Northeast Real Estate Business

NOV-DEC 2015

Northeast Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Northeast United States.

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HAVE YOU SCHEDULED YOUR 2016 ADVERTISING? Don't miss your opportunity to appear in front of developers/owners, brokers, investors, lenders and corporate end-users in commercial real estate. Package rates available. For more information, contact Scott France (404) 832-8262 scott@francemediainc.com www.francemediainc.com Pick Your Region or Advertise Nationally N ortheast Real Estate Business and sister publication Shopping Cen - ter Business recently held their annual New York Retail Roundtable at the offces of Goulston & Storrs in Manhattan. With the city bustling with visitors on nearby Park and Fifth Avenues, participants were bullish on the city's retail rents — at all-time highs in some areas — and for new development. One item of high inter- est was the recent announcement that Nordstrom is locating in the city at 225 W. 57th Street, in 2018. Food and entertainment retail were also large topics of conversation, driving the ex - perience that tourists and locals have in the area. Attendees of this year's roundtable were Andrew Miller, Forest City Rat- ner; Andy Graiser, A&G Realty Part- ners; James Steuterman, ARC Prop - erty Trust; Jonathan Greenberg, MPI; Joanne Podell, Cushman & Wakefeld; Mitchell Salmon, Garrison Invest- ment Group; Joseph French, Marcus & Millichap; Victor Menkin, Menkin Realty Services; Richard Cohan, 34th Street Partnership; Frankie Campione, CREATE Architecture; Patrick Bres- lin, Studley; Ariel Schuster, Robert K. Futterman & Associates; Richard Brunelli, R.J. Brunelli & Co.; Chris- topher Conlon, Acadia Realty Trust; Stephen Stephanou, Crown Retail Ser- vices; Nina Kampler, Kampler Advi - sory Group; Howard Gilbert, Robert K. Futterman & Associates; Ke Schuckman, Schuckman Realty; orah Jackson, Cushman & Wake Samuel Mizrahi, Century 21 M New Developme Nt I N New York From outlets to neighborhood centers to multi-million-dollar department stores, New York is seeing new development. Sales and rents continue to rise as tourism grows and locals spend. Roundtable moderated by Jerrold France and Randall Shearin see NY DEVELOPMENT, pag www.REBusinessOnline.com November/December 2013•Volume10,Issue2 In calendar year 2013, through September 700,000 square feet of shopping center space has been built in our market. — Mitchell Salmon, Garrison Investment Gr spotlI ght INg New projects p.10 Empire Outlets & the New York Wheel Nassau Veterans Memorial Coliseum SEPIA at Ink Block in Boston Hudson Lights in Fort Lee, N.J. p.12 p.16 p.24 Connecticut Retail Projects Move Forward page 35 INSIDE THIS ISSUE Hartford County, Connecticut: Hopeful Signs for the Offce Ma page New Jersey Multifamily Pipeline Reaches Beyond 24,000 Units page A Look at Exit 8A Industrial, Northern New Jersey's Largest Market page 30 what to watch for IN 2014 Will regulation limit availability of capital? How is the industrial landscape changing? And what about the uncertainty in the federal government? By Jaime Lackey A lthough we end 2013 and begin 2014 under a cloud of uncer- tainty with regard to the federal budget defcit and its ripple effect on the economy, the general trajectory of commercial real estate fundamentals looks positive. To better understand how factors like fnancial policy and unemployment will play into the trends in 2014, Northeast Real Estate Business talked with Ken McCarthy, chief economist with Cushman & Wakefeld; Don Noland, managing di- rector, research, Northeast, with Cush- man & Wakefeld; and KC Conway, chief economist, USA, with Colliers International. "In 2013, we have had a better year in terms of growth. The nationa omy is stronger this year and pect continued improvement i as we see lower vacancies an growth," says McCarthy. "Capital wants to invest in co cial real estate. Commercial rea is attractive thanks to good ca cash returns. Values are below r ment cost — and regulators w allow banks to do a lot of constr lending," says Conway. He adds, "Bonds are not a go ternative because of the risk o going up. And investors are n about stocks because they are record highs. This is driven i see OUTLOOK, pag S eattle was alive with deal activity this past summer. News broke that Emeritus Senior Living would assume the operations of 38 living communities from Merrill Gardens. The properties are loc eight states across the country, with the majority operating in Californ and Washington (14). The transaction involving the two Seattle-based companies closed Se adds 4,400 units to the Emeritus portfolio. The deal helps Emeritus build its continuum of care, particularly in dependent living sector. For Merrill Gardens, the transaction provides nimbleness of operations for