U.S. retail REITs outperformed the broader commercial real estate REIT sector when it came to filling space in the second quarter, according to the Nareit T-Tracker: Quarterly Operating Performance Series index. Occupancy rates of all REIT-owned properties increased to 93.7%, the first quarter to reach and exceed pre-pandemic levels. Meanwhile, the occupancy rate for retail REITs, specifically, grew by more than 100 basis points from the previous quarter, to 96.9%.
PREIT, for one, boosted its non-anchor occupancy to 90.5%, improving 450 basis points year over year in the second quarter. It did so by adding such tenants as Tilted 10, Legoland Discovery Center and, at one property, even a self-storage facility in below-grade space. And the landlord transformed an empty Macy’s at New Jersey’s Moorestown Mall into a value-retail hub occupied by the likes of HomeSense, Five Below, Michaels and Sierra.
Kite’s occupancy rate climbed 20 basis points to 93.8% in the second quarter, thanks to strong retailers taking more space, CEO John Kite said on an earnings call. “The structural shift in how open-air retail is utilized by retailers and consumers has resulted in an 18-month period of record-low retail bankruptcies, record-high leasing volumes and brick-and-mortar sales growth outpacing the growth in e-commerce,” he said. He added that the landlord retained 90% of existing tenants whose leases came up for renewal during the period.
But What About Virtual Occupancy? Can a Landlord Make Money in the Metaverse?
The metaverse continues to build buzz. Some companies even are buying real estate in the virtual world from services like Decentraland and Sandbox. With that real estate, they plan to build virtual structures and lease space in them. But not everyone in the marketplaces industry is enamored of the concept. According to some, it’s most effective as a tool for big consumer brands to reach customers than for landlords to buy, lease, sell and manage. “Right now it’s more talk than anything,” billionaire investor Mark Cuban told Altcoin Daily. Cuban theorized that the limitless supply of land in the virtual world means landlords never would be able to capitalize on scarcity to make a profit. Turns out buying space in the metaverse could be more like buying a risky crypto asset than physical real estate.
One Way to Create Tenant Demand: Join the Open-Air, Mixed-Use Bandwagon
Under a new partnership, JLL will manage, operate and lease Poag’s 10 high-end, open-air lifestyle centers, and Poag will provide development services for JLL-managed properties, including its redevelopment pipeline. Poag also will work with JLL to answer RFPs for large, complicated, mixed-use developments integrating uses like office, retail, multifamily and hospitality. Poag plans to grow this third-party development platform as malls and open-air centers strive to adapt. Mall owner Centennial made a recent play to position itself for an open-air, mixed-use world, as well, buying open-air development specialist Bayer Properties.
Like This California Master-Planned Community Adding Retail
Another example of integrated uses: Many of today’s ground-up retail developments are supermarket-anchored properties meant to serve the residents and visitors of existing master-planned communities. The latest announcement is the 169,590-square-foot Town Center at the Preserve in the western San Bernardino County city of Chino, California.
Lewis Retail Centers is developing the retail and office center for a grand opening in the summer of 2023. A 46,109-square-foot Stater Bros. Market will anchor the property. Town Center at the Preserve sits within sister company Lewis Community Centers’ master-planned Preserve at Chino, which includes more than 6,000 residential units across eight neighborhoods. The center will feature a main street retail format with “an active streetfront, vertical mixed-use units and spaces for upbeat gatherings and events in a compact and pedestrian-friendly yet still distinctly suburban setting,” according to Lewis Retail Centers senior vice president of commercial development Ken Caron.
More Retail Rising in Master-Planned Communities
• The 84,000-square-foot, Publix-anchored Crescent B Commons at Florida’s Babcock Ranch
• The 85,000-square-foot Marketplace at Carnes Crossroads in Goose Creek, South Carolina
• The 500,000-square-foot Gateway at Verrado in Buckeye, Arizona
• The 90,000-square-foot, Publix-anchored Crossings at Wildlight in Yulee, Florida
Madison Marquette Offloads Industrial and Office Businesses
Real estate services firm Madison Marquette will sell its office and industrial property management, agency leasing and project management businesses to Avison Young. The acquisition includes more than 20 million square feet and 235 team members, including property managers, leasing professionals, project managers, building engineers and accountants. They primarily will integrate with offices in Texas and California and the East Coast. “Madison Marquette will now be able to focus on enhancing and growing its core investment management programs and advisory services, which includes its retail and mixed-use property management and development activities,” said Madison Marquette chair Amer Hammour. “Our renewed focus will allow us to build on our expertise in retail, mixed-use, multifamily, office, and the medical and senior-living categories.”
A German Mall Helps Youth Plan for the Future
Unibail-Rodamco-Westfield is helping young Germans figure out what they want to do with their futures with a pop-up experience at the company’s Düsseldorf Arcaden mall. For the next two months, the space, called Future to Go, will offer 15- to 25-year-olds insights about various professions and even help them find apprenticeships. The space is a collaboration with local agencies and features hands-on demonstration stations where young people can practice using tools and tech from different fields. URW said social responsibility and fostering local communities is key to its sustainability strategy.
New Head of the DowntownDC BID
The DowntownDC Business Improvement District promoted Gerren Price to president and CEO. Price, who joined the BID as director of public space operations in 2018, has led the organization as acting president and CEO since November 2021. He is the nonprofit’s third leader since this first District of Columbia BID was founded in 1997. In July, the Washington Business Journal also named Price to its 40 Under 40 class of 2022. Previously, he served as senior associate for national community strategies at the Annie E. Casey Foundation. He previously served as senior associate for national community strategies at The Annie E. Casey Foundation and began his career managing a national youth mentoring program before serving in the Office of the Chancellor for District of Columbia Public Schools, the D.C. Department of Parks and Recreation, the Office of the Deputy Mayor for Education and the District of Columbia Department of Employment Services.
By Brannon Boswell
Executive Editor, Commerce + Communities Today