Approximately 98% of the respondents reported that they are happy with the direction of the shopping center industry. A developer noted that, “The momentum has been positive. We’ve seen an increased amount of inquiries on our new developments.” Another developer/owner of shopping centers stated “I handle a national portfolio from the east coast down to the Texas and Oklahoma markets. Leasing activity in the last month has been as strong as any month in past five years. I’m seeing tenants more willing to do their own build-out cost in exchange for longer free rent periods and lower deal terms. Tenants are starting to commit capital into their spaces again.” On the west coast a broker stated, “My territory is northern California and the activity/deal volume is positive. The momentum continues; indicators include higher rents, less vacancy and multiple offers on spaces.” A vice president of real estate noted, “I lease retail centers throughout southeast, southwest and central Florida. I’m finding 2013 to be better than 2012. More nationals and mom-and-pops are doing deals.” A vice president for a shopping center developer explained, “My portfolio is throughout the southeast and there’s a positive movement in this market. We are breaking ground on new projects in the near future however getting commitments from tenants is still difficult. Most of the tenants that I’m doing deals with are national retailers; the mom-and-pops are looking but not acting.” More positive observations came from the west coast including a response of “My shopping centers are in the Sacramento region. We are seeing more leasing activity and interest for quality centers.” In the northwest a broker noted, “The Seattle market and the entire state of Washington has done very well. I’ve recently done deals with GameStop, Burlington Coat Factory and Burger King. Our market is seeing a lot of regional and national chains enter the state.” An owner and broker also explained, “My shopping centers are in small markets throughout the Midwest and we are seeing retailers expanding and consumers spending. I’m seeing all types of retailers back to opening stores.” More reinforcement that business is improving was the response that, “I’m a broker and my territory is the tri-state region of Tennessee, northern Mississippi and eastern Arkansas. My phone is ringing more and I have more tenant rep. contracts now.” Sheryl Vickers, CCIM of Select Sites explained, “I do leasing, brokerage and retail site selection in Kansas City and surrounding markets. Last year was an improvement on activity and production over 2011. The momentum is strong and I see more retailers expanding or entering the Kansas City area. My clients are much more active and they are restructuring internally to gear up for a future expansion.”

Negative responses and mixed observations were few. A broker explained, “I handle the Chicago and Las Vegas markets. Chicago has done well but is sliding. Leasing in Chicago has slowed down from two years ago. Las Vegas has underperformed, but is going in the right direction and leasing activity is picking up.” A developer noted, “Commercial real estate is coming back, slowly. In 2013 the indicators are good, but there is still a disparity between what a landlord needs for their pro forma and what terms the tenants can get at existing projects.  Another negative sentiment came from a developer in Connecticut, “I am not overly optimistic about the future of retail real estate. There are certainly some real estate uses which require storefront establishments, but with the internet, a lot of commerce can be done that doesn’t require physical presence.” Vickers added “I’m cautious but very optimistic; lending is loosening, deals are happening with a little less heartburn, and retail activity is very strong.”

Developers with shopping centers under construction or breaking ground in the next year also expressed positive observations of progress and recovery. Terry McCollom of McCollom Realty noted, “Our portfolio is throughout the Midwest. We recently developed a 13,000 square foot strip center in West Milwaukee, Wisconsin. It’s 100% leased including national chains such as Starbucks, Jersey Mike’s, Qdoba and AT&T. All of our properties, spanning six states, are in good shape and we continue to see leasing activity.” Another developer added “In the past year, I developed 40,000 square feet of retail in a mixed-use project that includes office and multi-family. The financing for the new construction was closed in 2012. We have had difficulty finding the “right” tenant and containing construction costs. We have two projects slated to break ground in the next 24 months. In our new developments leases are taking 12 to 18 months to close.” A developer of grocery-anchored centers explained, “Obtaining financing is still a challenge especially for new construction and so is finding tenants that can pay the rent associated with new construction. We have several centers breaking ground next year. Many retailers are looking to landlords to provide turnkey deals and we are starting to see the willingness to pay the rent associated with their request.” Another shopping center developer explained “We are currently under construction on a 20,000 square foot retail and office building. We’ve had no particular difficulty in obtaining construction financing.” Many of the developers expressed that they are actively preleasing centers however the deals are taking much longer as there doesn’t seem to be any sense of urgency.

Leasing activity in second-generation shopping center space has picked up substantially in the past year. The uses most frequently noted as in expansion mode were quick-serve restaurants specializing in hamburgers and ethnic food, child care centers, discount stores, medical and dental offices and other service providers. Most leasing activity was reported with mom-and-pop chains and franchisees. The chains noted frequently for having impressive store growth were Nordstrom Rack and Trader Joe’s. Most responses indicated that deals in today’s leasing environment are close to or at market rents with a tenant improvement allowance and some chains are demanding and getting kick-outs. A broker in the Midwest noted, “Retailers are getting just below asking with tenant improvement allowances in my market and the tenant improvement allowances for national chains is typically equivalent to a year of rent.” Many responses noted that retailers are downsizing their footprints to lower occupancy costs in anticipation that rents will continue to increase. Most leases are taking six months to a year to finalize, even for small shop space. A broker added, “It still seems to take nine months to close a deal, and sometimes a full year. I closed two deals in first quarter that only took four months to get a fully executed lease. This is due to a very competent and motivated landlord with an amazing property.” Vickers echoed a frequent response that, “Unanchored centers are still the hardest to lease. Power centers are filling up or are at occupancy, and even lifestyle centers or new developments that had stalled are now enjoying strong leasing activity.”