future innovation and development. Th pany plans to continue to develop four to ve communities per year in markets. Subsequent to the completion of the transaction, Health Care REIT pur Merrill Gardens' 20 percent ownership interest in the 38 communities fo million and is leasing the communities to Emeritus under a master lease ment. Emeritus will pay Health Care REIT $54 million in rent during t year and slightly more each year for the next 14 years, with an option to for an additional 15 years. Emeritus also will pay Merrill Gardens a $10- management contract termination fee. F or more than 100 years, the 32 waterfront acres that take center stage in Vancouver, Wash., have been zoned for industrial use. They have been the site of a saw mill, a ship- building enterprise and a paper plant. They also include the entire stretch of waterfront property parallel to the city's Downtown district. Instead of working against each other for personal gain, Gramor De- velopment and the City of Vancouver have teamed up to envision a $1.5-bil- lion project that will nally reconnect the city to its historic waterfront. The 22-block project will involve 1.2 mil- lion square feet of of ce space, 3,300 housing units, and 250,000 square feet of retail and mixed-use space. It will also include a total of $44 million in oNe mega Deal, two perspect I ves Granger Cobb of Emeritus and Bill Pettit of Merrill Gardens discuss motives behind the blockbuster deal in which Emeritus assumes management of 38 Merrill properties. By Matt Valley see SENIORS, pag see VANCOUVER, page 20 Gramor Development is working with the city of Vancouver, Wash., through a public-private partnership to create a project larger than either could accomplish independently. recoNNect INg va NcoUver oNe part NershI p at a t I me A $1.5-billion project will reconnect Vancouver, Wash., to its Downtown waterfront after more than 100 years, thanks to a public-private partnership. By Barry Cain McMillin Communities has broken ground on Millenia urban center in Chula Vista. page Los Angeles Market Highlight page 14 page Portland Prope Taxes New Mexico Market Highlight page 17 INSIDE THIS ISSUE www.REBusinessOnline.com November 2013 • Volume 11, Issue 3 Emeritus at Sonoma, one of the 38 properties previously operated by Merrill Gardens, is located in Sonoma, Calif. The independent and assisted living community includes 124 units. www.REBusinessOnline.com November2013•Volume9,Issue9 R etail is known as a reactive in- dustry because of the tendency of retailers and developers to fock to areas where other property sectors are fourishing. Within Texas, those areas are everywhere, and thus retail is on the rise statewide. "Every part of Texas is experiencing good growth, except for Texarkana — maybe that's the Arkansas infuence," jokes David Simmonds, owner and broker at Austin-based Retail Solu- tions. "But really, it's almost like the days of old when you'd pick stocks by just throwing darts at a dartboard. What- ever it lands on, you're going to make money. I think it's the same with Texas real estate right now." The metrics don't lie. For example, in its Q3 2013 Retail Research Report, Marcus & Millichap published an expected increase in rents for retail space in the Houston metro area of 2.8 percent by the end of the year. Mean- while, retail vacancy in the San Anto- nio metro area is on pace to fall by 100 basis points, to just 6.3 percent, by the close of 2013. As for the Dallas/Fort Worth area, Marcus & Millichap says the Metro- plex is set to complete 2.6 million square feet of new retail space by the end of 2013. And in Austin, employ- ment is forecast to increase by 4 per- J ust off highway 59 in Houston, a major shopping, working and life- style destination is taking shape. The $100 million Kingwood Parc City Center is bringing more than 1 mil- lion square feet of retail, offce, anchor grocery and apartments to Kingwood, a 14,000-acre planned community in northeast Houston that boasts the third wealthiest ZIP code in and around the city. The development is a partnership of many parties, principally Jefco Devel- opment Corp. and Crestwood Realty Group, led by Cort Padon. Jefco, head- ed up by President Jim Fisher, was the same frm that brought the elaborate Portofno center in The Woodlands area of Houston to life. Designed to mimic the cityscape of Venice, the 600,000-squar Portofno was the only project that opened in 2000 that rivaled the size of Houston's Reliant Stadium. The Ro manesque statues fronting the pr ty were built out of limestone, and the creative idea behind it, Fisher says, was to recreate Doge's Palace, com plete with canals and gondolas. With a different kind of grandeur Kingwood Parc City Center is way to serving people living in an expanding transportation hub with state-of-the-art amenities in a commu