5.0 EDSR 03-09-2009 - Laserfiche WebLink

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COS~R News: National Rie~l Estate Ixtflsan March 04, 2009 Written by Sasha M Pardy (spardy@costar Filling Vacant Retail Boxes Requires Thinking t~utside The Box Retail Property Experts Discuss Alternative Tenant Uses and Strategies; Identify Active Traditional and Non-Traditional Retailers that Continue To Sign New Leases "Enough already!" We know that's what a lot of our readers are thinking when, day after day, they read about store closings and bankruptcies. You know stores are closing. What you really want to know is, who can fill these dark spaces?! For answers, we turned this week to several leading industry executives who offered insight on retail tenant trends, and checked recent activity in Costar Tenant. John Bemis, director of leasing for ]ones Lang LaSalle Retail, which specializes in the management and leasing of regional malls across the country (including several receiverships often involving high vacancy) said that over the last six months, landlords' willingness to consider alternative or non-traditional uses has increased. "Because of the nature of the disposition business in general, we're dealing with second generation space that usually was an underperforming store -- the nature of this requires a creative solution, so this isn't new to us," said AI Williams, principal with Excess Space Retail Services. "But, because the economy is shifting and most retailers have stopped expanding, we're seeing more and more non-traditional leasing. It has required brokers and landlords to become more creative and flexible in what types of deals and leases they're willing to maintain. The larger the space, the more creative. We're absolutely seeing more and more of it." "In secondary and tertiary retail markets, where the local economies are more self-contained and stable than the overall national market, there seems to be a trend developing: Smaller, local and regional retailers of all categories with solid sales performance are striving to take advantage of opportunities to lease prime retail space traditionally taken by large national retailers. Also, we have seen aggressiveness by a short list of non credit-rated department stores, with strong cash positions, in shopping for bargain lease rates out of retailer bankruptcies," said Harold Fry, VP of leasing for Hauck Holdings, the owner of shopping centers in 10 states. "There are only a handful of 15,000 to 20,000-square-foot traditional tenants active in the marketplace and most of those are discounters who won't pay more than $12.00 NNN. In a growing number of markets, you'll have five to 10 shopping centers competing for one retailer. Landlords have no choice but to be creative and think of alternative uses," said Matt Hammond, senior leasing associate for Coreland Companies. Patricia Palumbo, director of leasing and marketing for Metropolitan Management in Owning Mills, MD said she hasn't seen such a spike in her market yet, "The users I am working with are typical for strip center space. We are not doing anything non-traditional at this point." "There has not been that much of the alternative users of space taking over traditional retail space. I think all segments of the economy are being battered and no one really wants to take on additional fixed costs at this point, said Matthew Bordwin, managing director of Keen Consultants, the real estate division of KPMG Corporate Finance. Consulting Costar Tenant, we conducted a national search for retail tenants that signed new leases 1,000 square feet or larger over the last six months to open new stores at retail properties 10,000 square feet or Copyright (c) 2009 Costar Realty Information, Inc. All rights reserved.