U.S. Retail Sales Increased in May

Sales rose 0.5% last month, a boost to the economy this spring
The Wall Street Journal 14 June 2019 Sarah Chaney

WASHINGTON—American shoppers ramped up their spending in May, a boost to the economy this spring.

Retail sales, a measure of purchases at stores, restaurants and online, increased a seasonally adjusted 0.5% in May from a month earlier, the Commerce Department said Friday. April sales were revised to a 0.3% increase from a 0.2% decline, and retail sales excluding the volatile categories of autos and gas rose 0.5% last month, underscoring solid spending momentum.

Consumer spending is the main driver of the U.S. economy, accounting for more than two-thirds of economic output.

Strong retail-sales growth shows the economy is overall on solid footing despite trade tensions and slowing global growth. Other facets of the economy are also offering signs of resilience. The services sector, which accounts for 88% of U.S. gross domestic product, keeps expanding and unemployment is historically low.

Michelle Gass, chief executive at Kohl’s Corp., sees a healthy consumer.

“All the indications continue to be really strong in terms of unemployment, customer confidence,” Ms. Gass said in an earnings call last month.

Inflation remains tame, a dilemma for the Federal Reserve, but a positive development for Americans looking to shop.

Even as conditions remain supportive of household spending, headwinds persist. Job creation, which cooled in May, may continue to slow in the coming months as employers struggle to fill open roles. That could ultimately impede spending and broader economic growth.

Retailers could feel the squeeze from tariffs in coming months.The Trump administration slapped 25% tariffs on more than $40 billion of goods that are imported from China last month, affecting clothing, luggage, handbags and furniture, among other consumer products. In response, merchants may have to decide whether to absorb the added costs of the new tariffs themselves, spread them across their vendors or pass them on to consumers.

Friday’s report showed the rise in May spending across the economy was fairly broad-based, with gains posted in discretionary categories. Spending picked up at electronics stores, restaurants and sporting-goods shops, according to the Commerce Department report. Online retail sales grew 1.4%.

Gasoline-station sales rose 0.3% in May from the prior month.

In Potential Forewarning To Retail Investors – UK Lenders Are Enforcing Loan Covenants on Performing Assets

It’s Not Just Extend And Pretend As Lenders Put Pressure On Retail Owners London Retail 24 April 2019 Mike Phillips, Bisnow London

During the last downturn, extend and pretend was the name of the game when it came to loan-to-value covenant breaches. Banks didn’t want to end up owning millions of square feet of real estate, so as long as interest payments were being made, they tended to ignore breaches of the LTV covenant, a part of the loan contract that says LTV has to stay within a set range, or the bank can call in the loan or change the interest rate. Shopping centre owners are starting to breach debt covenants at a faster pace as values in the sector drop.

In many cases, income is remaining robust, but LTVs are being breached as yields rise. So how are lenders dealing with the issue, a decade on from the last crisis? With instances being more isolated so far, they seem to be taking a tougher line. Extend and pretend — with a twist Some lenders are waiving LTV covenant breaches, but owners are not getting away unscathed.

In December, South African firm New Frontier Properties revealed it had breached LTV covenants on a portfolio of three shopping centres bought for £284M. The value of the portfolio has fallen to £181M, which, with £140M of debt, puts the LTV at 77%. As a result, free cash flow from the assets is being used to pay back debt, and New Frontier is having to sell an £8M Dublin logistics asset to make further repayments.

Cranking up the pressure UK REIT RDI revealed this week that it had come to a standstill agreement with lender Aviva after a fall in the value of four UK shopping centres it owns meant the LTV had risen to 89%. But again this is not a case of kicking the can down the road. RDI now has until 11 October to either sell the portfolio or put more money in to resolve the LTV breach. With an LTV covenant of 85%, that would mean putting in about £9M, and that works on the assumption that the value doesn’t keep falling. The yield on the assets has risen to 9.7%.

The ultimate sanction This time around, lenders are not being overly shy in pulling the trigger and putting centres into administration or receivership. There are two recent examples of projects being foreclosed, though neither lender has said if it was solely an LTV breach that caused control of the assets to pass to the bank, or if there was an income cover ratio breach as well.

The Future Of American Malls

Because of the pressure that online retail is putting on brick and mortar stores, commercial real estate is having something of a crisis. Department stores are declaring bankruptcy and malls are in danger of dying.

american malls - commercial real estate

But someone once said that a problem is an opportunity in work clothes. There are other big trends happening in the US that provide a potential path forward.

A Changing Landscape

As Baby Boomers hit retirement age and Millenials eschew auto-centric lifestyles, there is a growing demand for residential options in walking distance of amenities. This confluence of large-scale trends has inspired a number of mall owners to look towards adding apartments to the mix as a means to improve their bottom line while providing a built-in customer base for the remaining stores.

Some commercial establishments are resistant to the encroachment of online sales, such as restaurants and fitness centers. Even if customers do want to order takeout and have it delivered by one of the growing delivery options out there, the food still needs to come from somewhere.

