May 2010: Commercial News Round Up

News briefs to keep you in the know about the commercial real estate industry.

May 1, 2010

What’s New in Retail

Retail sales may be struggling, but like the mythical phoenix, retailers are always recreating themselves. Will Ander, senior partner at retailing expert McMillan Doolittle in Chicago, shares his insights into some of the current and future forces that are driving retail.

A migration from products to solutions. From Best Buy’s "Geek Squad" to a boom in spas, both new and existing retailers are putting more emphasis on service. More services don’t mean more space, however. Instead, retailers are reducing product inventories and reconfiguring existing space.

Smaller grocery stores. Grocery retailers are banking that a combination of convenience, affordability, and quality perishables will attract customers to these 10,000-square-foot stores. Some examples: Wal-Mart’s Marketside and Fresh & Easy Neighborhood Market.

More big-box grocers. At the other end of the spectrum, both Kroger and Safeway are emulating Wal-Mart—in a slightly more upscale way—with one-stop shopping concepts that include restaurants and much more in as much as 100,000 square feet.

Focused niches based on lifestyle, life stage, and ethnicity. Retailers hope to differentiate themselves by tailoring their offerings to narrower consumer segments.

Global brands. An easy way to expand your brand is to take it overseas, a strategy embraced by both U.S. and foreign retailers. U.S. retailing woes are opening up a great chance for foreign brands like Spain’s Zara, U.K.’s Top Shop, and Australia’s Billabong to lock in great locations at low rents.

Sustainability. Smart retailers are embracing the brand benefits and cost savings of green operations. Properties that offer LEED certifications and sustainable practices will have an edge in attracting or keeping tenants.

Put Your Career Back in Gear

Feel like your commercial real estate career has stalled? Get concrete help to jump-start your business with Success Strategies for Commercial and Multifamily Real Estate Careers, by Natalie D. Brecher, CPM®, an instructor for the Institute of Real Estate Management.

The 240-page book is a "career coach in print," filled with tools to assess your skills and match them to the areas of commercial real estate where they’ll be most in demand. You’ll get the lowdown on many career paths in the commercial sector, including marketing, property and facilities management, and development.

Chapters also address how to position yourself for career advancement through networking and public relations.

Success Strategies is $24.95 or $19.95 for IREM members. Order by phone (800-837-0706 ext. 4650) or online (www.irembooks.org).

Where to Look for Financing

These days, as never before, a buyer's ability to finance a property can make or break a deal. If financing is a stumbling block for your clients, consider these options.

  • The seller. If an owner has equity, receiving part of the sale price in periodic payments may provide a better return than an outright sale.
  • Entrepreneurs. Can't find financing? Create your own mini opportunity club. Encourage several entrepreneurial investors—or a rich uncle or two—to form a partnership or LLC to buy a property. Check your state's local securities laws to determine if the fund must comply with state securities laws.
  • The government. Loans guaranteed by the Small Business Administration for the purchase or renovation of properties used for business operations are available from numerous lenders. Choosing an SBA-preferred lender can take the sting out of the paperwork. Even better news is that Congress is considering a proposal by the Obama administration to raise the loan limits from the current $2 million to $5 million.
  • Public markets. With banks showing no sign of loosening lending, The Wall Street Journal calls IPOs "one of the biggest businesses in real estate this year." If you aren't big enough to be a REIT, try selling to one.
  • A hard money lender. Using these private, non-bank sources of funds will cost more, but they are lending on strong deals with an equity component.

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