Heartland Real Estate Business

FEB 2018

Heartland Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Midwest.

Issue link: https://heartlandrealestatebusiness.epubxp.com/i/935979

Contents of this Issue


Page 11 of 32

May 2017 • Volume 13, Issue 5 A HUB OF OPPORTUNITY Devco is seeking By Jaime Lackey T the project to fruition. below each of the buildings. private economic development ects in the New Brunswick area. the five blocks surrounding the Brunswick train station. Renewal in Rochester: Costco, RE Anchor CityGate Project page 4 It's a NNNew Market page 31 CMBS The Outlook for Medical Office page 34 INSIDE THIS ISSUE REB recently gathered four of the West's top retail experts to talk shop on both a macro- and micro-level. 2016. see SHOPPING, page 67 One La Jolla offers modern workspaces with 10 feet of floor-to-ceiling glass for maximum daylight. Nevada turns its focus to healthcare real estate. page 50 New Mexico Market Highlight page 38 page 52 Data Center Update Colorado Market Highlight page 40 INSIDE THIS ISSUE May 2017 • Volume 14, Issue 9 The Grocery List: What's Impacting the Market in Texas G rocery-anchored retail centers continue to be a popular and growing commercial real estate sector in Texas. Competition is fierce for grocery chains, which make strong retail an- chors because they draw consistent traffic as customers frequently visit the same store several times per week. "The grocery-anchored shopping center continues to be a hot com- munity for private investors as well as institutional owners," says Adam Gottschalk, vice president of Dallas- based brokerage firm Vitorino Group. "These are very stable developments, and even with the increasing presence of online retail, grocery stores are a re- tail asset customers visit because they want to touch and feel the products before making a purchase." alone. others, are vying to gain a larger lower-priced stores will "offer May 2016 • Volume 12, Issue 3 WHOLE FOODS HEATS UP GROCERY SECTOR Whole Foods brings 365 brand into growing sector By Haisten Willis Strong Demand, New Developments in Store for Fort Worth page 32 Net Lease Investment Sales Activity Maintains Brisk Pace page 38 page 34 INSIDE THIS ISSUE see GROCERY, pag Kimco's 500,000-square-foot Grand Parkway Marketplace is under construction at the intersection of Grand Parkway and Kuykendahl Road. See page 42 to learn mor C ertain that in - terest rates are on the rise, real estate profes- sionals are mulling the end of cap rate compression in the retail net lease mar- ket and an emerg- ing bid-ask gulf between buyers and sellers. Couple these changes with no clear view of tax reform or how other fiscal and regula- election. terest. "There are still buyers in the - - - May 2017 • Volume 15, Issue 9 Outlets of Des Moines Is On Track to Open in October page 30 of Speculative Construction page see NET LEASE pag with upward pressure on cap rates. By Joe Gose Jonathan Hipp Calkain Cos. K A N S A S & M I S S O U R I www.REBusinessOnline.com Heartland Real Estate Business • February 2018 • 11 HAVE YOU SCHEDULED YOUR 2018 ADVERTISING? For more information, contact Scott France President/Co-Publisher (404) 832-8262 scott@francemediainc.com W hat's old is new again in Wa- tertown, Massachusetts, at the edge of Boston and Cam- bridge. The Arsenal Mall, an enclosed cen- ter built in the 1980s, absorbed build- ings constructed in 1816 that had been used by the U.S. Army to assemble tanks and cannons. The "de-malling" redevelopment project currently un - derway at the site will demolish the added structures to reveal the mason- ry and steelwork of the original build - ings and add new components to the site to create a neighborhood with a S ometimes you can't see the for- est for the trees. In Lower Man - hattan's Seaport District, New Yorkers sometimes can't see New York for the tourists. The Howard Hughes Corporation is opening up the views and redeveloping several blocks along the East River to create a retail and en- tertainment destination that appeals to the growing population in Lower Manhattan and residents of the Great- er New York metro, as well as tourists that love the skyline views in the area. "The Seaport has a storied his- tory and offers