5.0 EDSR 03-09-2009 - Laserfiche WebLink

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CONTINUED: Filling Vacant Retail Boxes Requires Thinking Outside The Box larger. This search yielded more than 11,500 new leases totaling nearly 55 million square feet -- definitely enough transactions to identify trends on what tenant types, as well as some stand-out tenants, are signing new leases these days. NON-TRADITIONAL, ALTERNATIVE TENANTS GOVERNMENT USES Examples: Department of Motor Vehicles, City Halls, Military Recruitment Centers, Libraries Jones Lang Lasalle retail's Bemis said there's a "fairly large trend" of government entities opening in malls. Costar has recorded at least 100 leases to government entities at retail centers over the last six months. "While they're not ideal for upscale malls, they are willing to lease those difficult spaces -- usually in mall wings that are close to the parking lot," he added. Robert Thatcher, general manager and director of leasing for Triyar Cannon Group's Concord Mall in Elkhart, IN said, "I think government offices should be considered depending on the type of and center and its location within the community, with further consideration of things like availability of public transportation and perhaps a major (likely enclosed) shopping center's traditional role as a community focal point and/or meeting place [does it appropriately match the particular government agency, etc.]. Government offices are typically willing to make a long term commitment to a five or 10-year Lease, but insist on a one year kick-out provision in the event funding for the office is impaired or terminated. Thus, funding tenant improvements for these projects must also be evaluated in view of not just the "quality" of the income stream, but the "durability." EDUCATIONAL USES Examples: Satellite Colleges and Universities, Massage /Beauty Schools, Daycares, Youth Private Schools With the population of those laid-off from their jobs incessantly on the rise, many people choose to "go back to school" during this down economic period. That said, schools are a good candidate to backfill vacant junior anchor or anchor spaces at shopping centers. Costar has recorded at least 60 university/college/vocational school leases over the last six months, as well as countless preschools/day care centers. At malls, Bemis said, they'll even consider taking a block of combined small-shop spaces. "They're great traffic to have; wonderful for food uses and service businesses in the center and are accretive to sales," said Bemis. Hammond said Coreland is currently marketing a 20,000-square-foot space in a center anchored by Food 4 Less, CVs, and Big Lots. "Within the first sixty days marketing the center, we received one offer -- a regional vocational school. While it's not our ideal tenant for the center from a synergy standpoint, they have strong financials...we are pursuing them," he said. CHURCHES While those interviewed cited a few examples of churches signing leases as an example of alternative retail tenants, the consensus among those we consulted was that it's not a widespread trend. Costar recorded at least 80 leases signed by churches at retail centers over the last six months. "I have been doing church deals periodically for 10+ years with great success," said Triyar Cannon Group's Thatcher. "They clearly generate mall traffic for retailers and food court businesses. Churches usually start smaller, and as they outgrow the space they're in, they move out into the community and either partner with other smaller congregations or acquire traditional church real estate on their own - even across town if necessary. In both of those instances, they have continued to grow dramatically," said Thatcher. Thatcher cited the example of Fresh Start, a new church that recently opened at the Concord Mall in a former KB Toy store that required little retrofit -- an attractive store front helps it blend in with other mall (c) 2009 Costar Realty Information, Inc. All rights reserved.