In Their Own Words: What the Next Economic Downturn Will Mean for Commercial Real Estate 1

By: Jeff Dervech - March 26, 2019 In Their Own Words: What the Next Economic Downturn Will Mean for Commercial Real Estate

Commercial real estate continues to be on a tear, with many calling this ballgame extra innings. Most believe that the industry is healthy enough with strong core fundamentals to withstand a downturn. Diversification is key, with most c-level executives and market leaders advising to build a portfolio to span geographically with multiple property types and specialty sectors to insulate against headwinds. A focus on Class A product was a common theme, as many leaders believe...

By: Jeff Dervech - March 21, 2019 Spas Go Mainstream

Did you know that there are approx. 20,400 spas operating in the US with aggregate annual revenues of about $18.3 billion? With the economy in healthy shape, consumers are spending more of their disposable income on self-care. Consumers continue to invest more into their own health and wellness entering into a lifestyle choice that a majority of the population is embracing. Spa concepts such as Hand & Stone, Massage Envy and Elements Massage are some...

Retailers to Open 2,250 US Stores This Year, Says Report 3

By: Jeff Dervech - March 19, 2019 Retailers to Open 2,250 US Stores This Year, Says Report

Retail is strong and the brands of which are adopting and embracing change will continue to thrive. Retail is evolving every day and has changed significantly over the last 30 years. Don’t expect it to stop now! Shopping centers will morph and evolve faster over the next 5 to 10 years than ever before. The way consumers shop has changed the retail landscape and with in turn has as changed the physical infrastructure and footprint...

Late-Cycle Real Estate Investing Has Done a 180 4

By: Jeff Dervech - March 14, 2019 Late-Cycle Real Estate Investing Has Done a 180

The current real estate cycle is considered to be in the later innings of the baseball game with some calling it a post 7th inning stretch and others describing it as long in the tooth, more closely resembling a game in extra innings. One thing is for certain, the back end to this real estate cycle is much different than the lead-up to the 2008 financial crisis. Overall leverage and lending practices are much more...

Dollar Tree to Renovate 1,000-plus Family Dollar Stores; Close Up to 390 Others 5

By: Jeff Dervech - March 11, 2019 Dollar Tree to Renovate 1,000-plus Family Dollar Stores; Close Up to 390 Others

Dollar Stores continue to grow and evolve! Dollar Tree, which has over 7,000+ stores and owns Family Dollar with over 8,000+ stores, announced a commitment to renovating 1,000 Family Dollar units in the coming year. The plan calls for the company to rebrand 200 Family Dollar stores to the Dollar Tree banner and completely close approx. 390 Family Dollar units across the country. The company announced its 4th quarter results from March 6th, 2019 with...

What Will Happen to All of the Vacant Sears/Kmart Boxes? 6

By: Jeff Dervech - March 7, 2019 What Will Happen to All of the Vacant Sears/Kmart Boxes?

What will happen to the hundreds of shuttered Kmart and Sears locations around the country? The retail locations formally occupied by these tenants will be repurposed or redeveloped to meet current market demands, with the exact use or concept to be dictated by the individual trade areas of which these locations lay. Most of these former Sears and Kmart boxes are old and functionally obsolete, ranging between 100,000 – 200,000 SF and in many instances...

New Grocery Store Business Coming from Amazon? 7

By: Jeff Dervech - March 4, 2019 New Grocery Store Business Coming from Amazon?

Amazon interested to open a new grocery store model separate from its Whole Foods Concept. The intent was that Amazon wanted to enter the grocery business by way of its Whole Foods acquisition, however their desire appears to exceed purely as a reformat and transformation of just that grocery brand alone. Their recent efforts as reported by the Wall Street Journal includes the plans of opening a grocery store in Los Angeles this year, with...

