Future of Urban Retail Properties in America

Urban Retail Properties News

Future of Urban Retail Properties in America...

There are many emerging factors which make urban retail properties more appealing. The long term rise in oil prices along with increased traffic and congestion has translated into a rising desire for proximity to public transit, which has made urban retail properties more desirable. To illustrate this fact, suburban households typically spend 25% of their budgets on transportation, compared to 9% for urban households. Subsequently, the number of households desiring to be within one-half mile of urban transit is expected to double, reaching 14.8 million by 2025.

Besides concerns about transportation, other factors are also making urban investment more appealing. The younger generation, so called "echo-boomers" or "Generation Y" is 50% more likely to live in urban areas. It has also been recorded that the top 100 MSAs (Metropolitan Statistical Areas) generate 75% of the U.S. GDP and 66% of its jobs, while only making up 12% of its land mass. Furthermore, the top 10 MSAs are home to 33% of the nations "knowledge jobs" and 27% of its research universities. In an economy which is increasingly based on technology and is in-fact referred to as the "knowledge economy", these numbers point to increased viability and prosperity for urban areas.

Lastly, the retrofit-ability (or reusability) of a particular urban retail property is typically much greater than standard suburban real estate. Urban retail properties usually require less identity-driven structures and tenants are comfortable in a specific space mainly because its location. Therefore, if a new tenant is ever needed to fill a specific property, the options of that tenant are much larger than a specifically designed building for the previous occupant.

In 2007, retail sales per Manhattan resident totaled $23,250, nearly three times the national average. That number has only grown. By contrast, in the Bronx, there were just $3,362 in retail sales per resident, about half of the average.

The Times said drugstores present the one exception to the rule of retailers shunning the four boroughs outside of Manhattan. There sales are strong throughout the city, as chains including Duane Reade and CVS have spread far and wide and offer many products, albeit at higher prices, that most Americans buy at discount retailers such as Target. Driven by a desire to spend less time in traffic, live in a smaller footprint and work and play within an urban atmosphere, aging boomers and Gen XYZers alike are leaving the edge and making their way back to the city.  Developers have capitalized on this trend by coupling high-rise condominium living with easily accessible ground floor retail space.  The convenience of these on-hand amenities makes for an attractive lifestyle for local residents and nearby office workers.  While not a new phenomenon, the rise in urban mixed-use development meets the market at a very good time

For developers, the rise of urban retail properties and mixed-use office projects and the willingness of traditional urban retail investors to pursue these assets offer an opportunity to monetize portions of the assets as well as unhook from the completed portion of the project.  Developers using this streamlined method of disposition have used their newly found proceeds to either pay down existing debt or fund new projects.  Additionally, a properly structured urban retail property provides flexibility in how a developer can subdivide the spaces often providing an infusion of cash from the sale of the retail units long before the residential properties have sold out.

www.calkain.com

Urban Retail Properties The Hottest Deals

Urban Retail Properties News

Urban Retail Properties The Hottest Deals in Real Estate!

The market for urban retail properties has witnessed a sharp resurgence in the past couple months. In-fact, we are seeing cap rates and prices that are reminiscent of the markets heyday back in 2005-2007. There is such a strong demand for these properties that they are routinely receiving multiple offers. This trend is being fueled by a number of factors such as inherently strong real estate quality, low interest rates, and a surplus of investors willing to deploy capital.

It is no secret that a great deal of the net lease market’s recent success is due to the security it offers investors. Net lease properties offer investors reliable income streams with little to no active management. These qualities are only enhanced in the context of urban condos. Unlike properties located in tertiary markets, urban retail can depend on higher foot traffic and a greater intrinsic value. This serves to add an extra layer of security to the investment – should a tenant leave it will not be hard to replace them.

Investors know this and are actively seeking these properties. Low interest rates coupled with a surplus of capital (that had previously been sitting on the sidelines) have led to a perfect storm of rising prices and falling cap rates. Likewise, many sellers are reluctant to sell because they would face the same problem in redeploying their capital. As demand continues to gain momentum it is likely investors will dig even deeper for tenant and location, resulting in downward pressure on cap rates.

http://www.globest.com/blogs

Urban Retail Economic Report

Urban Retail Properties News

The most aggressive cap rates Jonathan Hipp, CEO of Calkain, says he has seen has been in the mid 4s for “McDonald’s-type credit.”  Expect compression to continue, he tells GlobeSt.com.

The report also notes there is stronger investor demand for bank branches, pharmacies, and the best-performing fast food chains.Bank branches registered average cap rates of 6.1% in Q1, for example--100 basis points lower than the 7.1% average cap rate for pharmacies.