The acquisition and sale of shopping centers is sluggish from coast to coast, despite lenders being more open to funding acquisitions. Most of the sales activity in the first quarter of 2013 was from triple-net leased single tenant assets and 1031 Exchanges. Randy Briskin noted that, “It’s hard to find good value. There’s tons of money chasing shopping center acquisitions and today, the cash on cash return for a prime property is often better than a 30-year treasury bond. An investor explained, “We have not purchased any assets in the past six months, but we have made multiple offers. Our niche is retail/office in the $2 to $10 million range with GLAs ranging from 50,000 to 200,000 square feet. We are looking to acquire value-added or “B” grocery-anchored and non-anchored centers throughout the southeast. We’re also currently under contract to sell two triple-net assets. Obtaining acquisition financing is almost back to where we were pre-recession.” Another buyer responded that, “I acquired one shopping center in the past year and I’m looking to buy 50,000 to 100,000 square foot centers in southern Florida. There is lots of money out there looking for acquisition opportunities and this demand drives prices and most of the sites that I’ve seen are in the range of 6% to 8% Cap rates.
Banks are being much more aggressive when funding acquisition loans.” A shopping center owner in New England stated, “We are finding a lot of properties are now available for sale in our market, but at high prices with Cap Rates of 4.5% to 6.5% or with environmental issues or burdened with high cost and non-cancelable financing.” A broker specializing in triple-net sales, mostly Walgreens, CVS and AutoZone deals, cites low Cap rates as the biggest hurdle to closing more deals followed by coping with lenders’ loan-to-value ratios.

2013 appears to be the true turning point for a recovery. Most shopping center executives and retail chains are feeling more confident and no longer paralyzed by the fear of a shaky economy. Retail chains have toned up their business model; today most national chains have funds for capital expenditures and are looking for new store locations. The banks have thawed out their vaults after a few years of hibernation. Although interest rates are low, lender’s requirements for higher loan-to-value ratios has created an obstacle for borrowers. The most notable change observed in the past year is a fundamental shift in tenant mix for malls and strip centers. A huge influx of medical uses has entered the retail scene with chains of medical and dental providers leasing inline store spaces of strip centers. Landlords are more frequently looking to fill their vacancies with uses that do not easily cross over to an online sales platform either due to low price points, which makes it prohibitive to sell online, or a service that requires a physical storefront presence. Subsequently, service tenants, such day care and fitness centers, dry cleaners, hair salons and medical uses are more often rounding out the tenant mix than soft goods. Also, owners of enclosed malls are stepping outside a traditional tenant mix by filling vacant department space with discounters such as Target and specialty supermarket chains such as Whole Foods. Industry wide, retailers and restaurant chains are reevaluating and downsizing prototype footprints in an effort to contain occupancy costs with the expectation that rents will start to increase. Briskin added, “Retail uses that carry over easily to an online format are the chains that I’m seeing most aggressively downsizing their foot print. I think landlords with big boxes should be concerned, because the likelihood is high that their tenants will be downsized.” All areas of the country reported current rents are hovering around or hitting market rates. Most shopping center owners responded that they intend to staff up with more leasing talent in the next year and brokerage firms also noted, at a high frequency, that they anticipate growth and plan to take on more brokers. Briskin said, “It’s the best industry in the world and an excellent career choice with great opportunities to build wealth.” In 2013, the shopping center industry regained its confidence and is revved up to grow. The prevailing mindset is that there are lots of deals to be made and the future of the shopping center industry looks bright.

RECon 2013 is here!

Welcome to The Dealmakers special edition for the 2013 RECon in Las Vegas. This year’s convention will most likely be the best event we’ve seen in our industry for the past five years and it’s been a long time coming! After three decades in this business, I can say without reservations that the most important part of the Las Vegas convention is seeing old friends and making new ones. When you’re not negotiating deals, the best use of your time is relationship building and bonding.

Luckily, as a youngster coming in to the business, I had the opportunity to be mentored by some of the most influential men in the shopping center industry and they taught me the importance of making friends, sharing information and trust. I say men, because in the beginning of my career there were very few women and most of the ones that attended the convention were administrative staff running the booth, not doing deals. Some of my fondest memories from past conventions are of listening to war stories at the Hilton bar. My late husband, Ted Kraus, who was well known in the shopping center industry for his contrarian attitude, booming voice and heart of gold, would get together every year after the convention with some of the other great souls that we’ve lost in the shopping center industry; Barry Davis, Ed Paster, John Culpepper, Louis Strauss and too many more to add. We would talk some shop, but mostly the time was spent sharing laughs. They taught by example that friendship, truthfulness and generosity are the keys to success and the best deals are the ones where everyone walks away from the negotiating table with their jugular veins intact.

I recently had lunch with a friend who is an extremely reputable and successful broker well-known for putting together complicated deals. I asked him about an exclusive that he recently took on and he replied, “I fired ‘em after the first week. They were more about killing deals than making them and I don’t think they’ll keep their word.” The conversation reminded me of words of wisdom from my mentors and a company that I worked for years ago. Its real estate department epitomized a “rake ‘em over the coals” and “it’s my way or the highway” attitude towards negotiating deals. Because of their “go for the kill” mentality and reputation for renegotiating business terms in the eleventh hour; more deals died than got done. Too often, I feel as though our industry has twisted the ideology that good guys always win, and being fair doesn’t mean that you’re a weak negotiator. So when you’re pounding the pavement at RECon, remember you’re there to make deals not to kill ‘em and walking away from a deal isn’t defeat, sometimes it’s the smartest thing you can do. Enough of my rant, we’ve got great leads in this issue, insightful profiles and our annual State of the Industry report.

One of our features is about South Moon Under, a regional chain of fashion boutiques that’s taking the east coast by storm. We also have a feature on the Retail Brokers Network and you’ll get an idea of how their brokers closed $4.5 billion in retail leases and another $1.2 billion in the sale of retail sites during the past two years. Winick Realty Group is also profiled in this issue and the president of the company has some excellent words of advice for people that are new to the industry. Tulepan Management is another company featured and they have an investment fund with $90 million earmarked to acquire shopping centers. Also, for your convenience, we’ve included a floor plan of all three halls of the convention. Most of our advertisers have their booth numbers noted in their ad and on the floor plan so you can easily find them.

Other features in the magazine are the expansion plans of supermarket chains and home-related stores, in addition to our front cover feature on expanding chains of apparel stores. The Dealmakers special edition for RECon has hundreds of leads on chains looking for new store locations, acquisition opportunities and space for lease, plus our annual State of the Industry. This year’s report had the most positive responses that I’ve seen in five years. The most interesting observation that I made after reading the responses was a shift in what would historically be considered as an ideal tenant mix for strip centers to now include a heavier presence of service and medical providers than soft goods or necessity shopping. In malls, the tenant mix paradigm is changing too, with supermarkets and discounters replacing department store anchors. The research also confirmed that more chains have funds available to build out their new stores and rents have stabilized. A common complaint in the responses was that finding acquisition opportunities is tough. I concur, my company TKO Real Estate Advisory Group, Inc., is acquiring small strip centers in the mid-Atlantic region and we’re looking for sites with a dense Asian population in the immediate trade area. It’s been interesting trying to find shopping centers that cater to an ethnic clientele with a tenant mix of mom-and-pops. The pricing of centers that I’ve looked at the past few months has been reasonable. Most of them will require a decent chunk of capital to make up for a few years of deferred maintenance, but I’ve seen a few that have the potential to be real cash cows. So if you have something that meets our criteria, please call or find me at the convention. The good news is that the majority of the executives that responded expressed enthusiasm and they expect our industry to keep growing.