Strip Malls: The Least Glamorous Segment In Retail Is Among The Sector’s Strongest Performers 8

By: Jeff Dervech - March 2, 2019 Strip Malls: The Least Glamorous Segment In Retail Is Among The Sector’s Strongest Performers

E-Commerce Resistant! Strip Centers continue to be a desirable asset class for investors to own. The shopping center tenant mix is usually composed of more internet resistant and service-based uses, concepts from restaurant to medical to daily service needs. The locations of these properties traditionally are in the middle of neighborhoods and can conveniently serve the local population. Strip Centers with good signage, parking, and accessibility will continue to be in high demand. Why is...

NRF study says consumers shop at discount retailers regardless of age or income 9

By: Jeff Dervech - February 27, 2019 NRF study says consumers shop at discount retailers regardless of age or income

Everyone likes a bargain regardless of age or income! Majority of U.S. consumers are driven by value and have remained price-conscious shoppers throughout time, regularly visiting discount retailers to seek out a bargain. Regardless of age, looking for the best price remains to be a habit in consumers of almost every demographic group. The art of a steal, is what drives this desire regardless if the consumer is capable of affording to shop elsewhere. The...

CRE Investors can still profit from Retail Real Estate – If they stick with Service-Oriented Tenants 10

By: Jeff Dervech - February 19, 2019 CRE Investors can still profit from Retail Real Estate – If they stick with Service-Oriented Tenants

Real estate will continue to be a safe harbor for investors in our time of extreme uncertainty as we move into the future. As investors seek out new investments to deploy capital, they should seek out retail investment properties that include service-oriented uses, experimental retail, and internet resistant concepts as they are more likely to provide healthy, risk adjusted returns. With so many sources of potential market volatility threatening investors, U.S. real estate remains a...

Thriving “Self-Care” Sector Fuels Demand for Strip Center Space 11

By: Jeff Dervech - February 11, 2019 Thriving “Self-Care” Sector Fuels Demand for Strip Center Space

Fitness and Self Care Concepts continue to warrant strong demand for space in strip centers. The “self-care” sector which includes wellness, health, fitness, and beauty is a growing business as more and more people are investing their discretionary income into themselves. Majority of these self-care tenants are offering memberships instead of a pay as you go model which bodes well for shopping center owners, adjacent tenants, and retail foot traffic at these properties as it...

Energize aging shopping centers by splitting them in two, architect advises 12

By: Jeff Dervech - February 7, 2019 Energize aging shopping centers by splitting them in two, architect advises

Renovate and Freshen Up your Strip Center! Why? Because in many instances you can add tremendous value by renovating or redeveloping your plaza to attract better quality higher paying retail tenants. Creating new energy by way of renovation directly affects the property’s bottom line and positions retail assets to be setup for long-term success by attracting tenants and keeping up the occupancy rate. Deighton Babis with BDG Architects coined a term “In Cap” and created...

Feds hashing out details of Opportunity Zones program 13

By: Jeff Dervech - February 4, 2019 Feds hashing out details of Opportunity Zones program

What are opportunity zones and why is everyone crazing about them? Opportunity Zones is a new tax incentive program casted by the government that is forecasted to activate billions of dollars in development and investment in 8,700 federally designated low-income census tracts across the US. The basic concept behind this initiative is to incentive private investors to place capital in these low-income areas in return for deferred and reduced taxes on capital gains. The government...

Revamped Whole Foods ready to grow again, exec says 14

By: Jeff Dervech - January 23, 2019 Revamped Whole Foods ready to grow again, exec says

Whole Foods Market which operates 479 locations throughout its chain was purchased by Amazon in June 2017 for $13.7 billion. Since the acquisition, the chain has been somewhat muted on aggressive store expansion and store pipeline as Amazon worked to fine tune the engine and gear up for the grocery track meet. Whole Foods was known to be behind the curve on technology and the development of a loyalty program as well as declining same...