dramatic views of the www.REBusinessOnline.com A SETTING FOR SUCCESS The revitalization of the Seaport District will help New Yorkers reclaim the waterfront with 400,000 square feet of retail and entertainment experiences. By Jaime Lackey see ARSENAL YARDS page 26 PEELING BACK LAYERS OF A MALL A former mall near Boston will give way to Arsenal Yards, a mixed-use neighborhood with sections that have distinct, eclectic personalities. By Jaime Lackey see SEAPORT DISTRICT page 29 development partners for a transit-oriented projec 10 years in the making The Wilder Companies and Boylston Properties are redeveloping two former U.S. Army buildings built in 1816 as part of a mixed-use project in Watertown, Massachusetts. The historic buildings will house retail, a cinema, and entertainment venues. The Pier 17 building at the Seaport District in Lower Manhattan will feature a versatile 1.5-acre rooftop event space, with views of the Brooklyn Bridge and the New York skyline serving as a backdrop. here aren't many opportunit develop 1.7 million square fe space in an urban center ne a train station. New Brunswick D opment Corporation (Devco) has such an opportunity in New Je and is seeking partners to help b The Hub @ New Brunswick St is master planned for four buildin though Devco has the flexibility t three buildings if there is interest office tenants in larger floorplat 50,000 square feet. The project wi clude more than 1 million square of office space; up to 150,000 sq feet of retail, restaurant and enter ment space; probably 200 to 300 dential units; an above-ground p ing garage; and subgrade par Devco is a private, nonprofit re tate development organization cre in the mid-1970s to facilitate pu Ten years ago, the organization gan working with the city on its C Vision plan. That stands for "C mercial, Office, Residential and E tainment" and the plan encompa a three-phase program to revit The first phase — Gateway Tr see THE HUB pag page Calculating Reta C ommercial real estate firms are on the move throughout the West, but no mar- ket is more active than San Diego. Some of the industry's biggest players have decided to upgrade their digs in America's Finest City in pursuit of happier employees and office prototypes they can be proud of. Much of this motivation stems from the rise of Millennials in the workforce, the large amount of tech- and creative-focused firms in the area and surveys like CBRE's an- nual Americas Occupier Survey, which touts the importance of an effective workplace experience. The study surveyed 176 American executives, with 67 percent noting employee sat- isfaction was the key measure of the success of their workplace strategy programs. Cost per square foot came in second, with occupancy cost per employee and target cost reduction rounding out the list. Additionally, 55 percent of respondents said talent at- traction or retention was among the top three drivers of their organizations' workplace strategy, followed by promoting collaboration and operating expense savings. W SOUTHERN CALIFORNIA STRIP CENTERS: THE SHINING LIGHT IN THE WORLD OF RETAIL By John Read, Vice President, National Retail Partners – West Team, CBRE With the first quarter of 2017 behind us and an ongoing bumpy ride across the larger retail tenant sector, many investors are curi- ous which segment of the retail investment property market is seeing the strongest buy activity and how pricing now compares The simple answer is pricing for most we located Southern California retail inve ment properties, including single-tenant n leased (STNL) and grocery-anchored sho ping centers, remains relatively stable. Hig quality unanchored centers, multi-tenan retail strip centers and pads in strong ret locations continue to enjoy near-record pr ing. The same is true for projects with hi credit tenancy and those with demonstrat BeachWalk is a coastal center steps from the sand in the San Diego submarket of Solana Beach. It sold for $33.25 million in the mid-to-high 5 percent cap rate range. SAN DIEGO CRE FIRMS EMBRACE THE CREATIVE OFFICE CONCEPT The La Jolla and UTC areas of San Diego have gained some innovative office products as of late – and some of their biggest fans are the local branches of globally