America has a lost a lot of its walkable urban fabric and has largely zoned out of existence the ability to create such from scratch. But adding apartments to existing commercial real estate is an elegant solution to myriad American problems.

Proven Demand

The US already has a few malls with apartments added to them, usually above the commercial storefronts. These apartments typically rent for a premium of about 15 percent more than comparable apartments in other nearby locations.

The other competing format is transit-oriented development. Malls are not necessarily on or near transit hubs. Some people prefer to be able to go where they wish at will by being near public transit. One possible solution here is to combine the two and make sure the mall has good access to public transit.

Case Study

Northbrook Court, a distressed mall in Chicago, has plans to tear down the defunct Macy’s store and replace it with a grocery store, restaurants, and 300 apartments. The mall opened in 1976 and has 1 million square feet of space. An outdoor plaza, a lawn, and a food hall are envisioned as part of the rebirth of the space. Someday it may even include office space, making it truly a place to live, work and play.

Why Retail Owners are Focusing on Service Based Tenants

The retail industry is undergoing a bit of a transformation. Just as retailers are trying hard to attract their shoppers, property owners are trying to attract long-term tenants. Retail property owners are finding success with tenants that don’t rely on internet shopping. According to Michael Koss, the owner of Malibu Country Mart, service-based tenants are retail property owners’ best bet to find success.

The Popularity of Service-Based Businesses

As the internet erodes the sales of goods, Koss believes that service based tenants are the solution. Businesses like hair salons, gyms, restaurants, and spas are all examples of service based tenants that property owners are beginning to rely on. As Koss tells it, consumers will always have a need for these types of services.

When looking at the market, restaurants and grocery stores are taking the lead. With the availability and convenience that restaurants offer, consumers always have and will continue to rely on foodservice. When considering grocery stores, even with the addition of home delivery options, groceries and markets will never go out of business.

When looking at other successful service-based businesses, health and wellness companies are quite popular. Depending on the needs of a particular demographic, health and wellness businesses may or may not find their target audience. While gyms are usually a good choice in any neighborhood, both business owners and retail property owners should be mindful to ensure that the ethos of a particular company aligns with that of the surrounding neighborhood.

Choosing a Synergistic Tenant Mix

Koss holds that it is essential to have a synergistic mix of tenants. Property owners should consider the impact their retail centers have on their customers. In order to ensure synergy among tenants and the neighborhood, property owners need to ensure that each tenant is able to cater to and meet customers’ needs.

Property owners searching for a winning strategy should rely on a strong tenant mix and service-based tenants. Koss points out that shopping centers that provide customers with a unique experience will always fare better. The goal of every property owner should be to attract customers and encourage them to spend time shopping, eating or being entertained.

How is Experiential Retail the Future?

You may have heard a bit about experiential retail as a key component to the overall success of a retailer. What exactly does “experiential” mean as a term, and how is the concept so useful for retailers in general? To get a little information on this concept, we turn to a panel at the ICSC Western States convention that the Los Angeles Convention Center hosted in October.
commercial real estate mall chicago
The keynote panel at the event featured experts in the industry that could speak to experiential retail, how it works, how they use it, and its importance in the future of modern retail. Tom McGee, who holds the positions of both CEO and president of ICSC, moderated the panel. The participants here included speakers JP Suarez of Walmart’s US Realty Division, Nathalie Walton of Google’s Local Shopping, Carolyn Fields of Big Red Rooster, and Melina Cordero, head of CBRE’s retail research division. Each member of the panel spoke about some of his or her experiences with this facet of retail and how a company could use it to offer more convenience to its customers.

A key aspect of this type of retailing involves more than just selling a product to a consumer. Businesses want to streamline the entire shopping experience for the customer and get them to think about shopping in new or exciting ways. The concept of convenience is at the heart of the experiential retail model. Many businesses are hoping to eliminate lines and wait times for their customers as part of this model.

Melina Cordero suggested that growing technology will probably eliminate the standard queue that we still see stacking up at stores today. The other panelists chimed in to lend their support to this sentiment. JP Suarez is a firm believer that consumer experiences are going to be a driving factor in how retailers reshape themselves in the near future to stay relevant. He mentioned that things such as AI technology and voice activation features would further eliminate the need for a line and improve the shopping experience for customers.

Another point the panel touched on was how companies could use this model to eliminate confusion and ambiguity surrounding their products and services. New technology means new ways to keep track of a store’s inventory and provide an accurate picture of that inventory to consumers. These innovations should add to customer convenience and create fewer mistakes during purchasing.

The Changing World of Retail Forces Property Owners to Adapt

While e-commerce makes shopping more convenient for millions, especially those in rural areas, it’s having a negative impact on brick and mortar stores. By June of this year, there had been over 2,500 store closings throughout the United States with projections estimating the closing of 600 more stores by year’s end. Sears and Toys R Us aren’t the only ones closing the doors on stores throughout the country and the commercial real estate sector is taking this hit the hardest with a 60% decline in retail absorption.

The Digital Age Forces Commercial Real Estate to Change

Even those stores that will remain open are moving into smaller locations, now that they don’t need the manpower or physical space that was once so essential. This means commercial real estate management companies are forced to evaluate how they offer their units to new businesses. The issue of size is forcing many property owners to divide up larger properties and offer smaller units that will appeal to more small business owners.