Chipotle adds “Lifestyle Bowls” for paleo, keto, Whole30 dieters 15

By: Jeff Dervech - January 14, 2019 Chipotle adds “Lifestyle Bowls” for paleo, keto, Whole30 dieters

Chipotle Mexican Grill which operates 2,250 locations across the United States is a strong tenant for many strip center and shopping center owners and continues to innovate and stay ahead of the curve. This fast-causal restaurant has implemented a new category to meet customer demands designed to follow trendy eating plans. This new “Lifestyle Bowl” includes a Paleo Salad Bowl, a Keto Salad Bowl, a Whole30 Salad Bowl and a Double Protein Bowl which contains...

Landlords look to the parking lot for new revenue 16

By: Jeff Dervech - January 9, 2019 Landlords look to the parking lot for new revenue

As shopping centers evolve, so are parking requirements! The traditional parking ratio of 5 spaces per 1,000 sf is in many cases outdated and not does apply to every situation or commercial development. Municipalities are changing or considering changing the way that they view this requirement by understanding that traditional consumer transportation now includes multiple alternatives such as car sharing services and in the future autonomous vehicles. The existing code for parking requirements, at times,...

Economists React to December Jobs Report on Twitter 17

By: Jeff Dervech - January 7, 2019 Economists React to December Jobs Report on Twitter

The economy continues its longest streak ever by adding 312,000 jobs in December. This is a record 99 months of monthly job growth beginning in October 2010. Year over Year wage growth grew 3.2% with unemployment at 3.9%. December numbers show that are economy continues to be in a very healthy state and is not in line with the perception of the recent equity markets. This is a great thing for our economy kicking off...

The 10 Questions Real Estate Has to Answer in 2019 18

By: Jeff Dervech - January 4, 2019 The 10 Questions Real Estate Has to Answer in 2019

2019 is finally here! As we embark on this new year, investors will look to a world that consists of a strengthen economy with consist job growth in a tail ended real estate cycle. From technology, rising interest rates, economic conditions, potential political risks, omnichannel retailing, change of how brick and mortar space is used by retailers, chase for yield, debt market’s competition and global capital market flow, this year is sure to be an...

Retail Landlords Turn to Mom and Pop Shops to Fill Credit Tenant Void 19

By: Jeff Dervech - December 31, 2018 Retail Landlords Turn to Mom and Pop Shops to Fill Credit Tenant Void

As shopping centers continue to evolve, landlord’s will look to lease space at their centers to strong local and regional operating tenants. In order to meet the demands of consumers, landlords will look to input tenants that offer an “experiential, social and engaging experience”. Local and Regional Mom and Pop tenants have been increasing in appeal to shopping center landlord’s as they continue to prove by their successes that they know their customer, understand the...

Dollar General Plans Nearly 1,000 New Stores Next Year 20

By: Jeff Dervech - December 17, 2018 Dollar General Plans Nearly 1,000 New Stores Next Year

Dollar General plans to open 975 new stores and remodel over 1,000 stores in FY 2019 which begins in February. Part of their plan includes the incorporation of produce and expanded food selections into areas of which lack grocery options. The addition of produce and expanded grocery is an opportunity to offer a solution to a need especially in more rural and urban communities deemed as a “food desert”. A food desert is an area...

Five Retailers That Are Investing Billions in Their Stores 21

By: Jeff Dervech - December 16, 2018 Five Retailers That Are Investing Billions in Their Stores

Retailers continue to pour money back into their brick and mortar locations. Why? Physical stores remain the heartbeat to retail brands and it is important for them to keep their core assets polished. The push to make investment into their physical units is an effort to keep their stores fresh, incorporate new store formats and implement newly designed layouts in creating the store of the future to effectively execute on instore pickup and delivery operations....

Inside Walmart’s plans to convert parking lots into ‘town center’ 22

By: Jeff Dervech - December 12, 2018 Inside Walmart’s plans to convert parking lots into ‘town center’

“What do we do with all of this excess parking at our Walmart stores? Let’s create town centers!” – Walmart Executive Walmart has announced plans to capitalize on their existing real estate to reutilize excess parking fields for new town center retail developments. This is a new campaign spearheaded by Walmart called “Walmart Reimagined” which was unrevealed in October 2018 at the ICSC Southeast Conference in Atlanta. This is a great way for Walmart to...