Look for The Dealmakers Prize Crew at the convention and stop by and see us at booth #S283 Q Street. We’ll be giving away iPads, iPods, and lots of other goodies. Make this your best convention ever!

I hope all of you have a fabulous convention, make lots of deals and a few new friends,

Coral Square Shoppes Fort Pierce, Florida

Tulepan Real Estate Management, LLC is a privately held full-service commercial real estate investment, development, management and leasing company headquartered in Coral Springs, Florida, with coverage throughout southern Florida. For more than twelve years, the firm has provided its clients with a wide range of services, including the repositioning, re-tenanting and retrofitting of underperforming assets as well as in-depth analysis and assessment of existing properties. Tulepan Real Estate Management oversees the day-to-day operations of its own portfolio, in addition to managing centers as a third-party. The company takes pride in being hands-on and offering highly personalized site-intensive management, in addition to its leasing capabilities. Tulepan is seeing growth in its property management and leasing divisions. The company attributes the growth to its extensive experience as shopping center owners and its unique and diversified team of professionals. “We are the most hands on leasing and property management company that I am aware of,” stated company founder, Randy Tulepan. “I personally visit our properties a minimum of three times a week with the property manager and I hand collect rent from tenants on the first of the month. They see me during every single step of their tenancy. From the day we start the letter of intent all the way until their term expires. I make myself available by email, cell or text 24 hours a day and I make every effort to address their issues as fast as possible. Our company also self performs many tasks that other companies would contract out for. We look to save every single dollar we can for our tenants. Our commitment to our clients, collective vision and resolve has gained the firm consistent respect and achievements.”

In 2002, Randy Tulepan got his start in the real estate business with his father after he left the Marine Corps. Randy’s father, Craig, had been working in the industry for 30 years prior and specialized in every aspect of the real estate world, from acquisitions to property management. His father taught him everything from the ground-up, and Randy credits his father for teaching him everything he needed to know about the industry. Randy also quickly learned that the most successful element to any broker is relentless follow-up. According to Tulepan “A broker has to continuously call, email, write and do whatever it takes. The retailers are looking at thousands of sites and the broker has to stay on them to get any results.” My advice to brokers coming into the retail real estate business is to “read everything and be relentless. When you hear the word “no” just pretend it’s yes. And call back the next day like they want to move the deal forward. “

Randy brokered some impressive deals and among the more challenging was a 36,000 square foot lease with Florida Career College, which was recently acquired by Anthem Education. The deal was complicated on every level requiring a use variance, obtaining extremely creative traffic studies and remodeling 15 vacant spaces to accommodate the school while simultaneously dealing with objections from other tenants, as well as an anchor. “This deal was a world war,” said Randy, “but in the end it all got done and everyone is happy with the results.” The company recently demolished a Macaroni Grill building and replaced it with a build-to-suit for Blue Cross Blue Shield. According to Randy, the firm negotiated the lease with BCBS, handled all the permitting and approvals, and supervised the construction; delivering the building ahead of schedule and under budget. Since Randy started in the shopping center industry, he has observed the real estate landscape change drastically. He explained “The company now negotiates leases with schools, medical users and service providers more often than with typical retailers.” According to Randy, most shopping centers owners will have to lease to these alternative uses to maintain respectable occupancy numbers. Also, he noted that the big-box days are fading away, as the company sees an exodus of large box users downsizing and shrinking their footprints and new developments are reflecting that change in the retailers’ strategy.

During the recession of 2007 to 2009, the company was able to maintain decent occupancy rates and even managed to secure new deals during the peak of the financial crisis. He added “in the tough times we had to cut rents and do deals to keep tenants in business. Now we are seeing a stabilization and small increase in rental rates.” According to Randy, he was most proud to be able to guide some of his tenants through that time period and see them grow stronger every day. Randy added, “Being in leasing and property management it was a very scary time. Small local tenants were in a complete panic and sales were off dramatically. Vendors were folding up and basically every time the phone would ring it would be a deal of some sort falling apart.”

Now, Tulepan is optimistic about the future and only sees retail getting hot again during the coming years. The company’s affiliate, TM Property Advisors, Inc., has a private equity fund with $90 million to place for the acquisition of shopping centers in the geographic region of Miami to Orlando, Florida. The criteria entails value-add and distressed shopping centers with GLAs of 50,000 square feet to 250,000 square feet in both primary and tertiary markets. Randy added “from retail to housing, we are not seeing product last long on the open market. I only hope we are all a little smarter about things this time around.”

For more information contact Randy Tulepan, Tulepan Management, LLC; 11555 Heron Boulevard, Suite 200; Coral Springs, FL 33076; 954-603-0455; Fax 954-603-0542; Email: randy@tulepanmanagement.com; Web site: www.tulepanmanagement.com.

Moreover, RBN has three Councils of experts for its restaurant, anchor/big box and investment sales clients. The Councils provide invaluable information and hands-on knowledge of what’s happening within these specialty groups. Whether it’s a restaurant chain entering a new part of the country, a big box tenant looking for a prime location, or providing investment sales and analysis for buyers or sellers of either single tenant or shopping center portfolios, the Councils assist member brokers to meet the specialized needs of its clients. Routinely, members within a region gather for educational sessions to present new ideas and to keep its fellow members informed. The sharing of knowledge and specialty expertise office-to-office provides a level of service to meet the needs of institutional investors and municipalities, in addition to the owners of small portfolios and growing retail chains. In addition, many members of the RBN have also shown their dedication to their industry by participating and volunteering in numerous ICSC functions throughout the year. RBN members have chaired conference planning committees, been state board chairmen, have been involved in the numerous ICSC committees such as government relationships, next generation and alliance committees. The RBN also participates in over 30 yearly ICSC events domestically and internationally. At the 2013 RECon, RBN’s past-president Keith Lord, president and managing director of The Lord Companies LLC, will pass the title to the newly-elected Chuck Lanyard, president of The Goldstein Group. As the incoming president; Lanyard explains the success of the network is due to “tremendous cooperation among the RBN offices. Aside from assisting clients on a local basis, RBN members share knowledge and research on a national scope from major metropolitan markets to submarkets, as well as in Puerto Rico, Mexico and Canada.”