recognized commercial real estate firm By Nellie Day see SAN DIEGO, page 70 SHOPPING FOR SUCCESS The ever-changing nature of today's retail environment means landlords and investors are constantly searching for the next solution and the latest, greatest trends. By Nellie Day www.REBusinessOnline.com Population growth in the Lone Star State has fueled the growth of neigh borhood and community centers chored by grocery stores. More than 410,000 new residents moved into state's four major metro areas in Several competitors, including Kroger, Walmart, H-E-B, Sprouts and ket share in the Lone Star State. One company, Austin-based Whole Foods, is launching a new brand this month called 365 by Whole Foods Market. According to the company, the venience and everyday low prices on natural and organic products that A trio of Lone Star State com- panies are redefining what it means to go bowling, hit the driving range or head to a movie — and they're seeing success on the com- mercial real estate front in the process. Dallas-based Main Event Entertain- ment and Topgolf, along with Austin- based Alamo Drafthouse Cinema, all bring a renewed focus on the custom- er, high-quality food and an overall commitment to a first-class experience that has led to success. Eat. Bowl. Play. Founded in 1998, Main Event En- tertainment's most basic element is a bowling alley, but locations also offer a full bar, laser tag, arcade games, rock climbing, billiards, an obstacle course and more. Its motto is "Eat. Bowl. Play." Main Event is a subsidiary of Ar- dent Leisure, an Australian leisure company that owns and operates a portfolio of more than 100 assets. Ar- dent is publicly listed on the Austra- lian stock exchange. The company recently opened its 25th location in Louisville, Ky., with new stores planned in Cincinnati and Albuquerque, N.M. By mid-2017, Main Event plans to open eight ad- ditional centers in Florida, Arkansas, Missouri, Georgia, Louisiana, Arizo- na, Tennessee and Illinois. www.REBusinessOnline.com TEXAS-BASED COMPANIES DRIVING RETAIL TRENDS Main Event Entertainment, Topgolf and Alamo Drafthouse Cinema excel in experiential retail. By Haisten Willis see RETAILERS, page 44 Topgolf operates nine locations in Texas, including this one in the Houston suburb of Webster. The company's biggest demographic is males aged 18-34. TARGET TO ANCHOR KIMCO'S GRAND PARKWAY MARKETPLACE IN HOUSTON tory polices may affect the econom and the unknowns are prolonging choppy market that began before Twelve to 18 months ago, net le assets often fetched multiple of says Jonathan Hipp, CEO of Herndon, Va.-based net-lease brokerage Calka Cos. Today there's generally les ket, but there's not the same veloc explains Hipp, whose team rece represented an Applebee's re T oday's grocers are catering to the urban shopper and enhancing customer experience to stay com- petitive in the marketplace. Enter the "grocerant," a hybrid of the grocery store and restaurant, where customers can pick up their groceries and stay for dinner too. Across the Midwest, the likes of Mariano's and Whole Foods Market have begun to anchor mixed-use developments. Whole Foods Market has become known for its salad bar and prepared foods at traditional locations. The re- tailer launched an additional chain of stores called 365 by Whole Foods to compete on a lower price level. Shop pers can use iPads to order sandwich es, pizza and rice bowls to go, accord ing to JLL's 2017 Grocer Tracker retail research report, which emphasizes that convenience is leading grocery trends. Mayfair Collection, a shopping cen- ter developed by HSA Commercial in Wauwatosa, Wis., is now home to a Whole Foods that opened last year. The 47,563-square-foot store marked the second location for the Austin, www.REBusinessOnline.com RISE OF 'GROCERANTS' Changing shopper demographics, urban dwellers drive demand for prepared foods across Midwest. By Kristin Hiller LOCAL RETAILING TAKES OFF AT AIRPORTS Authentic design, restaurant offerings give travelers a 'sense of place.' By Kristin Hiller A irports by and large are jump- ing on the "shop local" band- wagon, offering more and more locally based dining options. Airports that infuse the local character into their design