This new approach is most prominent in New York and property managers are taking it a step further by taking bigger risks on unproven businesses. Typically, property managers tried to avoid boutique fitness stores and casual cafes, but those are the tenants most interested in the smaller spaces now being provided.

In one example, Brookfield Property Partners invested in seven Bleecker Street storefronts, which it hopes to fill with new business. They hope to attract e-commerce businesses with the promise of expanding and establishing a brick and mortar presence. Already, Margaux, a shoe retailer, has joined the seven shop community, where a few art and cultural shops are also launching a presence. The physical locations may help these businesses expand their reach and attract new online consumers.

Commercial Real Estate Targets Service-Driven Businesses

Commercial real estate management in metropolitan cities, such as New York and Chicago, are finding that service-oriented businesses may be their saving grace. While most products can be purchased online, services will need to be provided in physical locations. Gyms, restaurants, and other service-related businesses are the key to driving commercial real estate in today’s market. These are experiences that the internet can’t provide.

Some product-oriented businesses may also thrive in this new atmosphere, but it will depend on how they utilize their commercial space. Younger generations, those coming of age after millennials, have started to demand more transparency. They want to see how their products are made and they want to know that those businesses take environmentalism and waste elimination seriously. For instance, Ample Hills Creamery opened a factory and museum in Red Hook, which allows their customers to see their foods being made.

The new world of retail and the management of commercial real estate will hinge on offering services, such as entertainment, dining, and fitness. By creating a retail community that promotes those services, brick and mortar stores that offer products can also thrive. Between dining and entertainment, people will also be likely to visit shopping centers and they’ll be more apt to buy in those circumstances. Where a sole brick and mortar store may not do well, a shopping center, offering dozens of smaller businesses, may be the key to bringing consumers back into physical stores.

Why Retail Landlords Lose Tons Of Money To Faulty Expense Calculations

Retail real estate has an underappreciated problem: Year after year, incorrect or incomplete tenant expense reconciliations cost landlords an enormous amount of money.

Erroneous common area maintenance and other reconciliations (generally referred to by the catchall term “CAM recs”) can account for hundreds of thousands of dollars in losses over time for landlords. This is especially true of those with large portfolios comprised of dozens of shopping centers and hundreds of tenants. Even for just a single tenant, incorrect calculations or lease interpretations can add up to a five-figure annual loss for the landlord. The longer the mistake goes unrecognized, the greater the damage. Reconciliation complexity also grows exponentially with property size, making inaccuracies more likely. Such mistakes can complicate and delay property transactions and even spur conflicts that sour landlord-tenant relationships.

Important as CAM recs are, however, landlords often fail to complete them on time.

Chalk it up to the labor-intensive, time-consuming nature of the process. Generally speaking, it amounts to a herculean effort for already-busy property managers and accountants. Timing wise, CAM recs are usually conducted right in the middle of spring tax season. As a result, real estate companies’ internal teams work incredibly long hours as they dive into the weeds on expense calculations, caps and modifications in addition to their daily responsibilities. This presumes the team is actually able to engage on CAM recs. All too often, companies run years behind on the process precisely because their internal teams already have too much to do.

There’s a double-whammy here: Let’s say a company is three years behind on its CAM recs. When it does eventually find time to straighten things out, it is likely to frustrate its retailers by asking them to pay back huge sums.

How Commercial Real Estate Landlords Lose Money to Faulty Expense Calculations

Faulty expense reports are costing commercial property owners hundreds of thousands of dollars every year and the problem seems to be getting worse. The problem is created by tenants, who either don’t know how to correctly fill out expense reconciliations or submit the forms without fully completing them. The problem is multiplied, when there are several tenants under a single roof.

Tenants Expectations – CAM Reconciliations

Tenants are expected to file common area maintenance and other reconciliations, or CAM recs, to report their expenses. When just one single tenant files the form incorrectly, it can cost the commercial property owner a five-digit yearly loss. If the landlord owns a shopping center, for instance, and several tenants file their CAM recs incorrectly, that figure can quickly mount. Now, imagine the effect for a commercial property owner overseeing multiple shopping centers, or business parks. Those costs can quickly reach staggering amounts.
Additionally, a mistake that goes uncorrected can continue to increase the cost to the landlord. A single misreported CAM rec can interfere with future property transactions, complicating the landlord-tenant relationship.
The tenant isn’t entirely at fault, however. In many cases, the landlord is often at fault for failing to complete the orders in a timely manner. This can be attributed to the high labor cost, or to the fact that many service requests involve a significant investment of time. For property managers already dealing with a full schedule, this process can become an overwhelming burden.
The situation is further complicated by the fact that CAM recs are usually submitted, during the spring tax season. This necessitates long work hours for real estate teams, who must verify expense calculations and review caps and modifications. These duties are piled onto their routine responsibilities, compelling personnel to work hours of overtime or fall behind. In most cases, the latter is the case and teams can fall several years behind on reviewing the CAM recs for each property.
Another problem arises when real estate teams catch up on the reports. After evaluating their records, they may ask retailers to return enormous amounts of money. This creates more tension between tenants and property managers, making the situation even more complicated.
Finally, teams must act quickly to catch up in some cases, because there are time limitations assigned to CAM recs. If that statute of limitations expires, the property owner will have to take the loss. This is where the landlord ends up losing those hundreds of thousands of dollars. If the error is in favor of tenants, landlords must offer rent credits to the tenants, which disrupts the budget on that property.
The failure to keep current on CAM recs creates a downward spiral of errors that can continue to mount the losses for property managers. Even in instances where a tenant receives a temporary rent reduction, backed up filings can cause the property manager to forget to restore that tenant’s regular rental rate. The tenant may go years paying the discounted rate, which should only have lasted for a few months. Erroneous lease rates are common in these situations, because smaller tenants often pay a rental rate that’s based on the rates paid by larger tenants. One tenant paying an incorrect amount can affect what every tenant pays, resulting in a cascade effect that can cost even more in losses.

