B — January 25 - February 7, 2013 — Shopping Centers — Mid Atlantic Real Estate Journal
S hopping C enters
By Matthew K. Harding, Levin Management 2012 brings improved leasing for retail real estate in NJ/NY/PA area R etail real estate in the New Jersey/New York/Pennsylvania
Supermarkets remain quite active as well. Large national chains including Stop & Shop and ShopRite, specialized grocers like Fair- way Market, smaller for- mats such as Fresh Market, and specialized local shops geared toward a neighbor- hood’s ethnicity all are ex- panding regionally. Apparel, on the other hand, presents a mixed bag. Purely value-driven concepts like TJ Maxx, Marshall’s and Ross continue to do well and add locations. Some higher-end retailers, including Chico’s, are expanding as sales re- bound while others are weed- ing out underperforming stores. The middle tier still is feeling a pinch in terms of sales volume and ongo- ing consolidations. For ex- ample, Ascena Retail Group bought Charming Shops and is winding down its Fashion Bug operation. Daffy’s is liq- uidating all of its 19 stores. That has put some space back on the market. Most recently, Big M, Inc. – owner of Mandee, Annie Sez and Afaze – filed for Chapter 11, which could further impact the landscape. Ultimately, the level and scope of new leasing activ- ity in 2012 indicates that retail has again entered a positive trajectory. A high level of renewals across the board – from local retailers to franchises and national chains – reinforces this good news. Smart landlords recognize that now is an opportune time to retenant, revamp and reposition their shop- ping centers, with many linking capital improve- ments to tenant activity. For
example, our firm recently completed a renovation at Hamilton Plaza in Hamilton Twp., NJ. The project, which included significant common area upgrades, a new facade, and the addition of two pad sites and a 10,000 s/f end cap, coincided with a store renovation and expansion by long-time anchor tenant ShopRite. At another Levin- managed center in Whiting, NJ, a new lease by Save-A- Lot has spurred plans for renovation work there as well. In general, shopping cen- ter owners – whether they are institutional, fiduciary or private – are faced with a rapidly changing retail industry and a challenging real estate environment, and recognize that the busi- ness is more complex and competitive today than ever before. They understand that the best way to increase the bottom line is to incor- porate lean, yet effective, operations, employ carefully crafted leasing strategies, and win top tenants by of- fering quality shopping envi- ronments. Retail real estate services companies that spe- cialize in these specific areas, like Levin Management, are seeing increased demand as a result. Looking ahead, we expect that the progress retail and retail real estate enjoyed in 2012 will carry forward. Im- proving consumer sentiment and confidence will further fuel the sector’s momentum in the coming year. Matthew K. Harding is president of Levin Man- agement located in North Plainfield, NJ . n
r e g i o n a l market saw i m p r o v e d leasing ac- tivity during 2012 , d i s - tinguished f r o m t h e recent past by broader e xpan s i on
Matthew K. Harding
involving a larger variety of tenants looking at a wider range of property types. This reflects an important shift from 2010 and 2011, when most retailers remained cautious about growth, and much of the activity that did occur involved opportunistic leasing at quality, well-lo- cated properties with reces- sion-borne vacancies. Today, much of that Class A vacancy has been absorbed, yet leasing momentum con- tinues. Additionally, follow- ing a period dominated by growth among value-ori- ented concepts, 2012 brought stepped-up leasing by res- taurants as well as personal services, gyms and other tenants providing non-essen- tial goods and services. This speaks to renewed confidence in consumer spending and continued economic improve- ment. In the dining category, ac- tivity has picked up within the fast casual sector, espe- cially, with targeted regional growth by Chipotle, Moe’s Southwest Grill and Smash- burger. New franchises con- tinue to flock to this area as well, as illustrated by a number of leases by frozen yogurt concepts such as Let’s Yo and Cups.
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