nity-focused lifestyle center. Kingwood Parc, being built on 40 A project of UCR and RED Development, Rayzor Ranch Town Center will offer 600,000 square feet of retail, entertainment and restaurant space. Already in place is Rayzor Ranch Marketplace, which includes a Walmart Supercenter and Sam's Club. grocer growth leaDs te Xas retaIl charge Supermarket chains are gobbling up space at a rapid clip, and other segments follow suit. By John McCurdy see RETAIL, page 58 see PROJECT SPOTLIGHT, page 56 The 1 million-square-foot Kingwood Parc City Center is adding a sense of place to the planned community of Kingwood, Texas, via a center packed with amenities, offces and green space. workINg aND lIvINg IN the momeNt Kingwood Parc City Center is building places to connect amid retail, residential and offce space. By Lynn Peisner The Seitz Group carves out its niche as developer in secondary markets page 48 Region Snapshot: Houston Multifamily page 44 pag The Net Lease Market's Next Phase Strong and Stylish: Hermansen Land page 50 INSIDE THIS ISSUE W ith its low vacancy rate, strong absorption and robust development pipeline, the Midwest apartment sector is booming. Most industry pros says multifamily's solid fundamentals will continue for the next few years, despite some con- cerns that the sector is approaching its peak. "Overbuilding is a possibility in some areas. However, most markets still have a decent two to three strong years left in the apartment sector," says Breck Hanson, executive vice president and head of commercial real estate at the Chicago offce of Associ- ated Bank. Cities like Chicago, Indianapolis and Minneapolis are experiencing build- ing booms and will see signifcant in- creases in apartment net completions (deliveries minus demolitions) by the end of the year, according to the Co- Star Group. Chicago is leading the pack of major metros in the Midwest with net com- pletions expected to total 5,745 units this year compared with 724 units in 2012. Minneapolis follows with 3,022- unit net completions, and Indianapo- lis is expected to end the year with 2,108-unit net completions, according to CoStar. Strong renter demand, a prolonged period of limited new supply and modest job growth have led to the new round of development through- out the Midwest. The average vacancy among major metros in the Midwest was 3.9 percent in the third quarter compared with the national average of 4.2 percent, according to data from Reis. "Almost four years removed from the advent of the apartment market recovery, demand for apartment units remains robust," says Victor Ca vice president of research and nomics for Reis. The comm real estate research frm's fv forecast predicts national vac mUlt I famI lY market rolls merrI lY aloNg see MULTIFAMILY pag www.REBusinessOnline.com December 2013•Volume12,Issue4 farbma N: DetroI t offers ' Ups I De opport UNI t Y CEO of full-service real estate frm says fnancial institutions no longer redline Southeast Michigan. T he psyche of Michigan residents has improved immensely since the state's economy hit bottom in early 2010. Employers across the Wolverine State are projected to add 79,600 jobs in 2013, the third best year of job growth since 1996, according to the University of Michigan's Research Seminar in Quantitative Economics (RSQE). The latest RSQE Michigan forecast, released Nov. 22, calls for the addition of 65,000 jobs in 2014 and 65,800 in 2015. To put those fgures into context, consider that job losses across the state in 2009 alone totaled 230,000. During the frst decade of the 2000s, the state hemorrhaged some 850,000 jobs, many of them in the manufacturing sector. But employers have picked them- selves up off the mat in a big way. Af- ter enduring a brutal downturn, the auto industry has come roaring back. Ford Motor Co. recorded a pre-tax proft of $2.6 billion in the third quar- ter of 2013, an increase of $426 million compared with the same period ago, and the 17th consecutive q of proftability. Andy Farbman, CEO of the Fa Group based in Southfeld, Mi bullish about the prospects for east Michigan. The full-service r tate company has ownership in in approximately 14 million feet of commercial real estate in three states: Michigan, Illino Ohio. The lion' share of Farb see FARBMAN, pag New Medical Mart in Cleveland is at the Heart of a Resurgent CBD page 16 INSIDE THIS ISSUE Opus Group Completes Wichita First New Offce Building in 40 pag Andy Farbman: "The people that play in Southeastern Michigan and are successful will get handsomely rewarded for the risk that they are taking today." Renter demand is strong, the project pipeline is full and capital is fowing, so what's the concern? By Matt Valley By Rachel Goff Earlier this year, Hubbell Realty Co. completed the construction of Rocket Transfer Lofts, a 58-unit, $8 million multifamily