JLL’s Greg Maloney Will Retire, and Kristin Mueller Will Step Up

Maloney has been a key figure in the marketplaces industry for the past 45 years and has played an instrumental role in growing JLL’s retail business globally. Since taking the helm in 2002, he expanded and diversified JLL’s management portfolio from 20 malls to more than 500 properties totaling more than 75 million square feet. Along the way, he diversified from malls to open-air and lifestyle centers. He also expanded JLL’s presence in the retail capital markets and retail brokerage businesses.

Mueller will report to Mark Zettl, president of JLL’s property management business. She will partner closely with Naveen Jaggi, president of JLL Retail Advisory Services for the Americas, who reports to Americas markets CEO John Gates. She played an integral role in JLL’s retail property management business for more than two decades before becoming its COO. In her career, she’s held every position in property management — from property-level general manager to regional manager across eight states to business development lead and COO of retail.

More Department Stores Make Way for New Uses

Developers keep finding new ways to reuse valuable empty department store space.

Pacific Retail Capital Partners and Synergy Construction are transforming the former Carson’s at Lombard, Illinois’ Yorktown into a mixed-use center with luxury multifamily, a three-acre park and new dining and retail. Construction on the two-phase project will kick off in the spring, and the developers estimate the first phase will deliver two years later. “When Carson’s closed, we knew we needed to explore different opportunities to redevelop the space to the highest and best use,” said PRCP executive vice president of development Jonathan Rood. “With the addition of residential buildings and the ability to activate the green space, we are able to add a number of new restaurant concepts and retailers to this dynamic redevelopment.”

Meanwhile, in Ocala, Florida, a Sears and a Sears Auto Center outparcel totaling 148,857 square feet will make way for a mixed-use entertainment center. Tobin Real Estate is leasing in advance of the redevelopment. The 12-acre site is adjacent to the enclosed Paddock Mall, which is anchored by Belk, JCPenney and Macy’s.

And in Atlanta, Stonecrest Resorts will backfill the 15-acre former Sears at The Mall at Stonecrest with a 200,000-square-foot health-and-wellness concept. Called Privi, it will include a massage and facial spa, a sauna, a fitness club, co-working space, a juice bar and café, and a personal care product shop. SeaQuest aquarium opened at the Sears site in November, and a 50,000-square-foot food hall curated by Good Food & Company will open there next summer.

Eataly Cash Infusion Will Fuel Expansion

High-end food hall chain Eataly accepted a nearly $200 million investment from Investindustrial, a Europe-focused private equity firm, which gets a 52% stake in the company. Eataly will pay off outstanding debt and use the rest of the money to open flagships in North America, Europe, Asia and the Middle East, as well as several smaller U.S. stores. The chain has 44 locations worldwide.

Nicola Farinetti — the son of Oscar Farinetti, who founded the company in Torino in 2003 — will become chairman. The company plans to name a new CEO “with the mission of leading the company into its next phase of growth on a global scale.”

Sales fell 30% chainwide during the pandemic, forcing Eataly to close its Bari and Forli outposts in 2019 and 2020. It opened a massive food hall in London in 2021, reported the Commercial Observer, and projects nearly $600 million in gross sales by the end of this year.

—Will Swarts

5 Trends Shaping the Net Lease Landscape

Inflation fears are leading investors to seek out the comforting, steady cash flow that net lease affords, according to third-quarter reports from brokerage firms B+E and The Boulder Group. These five trends stood out:

Time is running out to make deals. B+E is is seeing an influx of properties for sale and expects buyers to snap many of them up to meet end-of-year deadlines, both for 1031 exchanges and for deployment of the funds they’ve been raising. Many buyers will want to close before the deadline of Dec. 31 on properties that qualify for 100% bonus depreciation, the report said. But buyers will need to be cash rich, as lenders already are tightening the purse strings; deals that previously required 75% loan-to-value ratios are now around 55% to 60% LTV, according to B+E.
Prices are getting high. Supermarkets, big-box stores, auto parts stores and car washes are getting more expensive. According to B+E, 54 net lease grocery stores sold in the in the U.S. in the third quarter, at an average cap rate of 5.57%. That’s a 0.55-basis-point decrease from the previous quarter. And 81 net lease big-box stores sold at an average cap rate of 5.66%, a 0.36-basis-point decrease. A cap rate is the net operating income of a property divided by its current market value. Traditionally, the lower the cap rate on a deal, the lower the return on investment the buyer expects to make.
Automobile-related tenants are hot. Car washes are also in demand. In the third quarter, 103 sold at an average cap rate of 5.21%, a 0.34-basis-point decline from the previous quarter. Meanwhile, 328 auto parts stores traded at an average cap rate of 5.02%, down 0.24 basis points, according to B+E.
Supply is dwindling. Now that interest rates have risen so significantly, buyers can’t afford to pay today’s low cap rates. Thus, the owners that are opportunistic and don’t have to sell right now have removed properties from the market. The result: The supply of net lease properties available for sale decreased by more than 12% from the second quarter to the third, according to The Boulder Group.
Value-add properties are getting more popular. Rising interest rates and inflation have impacted acquisition criteria for net lease buyers. “Properties with rent growth or the ability to increase rents in the near term are in the greatest demand,” said The Boulder Group senior vice president John Feeney.

