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Shrinking U.S. Shopping Malls Get Makeovers

December 2, 2015 by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment

Visitors used to flock to the Highland Mall in Austin, Texas, around the holidays to stroll through the city’s first enclosed shopping complex and admire the giant Christmas tree crafted from poinsettia plants.

But this holiday season, no shopping will be done there. Workers are converting the 600,000-square-foot structure into a campus for Austin Community College with classrooms, lab space and a culinary arts center.

Austin’s economy is strong and its population swelling, but Highland couldn’t attract enough shoppers to stay afloat.

“Competition came up and killed it,” said Matt Whelan, principal at developer Red Leaf Properties LLC, which is working with the college on the project.

An era of relentless expansion for American shopping centers is coming to an end as a toxic brew of overbuilding, the rise of e-commerce and a wave of retailer bankruptcies force landlords to reimagine once-lucrative properties.

Some owners are converting struggling malls into apartments, offices and industrial space, while others are turning big chunks of retail space into parks and playgrounds to keep shoppers interested.

“You have to create an environment that people want to come to,” said Tony Ruggeri, who eliminated about 50,000 square feet of retail space to create an open-air plaza at West Manchester Town Center in York, Pa., which reopened last year.

View entire article here in the Wall Street Journal.

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Online Shopping Tops Brick-and-Mortar on Black Friday Weekend

December 2, 2015 by Randybaconin Real EstateLeave a Comment

More shoppers did their holiday deal hunting online than in stores, a National Retail Federation survey reveals, with 57% of those shopping on their cell phones. Despite malls being quieter than usual, Black Friday sales still jumped 14% over last year–spending $4.45B total–underscoring a dramatic shift in shopping habits in recent years, the Wall Street Journal reports. On the brick-and-mortar end, holiday sales totaled $12.1B, a dip from last year. “This holiday may be a wake-up call for store-based retailers,” retail consultant at PricewaterhouseCoopers Steve Barr says, “to recognize they are going to have to transform their store models to compete with online retailers.” [WSJ]
Online sales coming from large retailers like Amazon and Wal-Mart and a growing number of smaller online retailers like osiyo computers and video games

Read more at: https://www.bisnow.com/national/news/retail/online-shopping-tops-brick-and-mortar-on-black-friday-weekend-53008?utm_source=CopyShare&utm_medium=Browser

Death of the American mall

November 24, 2015 by Randybaconin Commercial Mortgage LendingLeave a Comment

Last week, big box retailers such as Macy’s M, -1.40% and Nordstrom JWN, +0.72% reported weak results and both stocks came crashing down, inflicting damage on the retail sector and equity markets in general. I contend that what is happening to these companies is not a result of a weakening economy. Rather, it is due to a secular change — a paradigm shift — in consumer behavior and retail commerce. Investors fail to recognize this at their own peril.

What is most remarkable, in this shift, is the decline of traditional shopping, over the past few years, at malls across the country. I refer to this phenomenon, with no sense of hyperbole, as “The Death of the American Mall.” Recently I discussed this theory and its consequences for investors on WSJ Podcasts and Bloomberg Radio, but wanted to put my thoughts in writing for our MarketWatch readers.

Do you remember the classic movie “Fast Times at Ridgemont High”? It was a story which revolved around teenagers working and hanging out in a mall. I grew up in the 1960s, went to high school in the 1970s and graduated from college in 1982. During those years, malls in the United States were a destination for teens, tweens and young adults. You would go there to get the latest record release (those were vinyl disks which played music on a turntable), shop, grab a meal, see a flick or just hang out with friends. It was also a great place to get a job.

Read entire article here on Marketwatch.com

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Scarce Labor Drives Construction Costs for Multifamily Developers

November 20, 2015 by Randybaconin Real EstateLeave a Comment

The good news for the multifamily industry is that the cost of construction materials is very low. The bad news is that skilled construction workers are increasingly expensive and hard to find.

“I’m pretty optimistic that materials costs are going to stay low and maybe get lower,” says Ken Simonson, an economist with Associated General Contractors of America, an industry trade group. “My number one concern is the availability of labor.”

The U.S. economy is relatively strong—at least compared to the rest of the world. From Asia to Europe, economies around the world have struggled this year, driving down demand for products bought and sold on the global market, from oil and steel to concrete. But here in the U.S., unemployment is low. The price of labor needed to build large projects is high and rising, often wiping out the cost benefit of cheaper materials.

Overall costs rise

The prices contractors charge for construction projects, including the cost of labor, rose slowly but significantly this year, according to the U.S. Bureau of Labor Statistics. The overall producer price index for the construction of new non-residential buildings climbed 1.8 percent over the year that ended September 2015. (Costs for “non-residential” construction do not include single-family homes, and include many of the same materials and labor as large apartment developments, especially high-rise apartment buildings.)

The 12-month increases ranged from 0.2 percent for healthcare construction to 1.8 percent for schools to 1.9 percent for warehouses and industrial buildings and 2.4 percent for office buildings.

Worldwide demand for many commodities has fallen over the last year and that makes those goods less expensive in the United States.

Read entire article in National Real Estate Investor here.

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What Do Investors Need to Know About Crowdfunding?

November 20, 2015 by Randybaconin Commercial Mortgage LendingLeave a Comment

Crowdfunding platforms have exploded recently, with experts expecting $2.57B raised this year. And while we have discussed what investors should look for in a platform, we’ve yet to tackle why you should be looking at crowdfunding in the first place. To get a grip on crowdfunding’s advantages, potential concerns and future, Bisnow sat down with partner RealtyMogul.com’s CTO and co-founder, Justin Hughes (pictured). The Appeal Justin says the advantages of crowdfunding extend beyond accessibility and reach (although he admits they are significant benefits for investors). A solid crowdfunding platform provides investors additional investment opportunities they wouldn’t normally get because investors can “leverage the connections of the platform, as well as benefit from the enhanced purchasing power when investors pool their capital.”

Read more at: https://www.bisnow.com/national/news/technology/is-crowdfunding-an-investors-best-friend-52400?utm_source=CopyShare&utm_medium=Browser

Mall Owners Find Silver Lining in Retailer Busts

November 18, 2015 by Randybaconin Real EstateLeave a Comment

A spate of retailer bankruptcies this year has left owners of malls and shopping centers scrambling to fill empty stores. But some landlords smell opportunity.

The vast majority of these type of properties are occupied and spare space is in short supply in many parts of the country, according to experts and landlord data. That is boosting the confidence of landlords who believe they can find new tenants and charge them higher rents.

RadioShack was the largest retailer by assets with publicly traded stocks or bonds to file for bankruptcy since 2010. A former Radio Shack store in the Bronx, New York

Photo: Michael Nagle/Bloomberg News

After grocery chain A&P, filed for bankruptcy in July, for example, Brixmor Property Group Inc. said it bought back three leases in a bankruptcy auction under which the grocer, formally known as Great Atlantic & Pacific Tea Co., was paying an average of $6.59 a square foot. The firm, which owns shopping centers in 38 states, will be able to charge new tenants $20 to $30 a square foot, says Michael Carroll, chief executive.

See entire article in the Wall Street Journal.

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