property located south of MLK Jr. Parkway downtown Des Moines. The historic property opened at full occupancy. M ultifamily development is on the uptick. Approximate- ly 250,000 multifamily units are currently under construction in the United States, according to the latest Census Bureau release. A typi- cal year of deliveries would be about 200,000 units, according to Jones Lang LaSalle. Location is critical to the renters of these new projects, according to sev- eral multifamily developers. Rent- ers, who are primarily in the 25- to 35-year-old range, want to live in very close proximity to where they work, shop and dine. The higher-profle projects that are either in the pipe- line or have been delivered recently tend to be in walkable neighborhoods and/or near mass transit options. "Transportation is huge in these ur- ban projects," says Michael Lynd, CEO and CIO of LYND, a real estate devel - opment frm based in San Antonio. Four of the newer multifamily proj- ects in the Southeast are part of the trend. The recently opened 77 12th, a high-rise apartment tower, is located in the walkable Midtown submar- ket of Atlanta. The tower is oriented within walking distance of Piedmont Park and a couple blocks away from the Midtown MARTA station. Simi - larly, 8300 Wisconsin Ave. in Bethes- da, Md., Mercury NoDa in Charlotte and NINE at Mary Brickell Village in Miami are all located in walkable neighborhoods near mass transit. 77 12th in Midtown Atlanta In the midst of the recession, Daniel Corp., a commercial real estate frm, T he New Orleans Business Alli - ance is a nonproft public/private partnership that engages in busi- ness development activities to grow jobs and investment in New Orleans. Like a lot of economic development corporations around the country, the organization is busy promoting the city to outside businesses and holding serve with its existing corporate com- munity. Organizations such as these serve an invaluable service in the commercial real estate community as they facilitate companies locating or relocating their corporate or regional offces to their city. Southeast Real Estate Business chat- ted with Rodrick Miller, the president and CEO of New Orleans Business Al- liance, to get his thoughts on the orga- nization's role in the real estate arena, as well as get an update on the greater New Orleans market. Following is an edited question and answer session. Southeast Real Estate Business: Job growth is a key end game for any eco- nomic development initiative. How do organizations like the New Or- leans Business Alliance facilitate job growth? Rodrick Miller: Since our founda- tion in 2010, the New Orleans Business Alliance and Mayor Mitch Landrieu's administration have helped to usher in more than 4,000 new jobs from busi - nesses like GE Capital, mobile game developer Gameloft and the Hyatt Re- gency Hotel. We focus on marketing the busi - ness case for New Orleans to national and international companies. An- other thing we do is assist companies through the location process. We pro - vide market data, assist companies in navigating city services and agencies, identify relevant incentives, assess eco- nomic impact and perform a variety of other value-add services. The business retention side of our business supports companies already located in New Orleans and facilitating their growth. More than 70 percent of job growth in communities comes from existing businesses that expand in the market. Also, this year we released our pro- gram ProsperityNOLA. It's a road map to streamlining city-wide economic de- velopment efforts in the next fve years in advance of New Orleans' tricenten- nial in 2018. More than 200 business and civic leaders worked together to develop the plan to address issues they experienced in New Orleans. SREB: What kind of incentive pack - ages are national and international companies looking for when deciding on where to develop their new proj ects? Mercury NoDa, a new apartment community coming to Charlotte's NoDa Arts District, is one of the many Southeast multifamily developments being built near mass transit. tra Ns I t-orI e Nte D Walkable neighborhoods near mass transportation are a must for new multifamily development sites . By John Nelson see NEW ORLEANS, page 22 www.REBusinessOnline.com December 2013•Volume14,Issue9 Jacksonville Market Highlight pages 14-15 Raleigh Retail Snapshot page 16 South Carolina Taxpayers Play 'The Dating Game' page 18 INSIDE THIS ISSUE see MULTIFAMILY, page 20 Rendering courtesy of Risden McElroy work INg harD for the cI t Y From facilitating new developments to attracting outside corporations, EDCs like The New Orleans Business Alliance do it all. Interview by John Nelson Rodrick Miller President and CEO, The New Orleans Business Alliance

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