Commercial Real Estate Management in Chicago, Illinois

Landlords and owners look for a record of solid accomplishment when selecting a competent management company. After all, the idea is to maintain and grow the profitability of a building without having to do the work themselves. So, a careful analysis of each management candidate should reveal whether or not the company maintains a comfortable income for proprietors while keeping the edifice functional, clean and secure. Commercial real estate management firms are especially subject to these fundamental criteria. To be sure, resident businesses depend on property managers to provide an optimal setting where employees are productive and customers feel welcome.

commercial real estate management building for lease

Successful commercial real estate management firms should be expected to deliver in the following areas:

  1. They should negotiate favorable rents on behalf of building owners. This begins with an in-depth analysis of what commercial locations in Chicago and its environs are collecting in lieu of market conditions. Square footage, accessibility, conveniences and neighborhoods will, of course, be primary factors. So will physical maintenance, customer service and incentives for expansion.
  2. The terms of current leases say a lot about a commercial real estate management company. Leases are supposed to protect landlords from loss, rather than expose them. Does the management firm demonstrate a thorough knowledge of how leases work? Is it counseled by excellent legal professionals? More to the point, can the manager expertly explain the terms of the lease to the owner and tenant alike?
  3. Ideally, proprietors desire 100 percent occupancy. More practically, they seek a high ratio of occupancies to vacancies. In response, a worthy property manager develops a business plan to achieve maximum tenancy in even the most challenging markets. Even single-tenant buildings–retail box stores, for example–need a blueprint for how they will grow or sustain earnings over time. Attracting and keeping responsible and reliable lessees can not be left to chance.
  4. No landlord is excited to hear a property administrator ask to make improvements in the design or condition of a building. At the same time, owners must depend on their hired stewards to accurately assess the property and determine its physical and structural needs. An effective management company recommends improvements only when it makes good business sense and demonstrates financial sustainability.
  5. Speaking of which, a reputable firm has a record for meticulous financial accounting and reporting. What sense does it make for an owner to gain some high-paying tenants only to offset those profits with exorbitant management fees? Real estate managers who carefully account for every penny, and honestly represent their activities to their clients, are the ones that landlords can safely entrust their properties.

In addition to the above, the best real estate management firms in the Chicagoland areas will have experience running possessions in distress or receivership. The trust of large banks and government institutions must be earned with diligence and resourcefulness. These are traits that owners should prize, as well. Fortunately, at least one such company stands ready to adhere to best practices and every standard of excellence.

6 Commercial Real Estate Management Benefits You Should Always Expect From the Best

So you have chosen to diversify your investment portfolio by acquiring a two-flat in Irving Park, a vacation house on the North Shore or a pair of condos in Naperville. Maybe you had momentarily considered leasing a Chicago commercial real estate management company but determined that you were prepared to take on every challenge associated with being a landlord and reaping the rewards.

But as you promptly discovered — advertising your rental, studying city ordinances, checking that your tenants pay rent and returning maintenance requests are a lot more time-consuming than you had anticipated.

The short periods of time you allot to your rental can really add up fast! Your day job spends too much of your time and has you too exhausted to respond to the additional tasks.

commercial real estate chicago
Before you think about throwing in the towel on your vision of becoming a landlord, reconsider receiving guidance from a professional Chicago property manager. The National Association of Residential Property Managers accords the following ways property management helps any client with such a process:

1. Staying legal: As well as with keeping up on local structural specifications, property managers possess an extensive knowledge of fair housing issues to make sure you remain right with the law.

2. Pricing strategy: The number you can request for a one bedroom Southside garden apartment in the Loop can be considerably varied than the number for a one bedroom high-rise condominium. A well-versed property manager can assist you in setting the proper price for the location.

3. Tenant screening: You do not just want any person living on your estate. A property manager will conduct the required background and credit checks to make sure you’re acquiring exceptional tenants.

4. Rent collection: Money is the primary motivation for buying a property, but securing funds from tenants is a less than enjoyable task. An expert in Chicago property management will handle rent collections for you, letting you live your life without these stressors.

