Retail Traffic

Heard on the Floor

“With the way the economy is going right now, I've noticed retailers are more aggressive about negotiating their exit strategies,” says an attorney with Cox Castle Nicholson, a Los Angeles-based commercial real estate law firm. “They don't want to get stuck if the economy continues to slide. In that case, something that's a good compromise situation for the landlord is if a retailer has sales below a specific amount for a given period of time, then the retailer can get out of the lease. They can't just leave their space without good cause.”… “Most retailers are now looking at that bottom 5 percent to 7 percent of their real estate portfolio to see if they can [cut costs],” says Al Williams of Excess Space Retail Services, Inc., a Lake Success, N.Y.-based consulting firm. “Wall Street is not going to look down on that right now, so they think it's a good time.”… Retail developers in search of replacement tenants can now turn to Creme de la Creme, Inc., a Greenwood Village, Colo.-based developer and operator of early childhood development centers. The firm is currently looking for outparcel sites at high-end lifestyle centers in the suburbs of major cities. “We are attracting 600 people to the center every day, twice a day,” says Bruce T. Karpas, Creme de la Creme's president and CEO. The company, which operates 20 centers at present, will open three additional properties in 2008.… Glimcher Ventures Southwest, a Scottsdale, Ariz.-based developer, is rolling out a new concept called the Boulevard, which will combine retail offerings with a wide mix of restaurants and entertainment venues in an open-air, pedestrian-friendly setting. The first of the projects, a 250,000-square-foot center in Surprise Point, Ariz., scheduled for completion later this year, will be followed by three similar developments in the Phoenix area and, eventually, locations in California, Nevada and New Mexico. David J. Glimcher describes the concept as a “Disneyesque experience.” “We believe we are creating affordable entertainment for all demographics,” he adds…. Rich Walter, president of Faris Lee Investments based in Irvine, Calif., is still looking for what the finance side of the business will come up with to replace the commercial mortgage-backed securities (CMBS) loans that just aren't coming. “I think that's gone,” Walter says. “I think it will be a factor in lending, a place to go, but it's not necessarily going to be the favorite place to go.”… Westfield continues to experiment with its “dining terrace” concepts. The firm has made its food courts more upscale. The terraces include higher-quality finishes and designs. They also employ non-disposable cutlery and china, to help make the dining terraces greener than typical food courts. However, the firm has learned some valuable lessons. For one, it learned that using real china can be a be more expensive because of the breakage factor. Now, it's moving to hardier materials. Also, it found that its retailers were determining portion sizes based on the size of plates Westfield offered. So now it's working more closely with its tenants to figure out the best size plate for servings so retailers don't feel forced to dole out portions much larger than they normally would.… Beachwood, Ohio-based Developers Diversified Realty is expanding its foray into Canada. Originally the firm committed to build one project in Canada teamed with Rice Commercial Group. Now it's formed a second partnership with Holborn Property Investments and between the two ventures has a total of five projects in the works…. Jacksonville, Fla.-based Regency Centers continues to be one of the leading firms in the retail real estate industry in incorporating green strategies into its portfolio. Mark Peternell, the firm's vice president of sustainability, and Scott Wilson, vice president of construction, are also working closely with the U.S. Green Building Council (USGBC) to fine-tune the LEED certification process for shopping centers. This month, Regency, along with three other developers, will take part in a “developer summit” with USGBC officials to help push that process forward…. Frank Kass, chairman of Continental Real Estate Cos., a retail developer based in Columbus, Ohio, believes that the CMBS vehicle embraced by so many borrowers in the heady days of 2005 and 2006 faces some obstacles in the foreseeable future. “People in our business went to conduits because they received more money, and many times slightly lower rates than they would have with conventional insurance companies,” Kass says. “If the CMBS market comes back, it will not play into the developers' leverage desires as much as it has in the past. It will come back with a lower loan-to-value [ratio], the spreads will be higher because the risks are greater in today's real estate.” … Lend Lease Communities, the U.S. division of Australia-based Lend Lease Corp., plans to bring a 500-acre sustainable master-planned community to Aurora, Colo., the first of several projects the company wants to build in the U.S. It will contain 3,800 homes, 1.3 million square feet of retail, 4 million square feet of office space and 60 acres of parkland…. Anthony Cafaro Jr., vice president of Youngstown, Ohio-based Cafaro Co., expects there will be fire sales in the retail real estate space in the next six to 12 months and he wants his firm to take advantage. “Many of our peers are in panic,” Cafaro says, admitting that his firm too was tempted to get overaggressive. Now, however, he thinks the firm is positioned to take advantage of the downturn.

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