Recent Net Lease Transactions

HB Property Management bought a triple-net lease restaurant in Covina, California, from SBH Real Estate Group for $4.6 million. Fast-casual chain Pollo Campero just signed a 15-year ground lease to occupy the property. Newmark represented the buyer, and JLL represented the seller.

In an off-market deal, a Colorado investor paid $10 million for an 8,415-square-foot Lazy Dog restaurant in Highlands Ranch, Colorado. The Boulder Group helped broker the deal.

A private REIT sold a 6,116-square-foot Firestone Complete Auto Care in Colorado Springs, Colorado, to a Florida investor for $4.4 million. The property was built in 2021. Blue West Capital represented the seller.

A Whole Foods on New Orleans’ Magazine Street traded for $31.4 million in a 1031 exchange. The grocer recently extended its lease there for 15 years, according to Faris Lee Investments, which worked with SRSA to represent the seller. Stan Johnson Co. represented the buyer.

Mach-1 Express Wash bought a pair of properties — in Cedartown, Georgia, and Forest City, North Carolina — in a $7.9 million sale-leaseback with an institutional investor. Both sit in Walmart-anchored shopping centers. RealSource and Aileron Capital Management represented Mach One Holdings Ltd.

Palmetto Land Buyers paid $2.8 million for a new, freestanding property in Spartanburg, South Carolina, that’s net leased to fried chicken chain Popeyes. NAI Charleston represented the buyer. Crosland Barnes Group represented the seller.

A Pair of Proptech Deals

Proptech companies are evolving to appeal to a broader range of users.

At the financial dealmaking and transactional level, Archer plans to expand beyond multifamily to retail, industrial, office and hotel. The artificial intelligence company helps investors pinpoint off-market properties for purchase and underwrite the deals.

And at the ground level, MRI Software purchased foot traffic analytics company Springboard. Springboard uses camera networks and algorithms to provide real-time usable data on visitor activity for retailers, landlords and government entities. The deal will help MRI expand MRI@Work Retail.

The Biggest Traffic Day This Holiday Season

In this year’s U.S. holiday shopping season, the highest number of store visits will occur on Black Friday, according to Sensormatic. Second will be the Friday before Christmas, Dec. 23, and third will be the day after Christmas.

On average, the 10 busiest shopping days account for 40% of all U.S. holiday retail traffic, according to the company. However, shopper numbers might consolidate further into those 10 days as shoppers try to make fewer trips in order to save on gas.

“Historical data will be extremely valuable in determining how to stock, staff and promote deals during the holidays,” said Sensormatic global leader of retail consulting and analytics Brian Field. The data also will aid landlords as they plan for the holidays at the property-wide level.

“Christmas Day falls on a Sunday this year, so the last Saturday before Christmas is technically Christmas Eve, shifting the landscape somewhat from the norm,” Field said. “As most stores close earlier on the 24th and potential shoppers begin their holiday festivities, the 17th is likely to be the busiest Saturday in December. The last time this happened was in 2016, and if that’s any indication of what will happen this year, retailers can expect bigger crowds and higher-than-normal demand on this day than they might have in other years. They’ll need to plan their approach accordingly.”

Outlet Center Clarifies Its Model by Adding “Marketplace” to Its Name

An eastern Iowa shopping destination is adding the word “marketplace” to its name to better reflect its diverse mix of tenants. Outlets Williamsburg will become Outlets & Marketplace Williamsburg this fall to reflect the center’s transition to a hybrid retail concept. The tenant roster continues to lean toward traditional outlet retailers, but it also includes local restaurants and services like a day care center. In the past two years, the 250,000-square-foot center has added more than 10 locally owned boutiques, including women’s fashion, gifts, home décor and antiques. This model caters both to shoppers, interstate travelers throughout eastern Iowa and local residents. The property, formerly a Tanger Outlet, opened in 1991 and was Iowa’s first outlet mall. In 2019, Singermann Real Estate acquired the property, which it operates in partnership with TORG.

ALSO CHECK OUT:

Small Businesses Gain Ground at Tanger Centers
Outlet Centers Are Adding Food, Groceries, Regional Tenants and Even Non-Retail