CAN INVESTORS STILL PROFIT BY INVESTING IN RETAIL REAL ESTATE?

CAN INVESTORS STILL PROFIT BY INVESTING IN RETAIL REAL ESTATE?

The retail sector can still offer attractive returns, as long as investors focus on well-performing market segments.

John Egan | Jan 18, 2019

We’re barely into 2019, and the shaky future of Sears continues to grab many of the big headlines in the retail sector. But that’s not the story that high-net-worth (HNW) investors should be following in terms of retail real estate.

Rather, experts advise, HNW investors should be evaluating retail prospects based on geography and strategy—not on Sears-level machinations in the retail sector.

Continue reading “CAN INVESTORS STILL PROFIT BY INVESTING IN RETAIL REAL ESTATE?”

Fred Segal on Melrose Sells for $43 million

Fred Segal on Melrose Sells for $43 million

The original location of high-end fashion retailer Fred Segal on Melrose Avenue has been sold for $43 million to CormackHill, a Vancouver, British Columbia, retail real estate investor. Beverly Hills real estate investment firm Kennedy Wilson brokered the deal for the 29,000-square-foot, ivy-coated shopping landmark.
Continue reading “Fred Segal on Melrose Sells for $43 million”

CHANEL PAYS $13,000 PER SQUARE FOOT FOR RODEO DRIVE BUILDING

CHANEL PAYS $13,000 PER SQUARE FOOT FOR RODEO DRIVE BUILDING

French luxury retailer Chanel is paying a record price for retail space in Los Angeles as prime shopping locations in the nation’s major urban areas command rising premiums.

By Liam Pleven

French luxury retailer Chanel SA is paying a record price for retail space in Los Angeles as prime shopping locations in the nation’s major urban areas command rising premiums. Continue reading “CHANEL PAYS $13,000 PER SQUARE FOOT FOR RODEO DRIVE BUILDING”

BIG DEMAND FOR NET LEASE PROPERTIES

BIG DEMAND FOR NET LEASE PROPERTIES
By Natalie Dolce

LOS ANGELES—Why are sale-leasebacks and build-to-suit deals so popular? According to Andrew White, CCIM, managing director of the western region at Gladstone Commercial REIT, and a moderator at the recent RealShare Net Lease Westconference here, the answer is because “Cap rate spread to treasury is still high.”stnllogos

The “Opportunities” panel discussed the opportunities in sale-leasebacks and the advantages of build-to-suit developments. Panelist Peter Deltondo, director of Marcus & Millichap Net Leased Retail Group, said that the most aggressive capital he is seeing in this space is from the 1031 buyers. “Most of them are coming out of the apartment sector and they are paying the most aggressive cap rates.” Continue reading “BIG DEMAND FOR NET LEASE PROPERTIES”

RENTS PUSH RETAILERS TO FRINGE LOCATIONS 

Retail tenants are moving out into fringe-street locations–locations that are parallel or perpendicular to a high street–to avoid rising rents.

LOS ANGELES—Retail tenants are moving out into fringe-street locations—locations that are parallel or perpendicular to a high street—to avoid rising rents. According to a new report from JLL, which GlobeSt.com has seen exclusively, high-street rents have increased as much as 100% in some markets. It is a trend that happens often in peak market conditions when rents begin to crest, and the fact that it is starting to happen now, indicates that we are at or approaching the peak of the cycle.

“Our business is as cyclical as it gets,” Jason Charms of JLL, tells GlobeSt.com. “When rents start to crest and break through levels of previous ‘peaks’ in the cycle, retailers are going to look at areas that can give them a bit more bang for their buck. There’s always going to be a trade off between sales volume and occupancy cost. For example, if the marketing exposure of being on a Rodeo Dr. isn’t important, the lower occupancy cost of being on Brighton Way may well offset the drop in sales.”

In Los Angeles, retail tenants in Santa Monica and Beverly Hills, where high street rents have skyrocketed, are looking for fringe spots where retail sales better justify rents. “We are starting to see retailers consider “fringe” areas due to purely economic reasons. Smart retailers are constantly on the lookout for the new, upcoming areas, in part due to price,” says Charms. “It’s becoming quite difficult to make money at some of the rent numbers we are beginning to see. The larger corporations can write off the occupancy cost as a marketing/advertising expense but the smaller companies don’t have that luxury.”

Charms is currently marketing a space at 420 North Camden, a fringe location of Rodeo Drive, near the Golden Triangle. Retail tenants who fall into this category—someone who is concerned about or can’t afford the high rents on Rodeo Dr. but want the prestige of the area and the traffic that overflows from Rodeo Dr., would be the perfect fit for the location, says Charms, who has been advising his retail clients to find these spots as a solution to the rental increases.

Outside of fringe street locations, Charms says that retailers don’t have many options for avoiding high rents. “The easy answer here is to talk ‘online presence this, digital sales that,’ but we are seeing strong data show that consumers still enjoy a full retail experience,” he says. “Downsizing their retail footprint is always an option. It says more about the overall economy than anything else.”

Savvy retailers are finding multiple ways to adapt at this point in the cycle. In addition to leasing fringe locations, some retailers are also leasing multiple spaces within a single dense urban submarket to control the path of travel and gain more market share.

 

 

 

 

Source: Rents Push Retailers to the Fringe – Daily News Article – GlobeSt.com

A CLOSER LOOK AT NET LEASE INVESTMENT

A CLOSER LOOK AT NET LEASE INVESTMENT

By Natalie Dolce

LOS ANGELES—If a good deal comes along with good yield and credits that you can get comfortable with, whether the deal is in a secondary or tertiary market isn’t the main focus. That was according to panelists on the “Investment and Transaction Outlook panel at RealShare Net Lease West on Thursday.

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Net Lease Cap Rates May Increase As Pressure Softens

Net Lease Cap Rates May Increase As Pressure Softens

According to Dominic Cerminara, of Kingsbarn Realty Capital, cap rates in the net lease sector have seen immense pressure, thanks to the extreme demand and competition for product, but that may be changing.

Continue reading “Net Lease Cap Rates May Increase As Pressure Softens”