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Mid Atlantic R eal E state J ournal Publisher ............................................................................Linda Christman Publisher ...............................................................................Joe Christman Section Publisher ................................................................Elaine Fanning Section Publisher ....................................................................Steve Kelley Senior Editor/Graphic Artist ................................................ Karen Vachon Office Manager ....................................................................Joanne Gavaza Contributing Columnists ............................................. Matthew K. Harding Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly P.O. Box 26 Accord, MA 02018 (Mail) 312 Market Street, Rockland, MA 02370 (Overnight) Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, P.O. Box 26, Accord, MA 02018 USPS #22-358 | Vol. 24 Issue 12 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
Mid Atlantic Real Estate Journal
ollowing 2012’s marked improvement in retail leasing, 2013 is off to a F By Matthew K. Harding Retail “State of The Market” Solid Heading Into Heart of 2013 great start in the Northeast. We are seeing demand from national, local and franchise companies. The category base reflects broad variety as well, with restaurants, apparel, pet supplies, gyms and personal services tenants among the most active tenant types – fol- lowing several years in which value-oriented retailers domi- nated. Nationwide optimism was evident among both retailers and developers at ICSC’s recent RECon meeting in Las Vegas. The event brought 33,000 in- dustry participants together, and everyone we spoke with agreed they were able to con- duct more productive network- ing, leasing meetings and new business development than in the recent past. We also observed increased talk about new projects, which is a time- proven indicator of increased market strength. One emerging trend worth watching includes stepped up activity from non-traditional retail tenants. Among them, healthcare-related businesses increasingly are targeting shop- ping center locations. Within our own leased and managed portfolio, LabCorp, a medical laboratory tests and services provider, recently signed a 1,700 s/f lease at the Centre Plaza in Bensalem, PA. At another property, we currently are negotiating a 10,000 s/f lease with a different
medical user. Last week, we received a requirement from a 100-location medical chain. Earlier in the year, one of our first non-traditional healthcare tenants, Jersey College School of Nursing, tripled its space at Capitol Plaza in Ewing, N.J. The private, post-second- ary educational institution leased with us in 2002 and now occupies 30,000 s/f at that property. In terms of size require- ments, supermarkets still are opening large stores. Many are incorporating online shopping/ store pick-up operations that require dedicated space. Other categories, like office supplies and department stores, con- tinue in a right-sizing direction with smaller formats. What does all of this mean in terms of fundamentals? Retail remains a “tale of two cities.” Top-tier properties absolutely are in demand, resulting in tighter vacancy rates and an upward trending in rents. At the same time, credit tenants remain focused on these bet- ter-quality, well-located assets. This poses continued challenges
for class B properties and those in secondary locations. Capital Markets Take Note Investors and financing en- tities are taking note of retail real estate’s strengthening state, especially in light of the improving general economy and continued low interest rates. Top-quality properties are in high demand, with gro- cery-anchored centers in prime locations remaining the most coveted asset type. Importantly, financing is freeing up to ac- commodate increased market activity. Within this context, many owners are recognizing that this is an opportune time to examine their existing portfo- lios for refinancing. We recently were able to refinance two properties for one of our clients in the range of 3%. They were able to use the proceeds to pay off the existing financing on those assets as well as a mort- gage held on a third property. The new payments on the re- financed properties are about the same as they were before, continued on next page
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