The RBN has evolved into a real success story. In the past two years, RBN members were responsible for brokering leases valued at $4.5 billion as landlord agents and tenant reps, while also closing investment sales valued at $1.2 billion. Lanyard noted that RBN members “are very pleased, as a result of the improved economy, to see all regions throughout the country have picked up considerably. Occupancy rates continue to rise as space is absorbed and retailers are making deals again.” As tenant reps, some of the network’s clients include Target, Hobby Lobby, The Fresh Market, Kroger, Dick’s Sporting Goods, Staples, T.J. Maxx, Marshalls, Lowe’s Home Improvement, CVS, Walmart, Costco and Walgreens along with hundreds more national chains to emerging concepts. “The network’s extensive investment/sales division continues to grow and we anticipate tremendous growth in investment sales,” added Lanyard. To maintain a steady pipeline of deals, RBN members interact through monthly special-council conference calls and the day-to-day sharing of pertinent information. This communication and collaboration allow the members to keep up with the ever-changing marketplace, analyze trends and share state-of-the art technology, which in turn directly correlates to closing more transactions.

As to growth of the network, Lord as RBN’s 2011-2013 President, added numerous offices, a presence in Puerto Rico and Mexico, as well as increased the broker head count by thirty percent. Lanyard expects “there will be perhaps some additional offices created in some of the submarkets, but for now, RBN is in an excellent position domestically and internationally to satisfy all of its clients’ needs.” He added that the philosophy behind RBN is to “Know, Like and Trust,” derived from network’s membership representing the “best-in-class” brokers, so when a member refers a fellow member to its client, whether it’s a landlord, tenant, buyer or seller; the broker rests assured that a high level of expertise will be delivered, because the members know, like and trust one another.

For more information, contact Chuck Lanyard, Retail Brokers Network, 45 Eisenhower Drive, Paramus, NJ 97652; 201-703-9700 Ext. 115; Emails: clanyard@thegoldsteingroup.com or info@retailbrokersnetwork.com; Web site: www.retailbrokersnetwork.com.

The chain has the fashion scene’s attention with its better lines of surfer inspired apparel for men and woman in the twenty to thirty age brackets, along with jewelry, accessories and gifts. Its clothing lines run from eclectic to fashion forward and include items such as a casual dresses with price points from $65 to $225, jeans for men and women priced between $90 to $200; a large selection of ladies swimsuits in the $100 to $180 price range, and a full spectrum of footwear from flip flops to boots and fashion accessories. The sales floors of South Moon Under are merchandised with fashions in keeping of its surfer spirit and include designers such as Hugo Boss, Kenneth Cole and Ralph Lauren, along with trendy lines from Free People and Citizens Humanity, in addition to brands often found in surf shops with a large selection of swimsuits and resort wear year round. Aesthetically, the stores are bright and beach-themed with numerous mannequins and table displays.

Although the concept has a laidback feel, its belief in superior customer service is intense and the chain strives to create a highly personalized, comfortable and fun retail experience along with daily additions of merchandise to its sales floors. In addition, the chain hosts store events from “Girls Night Out” parties to book signings. The combination of the concept’s customer service strategy and its constant replenishment of merchandise generate a high frequency of repeat shoppers. Jay Lepselter, director of real estate for South Moon Under, explained further that “as a strong regional fashion retailer of high-end branded goods, with exceptional editing of the best of each line carried, the customer is given an unparalleled assortment of current fashion selections with outstanding boutique-quality customer service.”

South Moon Under operates 19 specialty boutiques throughout Delaware, Maryland, New Jersey, New York, Pennsylvania and Virginia. The stores are located in high volume shopping venues such the National Harbor just outside of Washington, DC with Charming Charlie, Fossil and Jos. A. Bank as cotenants. In Gaithersburg, Maryland at the Washington Town Center, its cotenants include Chico’s, Ann Taylor Loft, Francesca’s Collections and White House | Black Market, and again with Charming Charlie and Jos. A. Bank. The chain’s cotenants at its first location in New York include Uniqlo, REI and Apple at a shopping center in Yonkers. In New Jersey, South Moon Under’s cotenants include Ann Taylor, Anthropologie, Apple, Banana Republic, Blue Mercury 2, Brooks Brothers, Coldwater Creek, Denim Habit, Francesca’s Collections, J. Crew, Jos. A. Bank, Talbots and White House | Black Market at a shopping center in Marlton. The company has a storefront on Chestnut Street, a trendy affluent pocket in the Center City area of Philadelphia, Pennsylvania within a block of Anthropologie, J. Crew, Free People and Talbots. South Moon Under also has a store at the Short Pump Town Center in Richmond, Virginia where its cotenants include Banana Republic, Caché, Chico’s, Everything But Water, J.Crew, LOFT, Tommy Bahama and White House | Black Market. The chain is stringent in its site selection process and new locations must offer compatible cotenants.  Lepselter added, “Co-tenancy requirements make it difficult to find prime space, however the chain remains resistance to settling for secondary locations.”

New store opening at The Promenade at Sagemore in Marlton, NJ

South Moon Under has its sights set on a roll-out and the chain is projected to grow by three to four store openings annually for the next three years. Expansion will take place in affluent trade-areas throughout the east coast; from southern New England to northern Florida. Leasing opportunities for second-generation spaces are sought in high performing and high traffic locations. Lepselter explained “Our current short-term strategy is to go for existing spaces rather than new construction opportunities.” Also crucial to its site selection process, potential sites must offer co-tenancy with the likes of Anthropologie, Blue Mercury, Lululemon, Banana Republic, J. Crew, White House | Black Market, Sephora, Lucky Brand, Tommy Bahama, EMS, Francesca’s, REI and Apple. The chain typically utilizes 3,000 square foot to 4,800 square foot storefronts in established affluent shopping districts and inline spaces within existing high volume lifestyle centers.