Kroger, Walgreens step up grocery pilot 23

By: Jeff Dervech - December 10, 2018 Kroger, Walgreens step up grocery pilot

Kroger enters into grocery partnership with Walgreens! This partnership is a format for Kroger to offer a defined branded section within the Walgreens store footprint to sell groceries. The average Kroger grocery section in the new Walgreens program is going to be approx. 4,000 sf which is roughly about a 30% of the average Walgreens selling space. This move positions both companies to reach new customers and reshape their businesses in order to account for...

Omni-channel a boon for retailers, former Walmart head says! 24

By: Jeff Dervech - December 5, 2018 Omni-channel a boon for retailers, former Walmart head says!

Success in the future of retail requires the embracing and implementation of omni-channel into marketing and business operations. The retailers that perform this well will receive a “double whammy” as they capitalize from online in addition to brick and mortar. In the review of the recently passed 2018 Thanksgiving weekend holiday shopping stretch (Black Friday through Cyber Monday), 88% of US adults bought merchandise from physical retailers, whether through their online websites or directly in...

Innovation distinguishes crop of new retail, mixed-use developments 25

By: Jeff Dervech - December 3, 2018 Innovation distinguishes crop of new retail, mixed-use developments

Retail Development is expected to increase for 2019 when compared to 2018 with more than $90M square feet of new retail projected of which includes redevelopments, new restaurants, grocery anchored shopping centers and urban styled experience projects. FY 2018 is on pace to end up slightly less than $70M sf of new retail. The focus for developers will continue to be on mixed use projects that are e-commerce resistant and that continue to add an...

Analysis: TJX is a retailer for all seasons 26

By: Jeff Dervech - November 29, 2018 Analysis: TJX is a retailer for all seasons

TJX is a strong tenant for a shopping center landlord for many reasons and throughout all seasons! Everyone wants a bargain! As consumers look to stretch their dollar, this retailer continues to provide options that are aspirational and economical which bodes well in this sector of the market. They consistently drive traffic to their stores by keeping customers engaged and by regularly changing their instore assortments. This prompts regular visits by shoppers which in turn...

Ikea Eyes US Sites to Anchor Mixed Use Development 27

By: Jeff Dervech - November 27, 2018 Ikea Eyes US Sites to Anchor Mixed Use Development

Ikea is looking to open 6 new stores within mixed use retail projects that they plan to self-develop over the next 2 years. The company calls these stores “Meeting Places” and will look to high profile cities in core urban markets for this concept which will include an Ikea store, a home goods big box and a mall featuring entertainment uses and other international retail brands. The standard footprint for these new locations with range...

Malls compete for shoppers from e-commerce ahead of holidays 28

By: Jeff Dervech - November 27, 2018 Malls compete for shoppers from e-commerce ahead of holidays

This holiday shopping season sales could exceed $1 trillion of which 87.5% will be done in brick and mortar business. It is all about creating a great environment and great services for your consumer to make shopping as seamless and as frictionless as possible. Mall landlords are implementing curbside delivery in which consumers come to the mall, make their purchases, continue shopping and items are individually picked up, aggregated together and delivered to their car...

NRK Survey says more than 164 million consumers plan to shop over 5-day Thanksgiving weekend 29

By: Jeff Dervech - November 21, 2018 NRK Survey says more than 164 million consumers plan to shop over 5-day Thanksgiving weekend

Retailers must prepare for a floodgate of consumers to shop over this 5-day Thanksgiving weekend. National Retail Federation estimates 164 million consumers are already planning to go shopping. Consumers will be shopping all weekend and retailers must be ready to meet demand. Many consumers will head out right after finishing holiday turkey and continue to shop through Cyber Monday. Data points from the survey include: 21% (34 million) expected to shop on Thanksgiving Day, 71%...