and restaurant and retail offerings will likely entice travelers to stop and spend their dollars. Chicago Midway International Air- port is set to undergo a major reno- vation of its concessions and food of- ferings. In February, the city council approved an ordinance authorizing a concession redevelopment and man - agement lease agreement with Mid- way Partnership LLC to redevelop, manage and operate the airport's con - cessions program. The partnership is comprised of Vantage Airport Group, SSP America and Hudson Group. Tech Jobs, Population Surge Give Indianapolis Office Market Big Lift page 1 Toledo's Industrial Market Is in Ne see GROCERY page 22 see AIRPORTS page 29 A 200-foot-wide Civic Plaza at the Indianapolis International Airport is where food, retail, art and events come together. IT'S A NNNEW MARKET The net lease sector senses changes, beginning T aking in a professional baseball game is an experience unto it- self, and at SunTrust Park, the new home of the Atlanta Braves, fans are being treated to all the bells and whistles that come with a new $622 million ballpark. But since before the announcement was made in late 2013 that the team wasn't extending its 20-year lease at its former ballpark Turner Field, the Braves organization expressed the desire for its new home to have life beyond game day. "The Braves are always thinking about how to make this a place to vis- it 365 days a year, not just 81," says Dotan Zuckerman, vice president of leasing at Atlanta-based Fuqua De- velopment, referring to the amount of homes games in a baseball season. The Braves announced in July 2014 that Fuqua Development would be its partner for the retail portion of a mixed-use village surrounding Sun- Trust Park, later named The Battery Atlanta. Situated near the intersection of In- terstates 75 and 285 in Cobb County, the 1.5-million-square-foot devel - opment features three apartment communities, an Omni hotel, the Coca-Cola Roxy Theatre, Comcast's 10-story office building known as One Ballpark Center and an assort- ment of retail, dining and entertain- ment tenants. Jeff Fuqua, principal of Fuqua Development, says the project is unique, even among other mixed- use villages around the country that surround sports stadiums. "We looked at all the similar villag- es surrounding ballparks and none were like this," says Fuqua. "This is a one-of-a-kind project in the country, www.REBusinessOnline.com May 2017 • Volume 18, Issue 2 Fuqua Development gives shoppers, diners cause to visit Battery Atlanta beyond Braves games. By John Nelson Avalon's second phase doubles the square footage, triples the density pages 32-33 pages 36-37 pages 22-27 Market Highlights: Atlanta and Miami Q&A: WRS reimagines Underground Atlanta page 38 INSIDE THIS ISSUE see BATTERY, page 40 Brewery design: from production to consumption BIG LEAGUE PROJECT W hen one thinks of the larg- est urban redevelopment projects in the country, Balti- more probably isn't the first city that comes to mind, but Port Covington, a redevelopment of 266 acres of unde- rutilized industrial waterfront, is just that. The Baltimore City Council re- cently authorized $660 million in Tax Increment Financing (TIF) for public The city's job and infrastructure growth spell success for the retail and restaurant sectors. By Brian A. Lee BUSINESSES HAVING A BALL IN BALTIMORE see BALTIMORE, page 46 A ldi, the German discount gro- cery store chain, is one of the fastest growing retailers in the country with more than 1,600 stores in 35 states that serve over 40 million customers each month. The grocer is currently underway on a $3 billion campaign to bring its total U.S. store count to 2,000 by the end of 2018. Aldi is specifically targeting a large swath of the Southeast in its expan- sion plan, a region that the company is very familiar with. "We've been in the U.S. for more than 40 years, and our stores are fa- miliar to people who reside in our Why it's an ideal time for Aldi's $3 billion expansion and for its compatriot Lidl to enter the country. By John Nelson DISCOUNT DUO see GROCERS, page 43 From left, Jeff Fuqua and Dotan Zuckerman of Fuqua Development cultivated the tenant mix of Battery Atlanta using experiential retailers and