“Surfs’ Up” every day at South Moon Under as it grows from its surf shop beginnings to a chain of surfer-inspired fashion boutiques.

For more information, contact Jay M. Lepselter, South Moon Under, 619 Franklin Avenue, Berlin, MD 21811; 410-641-1644 Ext. 149, Fax 410-641-3725; Email: mailto:jlepselter@southmoonunder.com; Web site: www.southmoonunder.com.

Merchants carrying hard goods that weigh less than 20 pounds should be worried. Amazon is taking out the category killer chains one by one.

Welcome to The Dealmakers pre-show special edition for the ICSC’s 2013 Recon. It’s Vegas or bust, baby! This year’s convention looks like it’s going to be great. I’ve got a slew of appointments and several party invites for every night starting on Sunday to Wednesday. I am psyched. This convention should be one of the most exciting shows that we have experienced in over five years and judging by the parties, it also looks like everyone is ready for some fun too. We’re in the same spot at S283 Q Street, but we’ve got a brand new booth. It’s bright red and you can’t miss it. And our new Web site, along with our iOS and Android app, will make their debut at RECon too. We’ll have several iPads and monitors in our exhibit space, so stop by for a demo on the new site and app. The site has been redesigned to make it easier for all of our GREEN subscribers that prefer to read The Dealmakers online. And for those who prefer to be mobile, they can read the latest issue with their iPad, iPhone or Android. We also have a point of entry on the web site for you to send our editors info on your store expansion needs, tenant rep exclusives, space for lease, new developments, acquisition needs, opportunities for sale, recent deals, new assignments, promotions, etc., so you can easily get your deals in front of The Dealmakers’ audience. The new web site will also be updated daily with leads on retail chains that are looking for new locations, so you should book mark us and check it out every day for new leads. We’ll also have a networking sitting area where you can chill on our couches and no one will give you the hairy eyeball for taking a rest in our booth. We will also have a recharging station for you to charge your phone and you can access our Wi-Fi too. Stop by our booth to learn how we can help you generate more leads and you might even win something really cool. We’re giving away tons of prizes from iPads to iTunes gift cards with a repeat performance of The Dealmakers “Prize Crew.” Look for the folks walking around the convention with red shirts with The Dealmakers on the back and give them your business card. They’ve got lots of prizes to give out and pictures of the winners will be posted on our Facebook page and Twitter feed too.

On the topic of Facebook and Twitter, the ICSC has a technology pavilion during the show with lessons on how to use new social media platforms such as Facebook, LinkedIn and Twitter. I’m a technology fan, but I don’t believe you can attract potential tenants, buyers or sellers using anything other than a phone, email, print ads or direct mail. We have a company Facebook page just because everyone else does and getting your name in front of more people never hurts, but I don’t think it generates new leads or business for our industry. Same goes for Twitter; however I do see some merit in LinkedIn as a networking tool. A few of the LinkedIn discussion groups for our industry are worthwhile to follow, but I can’t see devoting too much time. Some people are so active on LinkedIn; it looks like it’s their full time job. I guess I’m old fashion. I would rather have someone just pick up the phone or email me rather than login to LinkedIn, then send a request to connect and a reply with a confirmation and then email, and I don’t need to know everyone that looked at my profile or everyone that someone else knows. But, I do plan to go visit the Technology Pavilion on Tuesday and listen to Randi Zuckerberg, former head of marketing of Facebook, just because it’s always interesting to hear ideas from smart people. Also on Tuesday is the Meet the Trustees Breakfast and if you’ve never attended this event I would recommend going to it next year. The information and networking at the breakfast meeting is invaluable.

Another session on Tuesday explores online retail sales and how the traditional storefront is evolving. Like I said earlier, I’m a huge fan of technology, so much so that my office runs on a virtual platform and we can work from anywhere. But, I don’t think retail on the internet will ever replace certain types of retail stores and services. Merchants carrying hard goods that weigh less than 20 pounds should be worried. Amazon is taking out the category killer chains one by one. Last year, I got a call from Amazon wanting me to give them press coverage on their lockers so they could solicit chains and developers to allow Amazon to install lockers for their customers to pick up merchandise shipped from Amazon. I asked how much rent will you pay and the response was virtually nothing. Then I asked why would anyone give up floor space for little upside and the answer was they would increase traffic to the center. It didn’t make sense to me then from a retailer or landlord’s perspective and it still doesn’t. I did ask if they had an advertising budget to promote that they want to rent space and the response was no. With that answer, all credibility went of the window with me. Jeez, you’re Amazon and you don’t have a marketing budget for a store rollout. It’s hard to get a handle on exactly how many lockers Amazon has installed, but I don’t think the shopping center community welcomed them with open arms. My understanding is that Amazon has a few lockers in 7-Eleven, but a game changer is that Walmart recently announced that they too are looking to open same-day delivery lockers inside existing Walmart stores, but also within other chains. With ecommerce sales projected to continue double digit growth reaching $370 billion in sales within five years, as a shopping center landlord, I would start looking really hard at my tenant mix and get a grasp on which stores will still serve a purpose five years down the line.

My company, TKO Real Estate Advisory Group, has taken on a few assignments to analyze portfolios of shopping centers and project the optimum tenant mix as leases expire, replacements of big box anchors, and gauging the likelihood of an anchor downsizing and the possible impact on the tenant mix. The research has been interesting; shopping centers catering to an affluent market or a low-income trade area have the least worries of their tenant mix becoming obsolete or marginal. Most affluent shoppers want a level of one-on-one service and the higher the price point directly correlates to the need for a storefront. In lower income markets, the lack of credit, bank accounts and access severely diminishes ecommerce sales. Strip and power centers catering to middle-America, which account most of the shopping venues in the U.S., are highly susceptible to losing tenants and sales to online retail. Middle-income shoppers have access, credit and due to the majority being two-income working families, they have very little time to shop. The history on what happens to chains selling products that easily transfer to an online platform is clear; look at the demise of Blockbuster, Borders and Circuit City. Every chain selling office supplies, eyewear, music and electronics in the country is vulnerable to closing. Also pharmacies are susceptible to ecommerce cannibalization and in my opinion that’s why many drug store chains are outfitting their stores with walk in clinics. Selling jewelry, furniture, appliances, home improvement materials and to some extent groceries and apparel will be difficult to transfer to an online platform, but you need more uses than just those for a well-rounded tenant mix. The good news is there are chains that will always survive in a storefront setting and as technology evolves, so will the tenant mix of most strip and power centers. If you’re concerned about your tenant mix becoming obsolete, drop by our booth or give me a call. I’m looking forward to seeing you in Vegas and stop by our booth S283 Q Street.