Investors, however, can be counted on to show a high degree of sophistication in their acquisitions not only across classes of tenants but specific tenants, as well. Sam Chandan, president and chief economist of Chandan Economics, tells GlobeSt.com. “Some pharmacy and bank branches are trading at sharply lower cap rates than their peers, even after controlling for variation in property quality and time to lease maturity.” For these most coveted assets, he says, debt yields are lower, as well, meaning that lenders perceive many of the same differences as relates to credit risk.

The most aggressive cap rates Jonathan Hipp, CEO ofCalkain, says he has seen has been in the mid 4s for “McDonald’s-type credit.”  Expect compression to continue, he tells GlobeSt.com. “Given where Treasuries are headed, people are looking for yield. Also, there is so much buyer interest in this product now we have gotten to the point where we almost don’t need new buyers. What we would like to have is more products.”

Not that the demand-supply imbalance will give investors pause, Hipp adds. “With everything going on, from the uncertain employment picture to the European debt crisis, at end of day people are still cautious on the economy. With the right combination of credit, location and length of lease it is a great time to be a seller in the net lease market.”

Or even a buyer, he says—but with a caveat. In this environment, current buyers should beware that an eventual exit strategy could happen in a period of higher interest rates and a diminishing flight to quality.

Source: GlobeSt.com

$1,123.00 ft² For Urban Retail Investment

Urban Retail Properties News

$1,123.00  ft²  Urban Retail Investment Sale in Washington, DC

Calkain Companies, a national real estate investment brokerage firm, has procured the sale of a Triple Net (NNN) Lease urban retail investment property in the Logan Circle area of Washington DC. A local retailer.

 “The $618,000 transaction provided a solid return to the selling partnership and is testament to the strength of the Washington DC Metro market. Even with a local tenant as the guarantor of the lease payments, the value of the real estate was realized and garnered an extremely high per square foot sale price.”

Calkain Companies is a boutique commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi-tenant retail, industrial, hotel and office net-leased transactions. While licensed to conduct business in many states, nationally, Calkain has multiple office locations throughout the Mid-Atlantic, Southeast and Northeast United States. Additional information about the firm and listings may be found at www.calkain.com.

Retail Urban Investment Sold in DC

 Urban Retail Properties  News

Calkain Retail Urban Investment Advisors recently completed the sale of a four-tenant, retail investment property in Washington, DC. The purchaser was a private investor/developer seeking an income-producing asset with a strong upside. The property, WY18, is a charming residential condominium in the heart of Adams Morgan. Adams Morgan, one of the District’s most diverse neighborhoods, has streets ripe with multicultural eateries, eclectic shops and vibrant, charismatic nightlife.

Rick Fernandez, Calkain Retail Urban Investment Advisors’ Managing Director, represented the buyer and seller. “The WY18 retail condos are well situated within a dense, high traffic location in an affluent, diverse residential and retail community. The buyer saw significant opportunity in the location and potential of this asset,” explained Fernandez. The transaction closed in the past thirty days.

Calkain Companies is a boutique commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi- tenant retail, industrial, hotel and office net-leased transactions. While licensed to conduct business in many states, nationally, Calkain has multiple office locations throughout the Mid-Atlantic, Southeast and Northeast United States. Additional information about the firm and listings may be found at www.calkain.com.

Benefits of Urban Retail Investments

Urban Retail Properties News

Benefits of Urban Investments

There are many emerging factors which make investment in urban areas more appealing. The long term rise in oil prices along with increased traffic and congestion has translated into a rising desire for proximity to public transit, which has made urban living more desirable. To illustrate this fact, suburban households typically spend 25% of their budgets on transportation, compared to 9% for urban households. Subsequently, the number of households desiring to be within one-half mile of urban transit is expected to double, reaching 14.8 million by 2025.

Besides concerns about transportation, other factors are also making urban investment more appealing. The younger generation, so called "echo-boomers" or "Generation Y" is 50% more likely to live in urban areas. It has also been recorded that the top 100 MSAs (Metropolitan Statistical Areas) generate 75% of the U.S. GDP and 66% of its jobs, while only making up 12% of its land mass. Furthermore, the top 10 MSAs are home to 33% of the nations "knowledge jobs" and 27% of its research universities. In an economy which is increasingly based on technology and is in-fact referred to as the "knowledge economy", these numbers point to increased viability and prosperity for urban areas.

Lastly, the retrofit-ability (or reusability) of a particular urban property is typically much greater than standard suburban real estate. Urban properties usually require less identity-driven structures and tenants are comfortable in a specific space mainly because its location. Therefore, if a new tenant is ever needed to fill a specific property, the options of that tenant are much larger than a specifically designed building for the previous occupant.

www.calkain.com