chef-driven restaurant concepts. Aldi is currently on a $3 billion campaign to bring its total store count in the U.S. to 2,000 by the end of 2018, with many locations opening across the Southeast. Pick Your Region or Advertise Nationally www.francemediainc.com Don't miss your opportunity to appear in front of developers/owners, brokers, investors, lenders and corporate end-users in commercial real estate. Package rates available. CNL HEALTHCARE ACQUIRES 38,496 SF MEDICAL OFFICE BUILDING FOR $14 MILLION OVERLAND PARK, KAN. — CNL Healthcare Properties II has acquired a 38,496-square-foot medical office building in Overland Park for $14 mil- lion. Constructed in 2007, the build- ing is located at 5525 W. 199th St. on the campus of HCA Menorah Medi- cal Center. The two-story property is fully leased to five tenants, with an ambulatory surgical center anchoring the property. Evan Kovac, Ben Appel, Anthony Frogameni, Andrew Milne, MaĴ DiCesare and Sean Fogarty of HFF represented the undisclosed sell- er. The team also procured the buyer, which is a non-traded REIT sponsored by CNL Financial Group. ST. LOUIS CARDINALS, CORDISH COS. BREAK GROUND ON PHASE II OF BALLPARK VILLAGE ST. LOUIS — The St. Louis Cardi- nals and The Cordish Cos. have bro- ken ground on the $260 million sec- ond phase of Ballpark Village. The 700,000-square-foot mixed-use expan- sion project will complete a full build- out of Clark Street. New buildings will be constructed on both the east and west sides of the existing Phase I development. A new street, running from 8th to Broadway streets, will be called Cardinal Way. On the east end of Cardinal Way will be a 29-story luxury residential tower called One Cardinal Way. On the west end will be a Class A office building, anchored by PricewaterhouseCoopers, and a convention hotel, Live! by Loews-St. Louis. In addition, a three-story re- tail pavilion just north of the existing Busch II Infield and event plaza will connect everything together. This glass pavilion will be anchored by a 31,000-square-foot Onelife Fitness. Slated to begin opening in 2019, the expansion is expected to be complet- ed by 2020. The first phase of Ballpark Village opened in 2014, creating more than 1,000 construction jobs and 1,700 new permanent jobs. DRAPER AND KRAMER OPENS SECOND PHASE OF APARTMENT PROPERTY RICHMOND HEIGHTS, MO. — Drap- er and Kramer Inc. has opened The Flats at EVO in the St. Louis suburb of Richmond Heights. The collection of 46 townhome-inspired rental apart- ments is the second phase of EVO, a multifamily property that also in- cludes an adjacent four-story, 281-unit apartment complex that opened in 2016. The 46 units include one-, two- and three-bedroom floor plans rang- ing from 764 to 1,465 square feet. Rents range from $1,375 to $2,570. Currently, renters will receive one month of free rent when signing a 13-month lease. Amenities at the property include an outdoor pool deck with grills, dog spa, fitness room, yoga studio and business center. MCCARTHY TO RENOVATE SCIENCE BUILDING AT SAINT LOUIS UNIVERSITY ST. LOUIS — McCarthy Building Cos. Inc. has broken ground on a $25 mil- lion renovation of Macelwane Hall, a four-story science building on the campus of Saint Louis University. The 82,770-square-foot project includes the complete renovation of all four floors of the facility after a May 2017 fire and subsequent water damage resulted in the temporary closure of the original building. The facility will include laboratories, classrooms and office space. Completion is slated for December 2018. The general contrac- tor also oversaw the conversion of a former charter elementary school into an interim science building to accommodate students, faculty and staff while Macelwane Hall remained closed. Hastings + ChiveĴa is serving as architect on the Macelwane Hall renovation. Other project team mem- bers include 8760 Engineering (MEP engineer), CR2 Engineering (systems engineer), Alper Audi (structural en- gineer), Rock Hill Mechanical Corp. (mechanical design-build contractor), Guarantee Electric (electrical design- build contractor) and Gateway Fire Protection Systems (fire protection design-build contractor).

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