Here’s to making more deals,

The balance between serving as a landlord’s leasing agent and an exclusive tenant rep is another key to the firm’s success. Baker explained, “The market can swing in one direction or another and if a firm only represents one side of the business; it can be very difficult during those fluctuations not only to cope with a downturn, but to also understand how to position both its landlord and retail clients to benefit from a troublesome economic climate.” One example of Winick Realty Group’s ability to persevere and perceive a space that came to market at the peak of the financial crisis as an exciting challenge. Baker was part of the team that leased 1 Union Square South to Duane Reade, Citibank and the first Nordstrom Rack in Manhattan with 26,660 square feet on the ground floor level and 31,035 square feet on the lower level. A positive economic climate serves both retailers and landlords alike as “a good economy translates into stronger sales for a retail tenant and as they grow and thrive and demand more retail space, in turn landlords are able to achieve higher rents,” added Baker. A competitive marketplace also requires a broker to have strong landlord relationship, so it can better meet the supply for new store locations for its retail clients. Winick Realty Group leverages both sides of the retail equation in a competitive arena to consistently deliver deals no matter the economic forecast.

The last couple of years have been proven to be banner years for Winick Realty Group. According to Baker, the company ushered in the next era of Union Square retail by bringing Nordstrom Rack’s first New York store to part of the former Virgin Records. Executive vice president Darrell Rubens was instrumental in the revitalization of Wall Street, bringing such high-end retailers as Thomas Pink and Tumi. The company also won the REBNY Retail Deal of the Year award for the leasing of Columbus Square, a massive mixed-use development project that has brought unprecedented retail to Columbus Avenue between 97^th and 100^th Streets. The company is currently marketing 36,000 square feet of retail at 3 Columbus Circle, as well as 84,000 square feet at 535-545 Fifth Avenue, the Moinian Group’s block-long redevelopment project known as “The Flagship on Fifth,” stated Baker. As a tenant rep, the company is assisting the following chains: InVite Health, Landmark Theaters, Tossed, Yogaworks, Mitsosa Group, Basics Plus, New York Burger Co., Hair Party 24 Hours, Starbucks, Plow & Hearth, Conway, Chipotle, AT&T, Jersey Mikes, Gristedes, MedRite, NYSC and Sunac Fancy Food.

Columbus Circle

Part of the company’s leasing success stems from its specialty leasing groups in certain retail categories, with luxury brands being one group. The research from this group on how luxury goods money behaves in the subject trade areas and in the general marketplace is extensive. The group’s research points out that “money has personality, flow, direction and velocity, and monies available to be spent by consumers behave differently for each retailer and each retail category. This understanding of money (Domain Knowledge) is the key factor in determining the appropriateness of the trade area and that retail location’s viability,” explained Executive Vice President Kenneth Hochhauser. In turn Winick Realty Group emphasizes the intense gathering, analysis and dissemination of relevant data so its clients can make more informed and more accurate real estate decisions. Because Winick Realty Group’s business model is unique, the firm is not organized in broker groups; it is organized around the client, so that its leasing specialists can draw from a broad and deep broker pool of various skill sets and core competencies to best serve its clients.

As the firm envisions the future and ramps up for growth, it launched an “Agent Training Program,” which provides recent college graduates with a structured learning environment. It provides new trainees with territories to canvas, weekly training sessions to teach the business aspects of putting together a deal and individual support. After an intense six-month period, the trainees that show the most promise are asked to stay at Winick Realty Group, which allows the company to grow organically. Acknowledging that it takes extreme hard work, patience and determination to be one of the top-producing brokers in New York City, not to mention creativity and instincts for the business, Winick Realty Group is growing its brokerage team with the best in class. It has been said that a company is only as strong as the people that work for it and Baker adheres to that philosophy. He joined the company 13 years ago through an introduction by friend who worked for the company. Baker understands the importance of a good teacher and how that time invested in education exponentially pays off when it ignites a top producer. Baker explained that “I used to be one of the first people in the office each day and I would make sure I got the attention of the principals at Winick Realty Group and ask them questions. They were the ones who helped me to learn this business, especially Jeff Winick, who I think is one of the best real estate brokers in the business. There is no one better to learn from than the best.” Words of advice from Baker to his protégées are “outwork the principals at your company. Come in each day with a good attitude and pay attention to your clients, your surroundings and your business. Speak less and listen more and you will do well in this business.”

For more information, contact Steven Baker, Winick Realty Group, 655 3rd Avenue, 8th Floor, New York, NY 10017; 212-792-2600, Web site: www.winick.com.

Organized in 2001, under principals Scott Smith and Art Kepes, WRS has developed 25 Walmart-anchored shopping centers with over six million square feet of retail space. Jude Crayton joined WRS in 2010 and serves as its Broker-In-Charge. He began his career in Charlotte, NC with Glenwood Development in 1999. Prior to joining WRS, he also worked for Centro Properties, now known as Brixmor. In addition, its key employees, whose experience and reputation are its most important assets, have been involved in the development of more than a hundred other shopping center projects, more than ten million square feet of retail space, office projects comprising in excess of 500,000 square feet of space, and several significant hotel and entertainment developments. Collectively, those employees have more than two hundred years of experience in the development industry. WRS caters to a client list of anchor and small shop tenants for whom its key employees had developed projects for previously, including Walmart, Staples, and Kohl’s, as well Dollar Tree, Cato, Shoe Show, Sally Beauty and others. WRS has and will continue to pursue outlots, ground leases and build-to-suit opportunities with McDonald’s, Arby’s, Chick-fil-A, Ruby Tuesdays, O’Charley’s, Discount Tire, Bank of America, Murphy Oil and other outparcel tenants as well as office, hospitality, and industrial users. To keep up with its clients’ supply demands for new locations, the principals at WRS have developed a network of land brokers over the years that are the “eyes and ears” of an early alert system for competitive land acquisition opportunities.