5. Maintenance: Maintenance problems are an unavoidable aspect for any rental property. If you are not someone who’s handy in this area, a property manager can ensure that all improvements are managed correctly by the correct vendors with proper expertise and certifications.

6. Disputes: Whether you’re looking at service providers, condominium associations or one of your very own tenants, a property manager is able to smooth over a volatile situation efficiently, protecting your money, and most importantly, your time.

In the Greater Chicago Area, property managers are obligated to possess a legitimate real estate broker’s license. It assures the property manager has carried out the proper courses of education and knows the laws associated with the trade. To find out more about the services a professional Chicago property manager is able to easily provide you, don’t hesitate to contact CapRock, a comprehensive, Chicago-based commercial real estate management company.

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Online Companies – Dominating Retail

Grocery stores and shopping centers are rapidly changing in this world of internet-based sales, ease of access, and the drive for even more convenient ways to shop as a customer.
Natomas Shopping Center in Sacramento, California
Recently the Natomas Shopping Center in Sacramento, California was sold. In the shopping center is a CVS, Dollar Tree, and an Ace Hardware. The sale of this center represents the ways that shopping today is changing. The seller and buyer of the shopping center sat down for an interview to discuss this phenomenon and offer their thoughts on the current climate for retail stores in Sacramento, California.

The seller’s representative discussed the advantages of the mix in the shopping center as far as offering a diversity of options to the community. Mr. Fryman, the seller’s representative, explained that shopping centers, for its customers, offers a convenience on a daily basis. This center offers services as well, such as dentistry, which customers cannot find or purchase online. This kind of offering makes centers like this still a necessity for even the most tech-friendly neighborhoods.

Retail Climate in Sacramento, CA

When asked about the retail climate in Sacramento, Mr. Fryman explains that it is really strong there still. They are looking to redevelop areas that are not performing well and adapt them to today’s buying climate. The housing shortage coupled with this issue also makes it inter sting when looking at the retail climate.

Mr. Fryman ends the interview by discussing shopping centers that have grocery stores as their main anchor store. He reported that grocery stores are still performing well and there is a mix of companies who can resist the internet buying phenomenon and those who cannot in their centers. They also explained that they try and have a good mix of companies in the shopping centers. This strategy helps prop up the revenue of the center as a whole.

Blending Retail and Online: A More Effective Strategy

It seems that online is replacing retail at every turn these days. However, there is a lot to be gained by using retail to your advantage in unique ways. The key is not to lose out on the benefits that retail or online selling provide by combining the two. Here is how they can be even more powerful together:

blending retail

Integration of Supply Chain

Mastering your supply chain is key in any retail situation. This is true for both online and offline operations. When you leverage the integration of your supply chain by blending your channels, you can have a more efficient distribution that eliminates costs at a fundamental level.

Faster Delivery

Getting your product to your customers faster creates loyal fans of your brand. When someone orders online for instance, you can allow them to pick up their item in your store. This provides a seamless end experience for the customer.

Sales Tracking

Tracking your sales allows you to understand which marketing campaigns work. If you are throwing dollars away on ads that don’t convert, you are losing out. Instead, blend your retail and online strategies to gain insights into higher level marketing campaigns.

Personal Touch with Scientific Data

Retail stores allow you to create a personal touch with the customer. This handles the relationship side of things. Then, using online tools you can build databases of your customer from online shopping that you can apply your personality to as well.

Multichannel Domination

Your competitors are using multiple channels to try and compete in your marketplace. If you are not doing the same, then you could be leaving a lot of your market share on the table. Be sure to leverage every channel available to you, and that includes your website and store locations.

Creative Marketing

The more experience you have with customers in various environments, the more creative your marketing can be. Don’t limit yourself to just one dynamic. Instead, blend your two worlds so that they can give you unique ideas.

When it comes to modern business, you need the right strategy to succeed and overcome the competition. If you are in retail or eCommerce, you should not restrict your business to one side of the equation or the other. Instead, combine them so that you can achieve a strategy that covers multiple channels and reaches your customers in more effective ways.

5 Ways to Find the Perfect Location for Your Business

You already know that choosing a good location is one of the most important factors that will impact the success of your business. But how do you know a good location when you see it, especially if you are not familiar with the neighborhood that you are considering? 

Find the Perfect Location for Your Business

This is where working with a local commercial real estate agent can save you a lot of time and headaches. An agent who is familiar with the area will help you zero in on locations that might be a good fit for your business. When you meet with your local expert, make sure you ask the right questions up front to help her find ideal locations and prevent you from wasting both time and money. 

1. Follow Local Zoning Laws

One of the most frustrating mistakes many business owners make is that they fall in love with a particular location, only to find out later on that the city won’t allow them to set up shop in that spot due to zoning conflicts. There are some cases where the city or county will grant you an exception, but the process can be lengthy and expensive. So it’s generally best to just filter out zoning issues right from the start. 

2. Identify Your Target Demographics

If your product or service is suited to a specific slice of the population, then you’ll need to consider the neighborhood demographics before you sign any lease agreement. Knowing your target market is key to your success, so make sure you have customer personas in mind that describe your ideal customers in terms of several relevant factors such as income, transportation options, gender, language, lifestyle and so forth. 

