boomers are ready to give up caring for a house and property, while Gen Y has no time or interest in such responsibility, he explained. And when they move into multi-family housing, they are drawn to different types of units: Gen Y to smaller, more affordable units and the Baby Boomers to larger units. Mark cautioned that those larger units should be placed at the top of the building, where the views are better.

Specific preferences don’t stop there: Baby Boomers like outdoor space (even if it’s not private), a single level (don’t build their space on multiple levels), larger common rooms for entertaining (more important than large bedrooms) and two rather than three bedrooms to encourage their children to visit but not move in. Gen Y also likes social aspects, but they prefer a rooftop deck for gathering (it can also double as a marketing venue for the building), dog runs and stylish finishes.

For more on Gen Y retail preferences, see the ULI Special Report “Gen Y Goes Shopping.”

Leanne Lachman

By Suzann D. Silverman, Editorial Director

As retail strives to recreate itself for the post-recessionary market, investors and developers are targeting one group in particular, and they are an opinionated and fickle bunch. The good news is that Gen Y loves to shop, the Urban Land Institute found in its most recent study of the generation’s retail preferences. The study, released at the Spring Meeting in San Diego on Thursday, followed last year’s report on Gen Y housing preferences.

Gen Y, those 18 to 35 years old, constitutes a strong segment for retailers. Beyond being a huge group, they bring financial strength to the market. Sixty-five percent of the 1,251 respondents to the survey do not receive financial help from their parents, with 41 percent working full time and fully 46 percent achieving household income of $50,000 or more per year. Thirty-two percent own their own home (predominantly those in their 30s).

And they are a financially responsible group, noted study author Leanne Lachman. Although they carry an average of $22,000 in student debt, four of five don’t use credit cards and 27 percent pay their credit card bills in full every month.

And they do shop. Eighty-five percent of respondents said they enjoy shopping, and not just women. In fact, eight of 10 men admitted to favoring this pastime. Overall, blacks and Hispanics turned in higher numbers than whites, with 89 percent of each group claiming a liking for shopping versus 83 percent of whites. Only 4 percent of the overall group said they hate shopping.

Shopping for them is very much a social pastime. Sixty-five percent said they typically shop with friends or family members. And 28 percent said shopping centers are their favorite place to get together with friends. Seventy-five percent go out to the movies, And 46 percent eat out with family or friends at least once a week.

Online shopping figures heavily in Gen Y activities, but bricks-and-mortar stores are still important. While 45 percent spend at least an hour online each day exploring retail-oriented sites, they often use Web sites for research, making their actual purchase in the store (conversely, of the 38 percent who purchase electronics online, one-quarter first go to the store for research).

With Gen Yers sporting short attention spans and a low boredom threshold, Lachman advised shopping center owners to think about fresh stimuli to keep this group interested. Certainly they are fickle restaurant goers, but the overall mix in a mall or shopping center needs to appeal to a range of interests that include entertainment, value, style and social gathering. Pop-up shops can be a critical part of this mix, according to Team I-Sight president Linda Berman, who noted they are not just for temporary offerings but are being used for experimentation by well-known chefs as well as established retailers seeking to try new ideas before they implement them in their stores. In fact, she said, they are turning to fashion schools for inspiration, setting up competitions between groups of seniors to get new, inexpensive inspiration from the Gen Y group itself.

Shopping center owners also need to think about other lifestyle preferences, Berman cautioned. For instance, while they have a strong preference for including their pets in many aspects of their lives, “everyone should have great pet concepts in their mall,” she declared, pointing to the hospitality sector, where brands like the Ritz Carlton have figured out how to incorporate pet attendance successfully. Yet among retail center owners, nobody has. With the pet segment highly fragmented, with many mom-and-pop owners, “developers are still looking for retailers.”

The popular stores targeting the generation continue to thrive, according to Steve Morris, president & co-founder of Asset Strategies Group—the likes of Forever 21 or H&M. But don’t be too quick to dismiss longer-standing brands, he cautioned. This group also likes thrift and discount stores. Department stores, too, continue to attract them, although they are using these stores differently, Lachman noted, doing their research online and then heading directly to their target item in the store for purchase. The end result, though, is that Macy’s, despite many dire predictions through the years, keeps performing again and again, noted session moderator Alan Billingsley, principal of Billingsley Investments, and Lachman added that JC Penney ranked high on survey respondents’ preference list despite recent criticism of its experiment with incorporating discounts rather than offering sales.

For a comparison of Gen Y and Baby Boomer characteristics and residential preferences, turn to the ULI Special Report “Across the Generations.”