In satisfying the needs of its clients, the companies provide real estate brokerage services, including market studies, site selection, contract negotiation, and coordination of zoning and permitting processes. In the greater Charleston area, Avison Young is regarded as one of the preeminent independent brokerage firms, with a significant share of the industrial, office and retail leasing and sales activity in the market. Avison Young is in the process of expanding its reach in South Carolina by opening an office in Columbia with another to follow in Greenville later this year. Regionally, WRS has also leveraged its anchor tenant relationships to provide brokerage services in situations when the chain prefers self-development opportunities.

SOREM’s property management services are a natural complement to the development and brokerage activities of WRS and Avison Young. SOREM’s involvement in the day-to-day operation of commercial real estate assets provides an accurate perspective on current activity and issues that WRS and Avison Young employ to assist its clients with development and investment decisions. Additionally, the experience and contacts of WRS’ leasing and construction management personnel and Avison Young’s leasing personnel provide SOREM with access to information and contacts unusual in the property management business.

WRS is currently developing two centers in North Carolina. Located in Greenville, North Carolina, Hardee Crossing will open in the fall of 2013 and is anchored by a Wal-Mart supercenter. Morganton Heights in Morganton, North Carolina serves as one of the company’s capstone projects with over 450,000 square feet of retail space. The center, which will open later this year, is anchored by a Wal-Mart Supercenter along with T.J. Maxx, Ross, PetSmart, Belk and a soon to be announced national sporting goods chain. Also, the company is developing two grocery-anchored shopping centers and will begin construction later this year.  WRS expects to add several more retail projects within the next six to eighteen months.

For more information, please contact Jude Crayton, WRS, 550 Long Point Road, Mount Pleasant, SC 29464; 843-654-7851; Email: jcrayton@wrsrealty.com, Web site www.wrsrealestate.com.

It always amazes me when people spend a small fortune in time and money going to RECon, but make no effort to let people know they will be there and what they have to offer.

Welcome to The Dealmakers special edition for the ICSC Carolinas Idea Exchange. This issue has tons of great leads on expanding chains, a profile on WRS with an overview of its pipeline of new construction projects, outparcels and acquisition needs, as well as a look at what’s happening in the retail real estate world. We just attended the ICSC Mid Atlantic Conference a few weeks ago in National Harbor, Maryland and the ICSC Gulf South Idea Exchange in Birmingham, Alabama. And in between those shows, the ICSC held its Southeast Retail Connection in Atlanta. That’s a lot of dealmaking events, especially if you’re a national company such as mine, and it’s hairy getting representation at every show. Brenda Buchanan, my sidekick, was in Birmingham and I attended the Mid Atlantic convention.

My take on the show in Maryland was that it was excellent; people were in good spirits and eager to make deals. I met with buyers of shopping centers, numerous brokers and several chains. I counted thirty-two restaurant concepts being repped by brokers at the show; that’s a lot of food tenants and no wonder it’s so competitive trying to find pad sites, end caps and conversion opportunities in the Mid Atlantic. Most of the buyers that I spoke to were looking for grade” A” grocery-anchored centers or they wanted to acquire almost dead shopping centers. I met a lot of people looking for turnaround projects to acquire or to take on as a consultant/leasing assignment too, but I met even more folks trying to sell dog centers by dressing them up as redevelopment opportunities.

I’m going to digress a bit about redevelopment opportunities. A little pool of investors, including myself, are looking at several small mom-and-pop centers and in our quest to find the right deal, we’ve been pitched some real dogs that are being taunted as the next great redevelopment opportunity. I talked to a few buyers in the Mid Atlantic market and they expressed similar complaints. I always give that “uh, do I look stupid?” response when a broker tries to sell me on a center that’s bottom dog in the market as having “phenomenal potential” for redevelopment, therefore the asking price is justifiable because the upside is so great! When I hear that line of thought, the only thing I do know is that investment sales broker has never leased a problematic shopping center in their life and they don’t understand the difference between releasing and redevelopment or the hoops you have to jump through to rebuild from the ground up. The risk factor is also just as phenomenal as the potential upside, so in my thought process, the asking price should reflect that the odds are not in favor of the buyer’s skills at leasing up a problem center. And by chance the site is really fantastic, then the asking price should also factor in that most likely a buyer will need to raze the existing structure and need not only an acquisition loan, but also a construction loan, in addition to all the expenses before a shovel hits the dirt. I’ve leased too many dogs, white elephants, and abominations of shopping centers to believe that any half vacant shopping center can be resurrected into a primo site with minimal effort or little capital. A best case scenario for buying a half empty center is to pump up cash flow by filling vacancies at cheap but reasonable rents with nominal tenant improvement allowances and play the waiting game for the right opportunity to sell it or find a credit tenant to anchor the site. Nine times out of ten when I’ve done an anchor deal in an older shopping center, it requires that most, if not all, of the center be rebuilt, so now not only is the buyer in need of leasing skills, they also need to know how to be a developer too. Sorry for the rant, but after the fifteenth sales broker at the show serenaded me about how easy it’ll be to lease and that the projected NOI is outstanding, I kind of lost it and asked them to put their commission in the deal for a few points, since it’s such a cakewalk – what’s the worry? Not one of them thought my idea was amusing, oh well.

The Carolinas’ show is expected to draw close to 2,000 dealmakers and I believe the high attendance is a result of business picking up throughout the entire southeast region and the Carolinas is feeling the uptick too. In this issue are a few examples of chains spreading their wings into new markets throughout the southeast including Dunham’s Sports’ entrance into Alabama, Georgia, South Carolina, Texas and Virginia; Performance Bicycle Shop pedaling into Florida and Tennessee, while Lowe’s Food eyes southwestern Virginia as a new territory. More notable movement in the southeast is Gander Mountain committing to two sites in North Carolina. I’m also hearing about slews of franchised food concepts growing in the southeast too; if all goes as planned for most of these chains, there will be no shortage of pizzas or frozen yogurt south of the Mason Dixon line. Trinity Partners is another company bullish on North Carolina with a recent expansion of its brokerage platform. Make sure you stop by and see us in Charlotte; we’re at booth #605.

