ATLANTA (July 29, 2013) – When it comes to regaining its
health, the retail sector may have lagged behind its commercial real estate cousins.
But that is changing. In fact, with just less than $10 billion of retail
property investment sales in the first quarter of 2013, it would appear the
sector is well on its way to recovery.
 |
| Michael Bull |
That was the consensus of a panel of experts on the most
recent episode of the “Commercial Real Estate Show” radio program, hosted by Michael
Bull of Bull Realty.
Home improvement stores, auto retailers and fast-casual
restaurants are paving the way for retail’s recovery.
“One example is that a couple of weeks ago Noodles &
Company went public, and they had some of the best returns from their public
offering of any company that went public in the last 12 years,” said John
Neville, partner at Arnall Golden Gregory. “That’s a great snapshot of the
market’s demand for that type of fast-casual restaurant.”
 |
| Jonathan L. Neville |
One of the strongest parts of retail’s recovery has been in
the investment sales arena. In fact, Dan Fasulo, managing director at Real
Capital Analytics, said sales of strip centers are up 30 percent on a
year-over-year basis.
“A couple of years
ago, it was the institutional quality strip centers that were changing hands
and seeing the value increases,” he added. “Now the market is starting to
spread out to all [retail] properties.”
PricewaterhouseCooper’s (PwC) first-quarter survey indicated
that retail cap rates, on a national basis, are hovering between 6 percent and
7 percent, said Mitch Roschelle, a partner at the firm and the leader of
its U.S. Real Estate Advisory Practice.
 |
| Dan Fasulo |
Regional malls have the lowest cap rates at around 6.5
percent, and strip centers have the highest at around 6.95 percent, while power
centers fall somewhere in the middle. Looking ahead, the panel expects cap
rates to continue to compress.
Distressed assets may still be desirable in some sectors,
but troubled retail properties have mostly been resolved through a sale to a
third party or a recapitalization. “Anyone that’s still waiting for this wave
[of distressed properties] to come is going to be waiting an awfully long
time,” said Fasulo.
 |
| Mitch Roschelle |
Foreign investors have exhibited a hearty appetite forretail
properties in a variety of markets throughout the United States, guests added.
“[Foreign investors] are very interested in retail because historically retail
has been a fairly elastic way to invest in real estate and enjoy economic
growth at the same time,” Roschelle said.
Secondary markets - including Atlanta, Phoenix, Minneapolis
and Denver, as well as parts of Florida and Texas – are experiencing big
increases in retail investment sales, Fasulo noted. Dallas has been one of the
big standout markets, said Roschelle.
For a complete
copy of the company’s news release, please contact:
Stephen Ursery
The Wilbert Group
404.405.2354
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