Each Wednesday, The Wrap presents a compilation of recent noteworthy commercial real estate stories from a variety of publications. Below are five items that caught our eyes in recent days. You'll notice a heavy emphasis on pieces from the 2012 ICSC RECon conference and trade show, which concludes today.
• RECon 2012: A Return to Normalcy by David Bodamer of National Real Estate Investor/Retail Traffic.
Last week’s ICSC RECon stood as a heartening example of how far the retail real estate market has come since bottoming out in 2008 and 2009, Bodamer reported in his show wrap-up.
The conference was marked by a sense of optimism, he wrote, as attendance rates were up and companies reported deals in the works. Retailers were looking for new spaces, and landlords reported finally having some leverage in lease negotiations.
“It’s been a slog to get here,” Bodamer wrote. “But by all accounts, ICSC’s RECon 2012 marked the first time since the commercial real estate market peaked in 2007 that the conference felt like it did during the boom years. There was optimism. There were full halls. And, most importantly, deals were getting done.”
Another reason for the sprightlier mood, attendees said, is that the last few years have given companies a chance to work on their balance sheets and portfolios to create safeguards against future dips in the economy.
• Retailers Really Are Looking 'Outside the Box' for Opportunities by Nellie Day of REBusinessOnline.com.
As a result of the ever-increasing popularity of Internet sales and finicky consumer bases, big-box retailers are having to “think outside the box” to create appealing destinations for shoppers. This according to a big-box panel discussion at RECon 2012.
“A number of companies are turning their attention away from the mega spaces to provide more personalized, intimate shopping experiences,” Day wrote.
Panelist Car Muller, vice president of real estate and design for Walmart, noted his company’s smaller Neighborhood Market stores, of which there are now 200 nationwide, and its testing of Walmart Express stores as examples of the turn to more intimate shopping. Also, Edward Hogan of Brookfield Office Properties noted his firm’s partnership with Target to develop a City Target in a downtown Los Angeles shopping center. The store is 90,000 square feet instead of Target’s typical 150,000 square feet and is geared to intown dwellers.
• Permits Climb as Developers Up Their Bets by Laura Kusisto of The Wall Street Journal.
Here’s another good sign for the commercial real estate markets: construction activity in Manhattan is starting to pick up. The New York City borough experienced a 169 percent spike in new building permits during the first four months of this year. The city issued 35 construction permits for Manhattan projects in the first third of the year, up from 13 during the same period in 2011.The permits cover hotels, apartments, an affordable-housing complex and an art gallery, Kusisto reported.
“The latest spike in permits reflects developers’ growing confidence in certain sectors, especially demand for rental housing and hotels, even while demand for office space lags,” Kusisto wrote.
Because of the lack of new space to come on line in recent years, “we feel that the market is very good right now and ripe for new condominium projects,” Michael Namer, chief executive of Alfa Development, which has broken ground on a 51-unit condo project on 21 Street, told Kusisto.
• Owners Report Scattered Leasing Success in Q1 by Mark Heschmeyer of CoStar.com.
The start of the year showed improvement in office occupancy for many landlords, according to Heschmeyer’s detailed analysis of the first-quarter reports of 15 publicly traded real estate firms. However, the reports paint a picture of continued overall softness in the office market and indicate the firms aren’t wildly confident about the road ahead.
“While expectations for a continued slow recovery should result in expected hiring and improved leasing demand later this year, they acknowledge that economic uncertainties could drag down any success they might have been expecting,” Heschmeyer wrote.
“Many of the firms reported that office leasing was strongest among technology and life science firms, while government leasing activity was soft,” Heschmeyer added.