To wrap it up, we are prepping for RECon. If you have new construction projects, space for lease, financing programs, acquisition needs, etc., let us know so we can get you some press coverage at the convention. You can send info to my email at ann@dealmakers.net. We will also have our “A List” too, so if you want help booking appointments before the show, it’s a great resource. If you need assistance with marketing your deals at RECon, we have solutions that will fit your budget. It always amazes me when people spend a small fortune in time and money going to RECon, but make no effort to let people know they will be there and what they have to offer. You can call me or Brenda to see how we can make your presence known at RECon and it will be painless, we promise. Also, we’ll be at Retailer-One-on-One in Florida during April too, so if you want some exposure at that event too, we can make that happen as well.

Again, stop by and see us at the Carolinas Idea Exchange,

Real estate departments are more worried about finding new locations than they are about rent reductions, relocations and renegotiating renewals.

Welcome to The Dealmakers special edition for the ICSC’s Mid-Atlantic Conference. I’m hearing mixed reviews about the Mid-Atlantic market, however, everyone that I’ve spoken to lately about this show all agree that having the event at the National Harbor is just one more reason to attend. Attendance is expected to be close to 2,000 and the first day has some good educational sessions and networking opportunities. The Retail Runway rounds out the first day followed by the cocktail party. On the second day, the Dealmaking opens at 8:30 in the morning and I’m sure there will be a few folks wishing that they hadn’t hit the party scene so hard the night before. It has been awhile since I went to the DC show and I’m anxious to see it firsthand this year.

While doing research for this issue, I must have spoken to close to 50 developers and brokers and about half as many retailers and tenant reps. I’ve known most of them for decades, so I’m confident that I didn’t get the standard canned answers frequently given to trade magazines. The retailers that I talked to expressed frustration with the Mid-Atlantic market, because either the primo retail space is already leased or they can’t afford the rent. A few anchors also complained that they’ve been pitched the same sites in the Mid-Atlantic for the past five years and they aren’t bullish enough on the market to take a chance on opening stores in subprime shopping centers. The tenant reps that I talked to have tenants wanting space, but the space either gets leased before their client makes a decision or the tenant is pushing for a better rent. In the Baltimore market, tenant reps were also complaining that they couldn’t find enough Class A retail space. The most active supermarket chains in the region include Wegmans, Weis Markets, Harris Teeter, ALDI, The Fresh Market and Kroger. A supermarket chain that I expect to see entering the region is Southern Season’s, a gourmet grocery store that is opening its third location with 50,000 square feet at a to-be-developed mixed-use center in Richmond, Virginia. If you aren’t familiar with Southern Season’s, the store’s presentation, merchandising and customer service are amazing. I also heard talk about Costco and Bob’s Discount Furniture having deals in the works in the Mid-Atlantic. There was lots of chatter about food concepts and restaurants being aggressive with growth in the market. Sarku Japan, Penn Station East Coast Subs and Taylor Gourmet Deli were frequently mentioned in my conversations as chains that are expected to see major growth. In our Food Chains section, we’ve got the details on the Mid-Atlantic expansion plans for Wendy’s, Manhattan Pizza, QuickFire Hibachi, and Pizza Autentica. Also, Alamo Drafthouse is growing in the region. A chain that I came across that would be a natural fit to enter the Mid-Atlantic market is Tudor’s Biscuit World, a 50-unit chain of quick-serve restaurants serving breakfast and lunch with a menu focused on southern-style comfort food. Paul, a chain of French Bakeries and Cafes recently entered Virginia from its home base of Washington, DC and is expected to continue growth in Virginia. Another breakfast and lunch concept, First Watch, is also expanding the region. Stone’s Cove, a specialty restaurant and bar concept, is another chain that is also growing in the Mid-Atlantic. My take is that retailers want to grow in the region, but the supply of space isn’t keeping up with the demand.

The developers that I spoke to with new construction projects in the immediate Washington DC area are happy and they’re seeing momentum and plan to actually deliver space to tenants by 2014 and 2015. Landlords that have existing space in the hot spots in DC or the affluent pockets in the suburbs reported that they are mostly fully-leased and aren’t afraid to ask for astronomical rents. Asking rents in the $30 to $45 psf range for the more desirable retail sites in the Mid-Atlantic were frequently mentioned in my conversations with landlords. I also spoke to owners of traditional strip centers and smaller community or convenience centers in the secondary and tertiary markets, and they are singing the blues. The folks that I talked to that work the Baltimore market complained that every major retail chain is already there and about the difficulty of finding new blood to bring to the market. The southern region of Virginia was frequently mentioned as an area where landlords are having trouble attracting tenants. I noticed that the people leasing new construction projects had a much better outlook on the market, where as the landlords that had B or C shopping centers were not so optimistic. Most of the new development projects that I saw were mixed-use with a residential component and a supermarket anchor.

I also talked to probably half a dozen shopping center owners that have balloon payments coming due this year that they can’t make and they are worried that they can’t sell their properties before the loans come due. On the investment side, I talked to twenty or so active buyers and none of them had the Mid-Atlantic on their radar screen if they didn’t already own centers in the region. I asked them why they wouldn’t entertain buying in the Mid-Atlantic and the reasons were that the market is too susceptible to fluctuations due to closing military bases or military cuts. Also, I heard a number of times that buyers were having trouble getting lenders to make acquisition loans for centers near military installations. Another item brought up frequently was the additional cost and worry for terrorism insurance policies. Overall, I didn’t encounter much enthusiasm about making acquisitions in the Mid-Atlantic region.

This issue has some great leads and a feature on Streetsense, a Mid-Atlantic-based brokerage company that represents tenants and landlords in the market. The company also has several mixed-use projects in its development pipeline. I’ve also noticed in the past few months that national chains are becoming more confident and their real estate departments are more worried about finding new locations than they are about rent reductions, relocations and renegotiating renewals. In this issue, Claire’s announces its plans to open 50 stores nationwide by the end of next year; Sally Beauty is also on an expansion push, as are Anytime Fitness and Red Wing Shoe. These are all positive indicators. I have to wrap it up. Make sure you stop by and see us the show, we’re at Booth 300. Also, let our editors know about your recent deals and new assignments. If you have some news to share about your deals, just email me at ann@dealmakers.net and I’ll make sure it gets to the right person. I hope you find some great leads in this issue and thanks for reading.