4C — November 27 - December 10, 2015 — Shopping Centers — M id A tlantic
Real Estate Journal
www.marejournal.com
S hopping C enters
t is hard to recall a time when pricing for core retail properties has been this By Kevin O’Hearn, HFF Northern New Jersey retail investment sales – pricing, trends & outlook I
Jersey for a cap rate in the low five percent range. It was a re- cently repositioned center with mostly investment credit-rated tenancy with long-term leases, but this type of profile drew a tremendous market response as there have been very few simi- lar centers brought to market. In regards to recent trends, one of the most significant items for this region was A&P declar- ing bankruptcy in July. This Top 3 grocer, with nearly 300 stores at one time, is still work- ing through the process, how- ever so far 71 stores have been sold to Acme and 24 stores have been sold to Stop & Shop. Ad- ditionally, 25 of its stores have closed, and the remaining stores are still being auctioned off. This represents a major shake- up of the competitive landscape as Acme now becomes one of the leading grocers in the area with immediate market share, and Stop & Shop grows its al- ready large portfolio. However, several of the other grocery chains are also in expansion mode. ShopRite continues to aggressively develop/redevelop new stores in the region, and Wegmans has begun construc- tion on two large stores inMont- vale and Parsippany, which are expected to be “game changers” in those respective submarkets. Going forward, we expect the trend of some of the larger department stores and junior anchor retailers to continue to shrink. Much of this is attribut- ed to the surge in e-commerce, as well as customer demand for discount pricing. Additionally, we expect owners to continue to focus on adding more food and restaurant options to meet the need of customers looking for a higher level of convenience and social outlets. Gym operators, once viewed as a tenant of last resort, should also continue to expand and be viewed more favorably as they draw sig- nificant foot traffic. The retail landscape in the region will also see changes with the addition of the five million-s/f American Dream retail and entertain- ment complex set to open in 2017 in the Meadowlands. The project is expected to be a huge draw for not only New Jersey residents but the entire New York Metropolitan area. Although the retail landscape in Northern New Jersey is cur- rently undergoing a significant evolution, it is moving in a posi- tive direction. Kevin O’Hearn is manag- ing director at HFF. n
of $1,000 per square foot. One sale this past summer included a ShopRite-anchored center in Somerset County where pric- ing was in the low 5 percent cap rate range. Another center in Northern New Jersey, also anchored by a high sales vol- ume ShopRite location, is cur- rently under contract at a cap rate in the mid four percent range. Most recently, HFF’s New Jersey office took offers on a Bergen County ShopRite- anchored center where pricing is in the low five percent range. Not surprisingly, these types of pricing trends are being driven by institutions and REIT’s.
hot. Record prices are be- ing attained for class A proper t i es , p a r t i c u - larly in the grocery-an- chored sector. HFF has been
Kevin O’Hearn
fortunate enough to sell several of these centers this year, and no grocery store garners more attention than ShopRite, the region’s top operator, especially when their sales are in excess
Chester Springs Shopping Center
This aggressive pricing is not limited to only grocery- anchored centers, but power
centers as well. This past sum- mer HFF sold a fully-leased power center in Northern New
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