3. Look for High-Visibility Locations

Many small startups focus primarily on price when looking for their new locations, but that isn’t appropriate for all types of businesses. You want to make sure that the building you choose offers great visibility for your target customers. It’s not much use to set up shop if nobody knows you’re there. 

4. Avoid Low-Traffic Locations

Traffic — both vehicle traffic and foot traffic — will make or break many businesses. Pay close attention to how many cars are driving by these locations and how many pedestrians are passing by. Packed shopping centers and mini malls are ideal for many retailers, since there is built-in foot traffic. If you can locate near businesses that share your target market yet are not direct competitors, that would be ideal. An example might be setting up a vitamin shop or sporting goods store a few doors down from a health club. 

5. Size Up the Competition

While you will likely want to avoid areas that are saturated with strong competition, that isn’t always necessary. Some neighborhoods have such strong demand for certain products or services that there will always be room for one more competitor to move in and thrive. Consider how many competitors are nearby and how long they have been in business. If they’re all raking in the dough, then you might be able to squeeze in and grab a slice of their business, especially if you can differentiate yourself from them in a positive way. 

Finding the ideal location for your small business is a lot easier when you know exactly what you’re looking for. Follow these five tips to help you narrow down your selection, avoid wasting time following dead ends and find the perfect spot to set up your business.

Chicago Metro Real Estate Still Going Strong

Despite a wide range of social, technological and economic changes, the metro Chicago real estate market shows resilience, according to multiple local experts.

chicago metro real estate

A panel at a mid-year 2018 Chicago year market review—held in Rosemont and attended by over 140 professionals—discussed the Chicago real estate scene. Avison Young’s principal, Danny Nikitas oversaw the panel where panelists talked about how the multifamily and industrial sectors were growing stronger. As they continued, panelists noted that retail and office properties remained steady, even though new technology makes a lot of conventional stores unnecessary and allows for a decrease in the amount of office space required.

There was an optimistic attitude in the air that the diverse, robust economy of Chicago would ensure the market continues advancing into next year and that technology would remain an important factor in commercial real estate.

Dike Realty’s vice president, Susan Bergdoll, mentioned that the industrial market is strong nationwide and that the vacancy rate continues going down each quarter. She quoted that the national vacancy rate dropped from 10.4% in 2010 to below 4% in 2018. In the Midwest, however, vacancy rates hover around 7%, while certain Chicago submarkets have a rate lower than 4%.

Executive Vice President of Cawley Chicago, Rawly Lantz, said the Chicago office market was “slow and steady” in 2017. Suburban office properties have a vacancy rate around 20%, while submarkets such as the East-West Corridor and O’Hare are around 14%, and downtown Chicago’s vacancy rate Is approximately 12% as developing office construction is going on. Lantz mentioned that property owners have experienced problems with lease renewals, although rental rates are going up, which is an indicator that there’s still strong demand.

Managing director of Integra Realty Resources, Gail Lissner, discussed the multifamily sector, noting that at the end of 2018 would result in a “really big year,” with just under 3,000 units delivered. Lissner continued, stating that the majority of developing suburban apartment buildings are located nearby Metra train station in the downtown area, and there are some fringe developments on the way. Multifamily properties in Chicago broke records in 2017, as 4,350 properties were built, and Lissner estimated that there would be three-thousand new apartment units on the market in 2018, as property owners are providing lucrative concessions to raise the number of leases.

To finish the market review, Deena Zimmerman, the vice president of SVN Chicago Commercial, mentioned that although there was a reduction in in-store sales and businesses filing bankruptcy, the retail market would continue growing. She believes that big-box store closures will create vacancies that will be filled by landlords who have a desire to change the asset class. She gave an example of property owners purchasing retail spaces of up to 60,000 square feet and transforming the former stores into distribution centers. Finally, she mentioned that many customers still prefer the experience of visiting a physical store, citing that Target aims to open just under three dozen small-size stores in the coming years.

How Property Managers Are Changing Every Asset Class

From retail and office to industrial, property managers are moving into the limelight at commercial properties, and tenants are taking note.

Property managers are moving into the limelight, and they are showing off just how important they are across asset classes. According to CBRE’s 2018 Global Tenant Occupier Survey, property managers play a crucial role in tenant retention and lease renewals. In the survey, 88% of tenants of office, retail and industrial assets said that the quality of the property management team had a “strong” or “very strong” impact on lease renewal decisions.
In terms of what makes a quality property manager, tenants listed “responsiveness” as the most important characteristic.

Full Article at GlobeST.com

Survey Reveals Retail Tenant Confidence Is At An All-Time High

For the complete article, visit the source at GlobeST.com

The survey, which gauges year-to-date store performance and checks in on the latest technology trends, generated the strongest numbers in its seven-year history.

The first half of 2018 was a healthy period for shopping center tenants, according to participants in Levin Management Corporation’sannual Mid-Year Retail Sentiment Survey.