Southwest Florida’s Supermarkets get fresh to grow sales 30

By: Jeff Dervech - November 19, 2018 Southwest Florida’s Supermarkets get fresh to grow sales

Growth within the grocer sector is strong in many areas encompassing Southwest Florida! Individuals grocers to include Earth Fare, Whole Foods, Lucky’s Market, Sprouts Farmers Market, and Detwiler’s Farm Market are continuing to seek opportunities to growth their footprint within this sector of the state. In search of entering into these markets with limited options, they are lending themselves to being flexible in deal structures, wether that is leasing all or a portion of a...

Thanksgiving sales, shopper traffic to rise, report say. 31

By: Jeff Dervech - November 14, 2018 Thanksgiving sales, shopper traffic to rise, report say.

Majority of holiday weekend shoppers are expected to head to physical retailers and shopping center destinations with ambitions to spend more than they did in 2017. 83% of Thanksgiving weekend shoppers plan to buy in brick and mortar and spend approx. $555 worth of goods and services over the 4-day weekend. The retailers that have both a physical and online presence will be ones to drive the highest sales as consumers want options and will...

Are Food Halls a Magic Elixir for Retail Owners? 32

By: Jeff Dervech - November 12, 2018 Are Food Halls a Magic Elixir for Retail Owners?

Food Halls continue to be a hot ticket for retail properties! The concept has grown significantly since 2015 from approximately 70 projects being tracked in the US, to over 180 food halls by the end of 2018 according to Cushman & Wakefield. The buck doesn’t stop there, the industry is expecting that to grow to 300 individual food halls by the end of 2020. Food Halls comes in all different shapes and sizes ranging from...

Dollar General heads for the city, with smaller stores 33

By: Jeff Dervech - November 7, 2018 Dollar General heads for the city, with smaller stores

Dollar General is rolling out a strategy to reduce its store footprint from 9,000 sf to approx. 4,500 sf in an initiative to incorporate a new urban concept called DGX. Dollar General operates approx. 15,000 corporate owned and operate units across its portfolio, opening approx. 1,315 stores in Fiscal Year 2017. The new concept is to target millennials starting families and setting up in homes while trying to save money. The concept is expected to...

A message from the chairman: The relationship between brick and mortar and online retail 34

By: Jeff Dervech - November 5, 2018 A message from the chairman: The relationship between brick and mortar and online retail

Brick and Mortar drives digital engagement! Brand’s web traffic and online sales performance is directly correlated and heavily influenced by the presence of a physical store. The selling experience is directly linked to touchpoints through selling channels such as stores, direct to customer, mobile and online. This link ultimately in effect leads to the promotion of a brand, building better customer relationships, which leads to an increase in shopping trips resulting in higher sales. Digital...

Mattress Firm Issues Ultimatum to Landlords as Battle Over Bankruptcy Closures Begins 35

By: Jeff Dervech - November 1, 2018 Mattress Firm Issues Ultimatum to Landlords as Battle Over Bankruptcy Closures Begins

Significantly lower the rent or face losing the location. This is the ultimatum Mattress Firm is issuing landlords as it begins the bankruptcy process filed on October 5th, 2018. Mattress Firm operates more than 3,000 stores and plans to reduce its store count by more than 500 units. The mattress retailer has experienced aggressive expansion in the recent years including several mergers which has resulted in the filing of bankruptcy mainly due to an accounting...

Holiday shoppers opening up their wallets for experiences 36

By: Jeff Dervech - October 30, 2018 Holiday shoppers opening up their wallets for experiences

Holiday shoppers are increasingly valuing experience over things! Interesting statistics from Deloitte’s 33rd annual Holiday Survey. According to the survey, experience spending will account for 40% or $611, out of the total $1,536 expected holiday shopper budget. 57% of total holiday spending is expected to be online this year. 66% of shoppers plan to research online and purchase in-store with 45% buying on-line and picking up in store. Omnichannel will be in full force this...

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