Some 71% of survey respondents report sales at or above the same level as last year. This compares to a trailing six-year average of 54.2%. Additionally, 64%% report shopper traffic at the same or a higher level year-over-year (compared to a 52.8% trailing average).

“It comes as no surprise that this robust start to the year has retailers confident about the coming months,” says Matthew K. Harding, Levin president. “Nearly three-quarters [73.5%] of our survey participants expect July to December performance to match or exceed the first half of the year.”

Levin’s mid-year survey traditionally explores technology issues impacting the retail industry. The current results reflect forward movement in the ways tenants are responding to e-commerce influences and leveraging tech advancements to serve and engage customers.

“The latest findings are highly encouraging,” Harding says. “Our retail tenants are using technology to their advantage at an increasing rate and in a variety of manners.”

More than half (51.8%) of survey respondents reported that e-commerce has prompted their companies to adapt their business model in some way – or ways. Most notably, 72.7% of those respondents cited increased training and focus on customer service.

This emphasis on enhancing the bricks-and-mortar shopping experience through employees also is reflected in the National Retail Federation/Forrester “State of Retailing Online” study, which reported that 61% of retailers plan to spend more on supporting their store associates’ ability to service clients.

“Personal touch and human interaction will always distinguish physical store retail from online shopping,” Harding says. “The retailers that recognize this will be best positioned to compete moving forward.”

Levin tenants appear to be embracing change in several important ways, Harding says.


  • 68% of respondents who have made adaptations have added in-store services and/or incentives.
  • 1% of adaptors have added in-store pickup and returns options for purchases made online.
  • 5% of adaptors have altered their store prototype (i.e. smaller store size or increased focus on showrooming).
  • 2% of adaptors have incorporated “experience” draws such as demonstrations, classes, performances or other in-store events.
  • 6% of adaptors have increased coordination between online and bricks-and-mortar operations.
  • 3% of adaptors have adjusted store inventory (i.e. fewer in-stock SKUs, larger quantities of popular items).
  • According to 60.1% of survey respondents, these initiatives appear to be working. This statistic marks a significant jump in affirmative responses; the trailing three-year average shows
  • 47.2% reporting measurable positive results from e-commerce-influenced adaptations.

The survey also points to increasing connections between traditional and online retailing. Sixty-eight percent of survey participants noted they currently offer an online option for purchasing goods, scheduling appointments for services or placing orders for pick-up, up from 49.8% of respondents last year.

Retailers continue to leverage technology to offer incentives and conveniences for shoppers, both in-store and externally, according to the survey.

Four on-site technology tools ranked high, used by more than one-third of the respondents that embrace tech-based marketing. They include digital coupons, discounts and/or loyalty points (73.9%); free Wi-Fi (43.5%); the option to pre-order items online/pick up in store (43.0%); and in-store, online ordering with free shipping for out-of-stock items: (34.8%). Popular external tech-based marketing tools include Email (80.3%); social media/social marketing (73.9%), banner ads or other internet advertising (42.7%), and text messaging (40.8%).

“Social remains an interesting—and evolving—platform for retail,” says Melissa Sievwright, Levin vice president of marketing. “Facebook and Instagram are the clear leaders for our tenants; 91.1% and 55.1% of mid-year survey respondents that use social media leverage these platforms, respectively. About one-third use Google+ and Twitter. Ultimately, social media has become an active channel for commerce and will continue to play a significant role moving forward.”

Additionally, 43.5% of tech marketing-focused survey participants are enhancing their social media presence with paid options, such as Facebook sponsored content or ads. Many are also leveraging social marketing platforms; Yelp is the most popular, used by 65.1% of respondents, followed by Groupon/Living Social, and Waze and other GPS programs.


Overall, technology-based marketing continues to grow as a priority for retailers, with 44.4% of survey respondents who employ tech-based marketing saying they have increased their volume in 2018. Multiple survey participants noted they have new tech-based initiatives in the works.

For the first time, the survey asked participants whether they are actively employing technology to analyze customer and/or sales data for the purpose of merchandising, creating services and menu options, planning in-store events, or creating individualized special offers.

“An impressive 64.7% of our respondents indicated they are using the information being captured via technology outlets to influence their business,” Sievwright says. “Our tenants are getting to know their clients’ habits and also preferences and are applying this insight to enhance and personalize their shopping experiences. In that sense, data is driving retail strategy, presenting one more way that technology is helping companies better serve customers and ensure future success.”

Levin’s next Retail Sentiment surveys will be conducted in October/November, gauging expectations as well as plans for the holiday season, and in January, exploring outlooks for the coming year.

Investors for Retail Property Looking to Purchase Assets

How the Retail Businesses are becoming the Right Deal to Venture into in 2018

commercial real estate properties investment

With the numerous changes that our world encounter including globalization, the commercial real estate sector is also rapidly evolving. Consumers’ demands are changing every day. Thus, the need of investors to research and find the right assets which meet the changing demands of the consumers. Attaining such assets necessitates the need of the retail investors to engage in buying mode actively. Today’s retail environment is also rapidly changing, which has led to some of the high profile stores being closed.

This has led to the negative impact in the business domain. However, the investors note other thriving segments in which they aim to venture. For a person to successfully thrive in business in our today’s world, there is a need for embracing new models. Such models do not matter whether they possess a variety of mixed utilization or experiential use. Entrepreneurs have unlimited opportunities if they conduct their research well. Also, if they change their approach to business in accord to the consumers’ change in demand.

One of the most diverse businesses in the commercial real estate is retailing.

One of the significant reasons as to why it is termed by Steve Shanahan as the most bifurcated business is its possession of distinct subsets. These perform well thus pushing the market successively regarding value and price. However, there are a few setbacks with retailing which is what led some entrepreneurs considering investing in other asset types. To understand the retail businesses better, RCM conducted a survey in May 2018 where it analyzed the U.S. database with information concerning the various retail investors in the country. According to this survey, it was found that the Anchored Shopping Centers were the most sought-after retail investment by businesspeople.

In comparison to the 2017 statistics, the grocery-anchored centers’ preference margin grew greater. Although the grocery retail businesses face many challenges which include setbacks in online orderings and the meal preparation concepts, the stores are likely not to be replaced according to the research. Some of the good grocery stores which cannot be replaced by the online ordering stores such as Amazon include gas stations where an individual cannot order for gas in the online stores, laundry business, or ice cream stores where individuals need the products urgently and at their proximity. To ensure that the retail stores perform even better, Cosenza suggested that the owners of such stores should think creatively to come up with a unique approach of conducting business. Moreover, they should aim at minimizing the amount of retail with the intent of driving the business’ growth.

CapRock Announces Merger with RESolutions

June 1, 2018

S.L. van der Zanden, Managing Principal and CEO, and Brian Goldman, Principal and COO, announced today the completion of the merger of RESolutions with its affiliate CapRock. “We are excited to combine our real estate services and investment activities under one roof (CapRock) to better serve our clients and investors”, van der Zanden said. “We expect the transition to be seamless for our RESolutions clients, with the most noticeable change being the CapRock name.”

CapRock Announces Merger - commercial real estate logo

Is retail really going to be obsolete?

The facts about where retail is going…

The actual ratio of retail closures is 90 to 10. This is according to speakers from the capital markets panel at RealShare Southern California.

There may be a lot of headlines covering the failure of retail stores, but it is not as bad as the media is making it out to be. The reality is 90 to 10 and brick and mortar locations are going anywhere.

Experts state that commodity retail does not warrant caution. B and C class malls are definitely a concern from an investment perspective, but brick and mortar is safe.

So, where one individual states that New York retail is a disaster, with a high vacancy rate. Others advide to look deeper. What kind of retail is it? There are good and bad retail choices for this market, and much of retail’s quality is based on tenant mix and, of course, location.

It’s important to look at the competition. Consumers are shopping, but the majority of this traffic is driven by very strong brands. When looking at the competition, you can best understand what the tenant base is. Investors are not excited to finance a “no-name retailer” for instance.

While there is definitely two sides to this debate, it is agreed that not all retail is becoming obsolete. We are in a different market, and strategies need to be looked at differently before making retail decisions to compete in the market.

Click here for the full article from Globest.com

Struggling Retailers Leads to Industrial Market Health

Warehouse leases are being vacated by struggling retailers, but this is actually helping the market supply.

The last few years has shown the market that eCommerce has created a boom for industrial real estate. The demand for industrial space has drastically increased, driving rates of vacancy to an all-time low. In certain LA submarkets, these lows are sub 1% creating an increased sense of urgency for those seeking more space.

What’s interesting is that fewer and fewer fulfillment centers are in need in order to supply brick and mortar store locations, so these brick and mortar closures are starting to turn into industrial downsizing.

“I represent some large corporations, and they have told me that because online sales are killing their business, they are cutting back on brick-and-mortar retail locations as well as the distribution and fulfillment facilities that support those locations,” Chris Jackson, an executive managing director at NAI Capital, tells GlobeSt.com. “I think you are seeing that across the board.”

Toys R Us is a perfect example of retailers closing all their stores. This then spills the industrial supply into the market, however other retailers are choosing to downsize their industrial needs as their brick and mortar locations shrink in certain areas.

“Some companies are trying to figure out how to downsize,” says Jackson. “They are finding that they need less industrial space. They are keeping a few facilities, and they are shutting the rest down.”

Building Size Demand

The most popular demanded building sizes are for midsize industrial boxes. These spaces are around 50,000 square feet.

“As retail users start to close, I think that could impact the market,” says Jackson. “Larger buildings have been sitting on the market for longer. In the bog box buildings over 100,000 square feet, even though there aren’t a lot of them, those big box buildings are beginning to stay on the market a little longer.”

The forecast from all of this is looking like there is going to be an increase in redevelopment industrial projects. Larger box buildings will be made into facilities for multi-tenants.

“I think the trend that you are going to start seeing is private individuals that own large buildings are going to sell, and the new ownership will divide the building into smaller spaces so that it can be leased out,” says Jackson. “So, the market will open up a little bit. It is hard to find one tenant for those large big box buildings.”