By Western Real Estate Business, Thursday, August 16, 2012

LOS ANGELES — BRE Properties has broken ground on a $105 million, mixed-use project located at the intersection of Wilshire Boulevard and La Brea Avenue in Los Angeles’ Miracle Mile neighborhood. The 3.38-acre site comprises an entire city block  previously occupied by an abandoned bank that was later converted into a Korean church. The city’s new planning policy allows developers to replace obsolete buildings with higher density, urban infill projects.

This new 800,000-square-foot project will contain 480 residential units atop 44,000 square feet of retail space. It is scheduled for completion in April 2014. Bernards is building the project, which TCA Architects designed to achieve LEED Silver certification.

By BisNow, July 31, 2012

Apple is under construction on a three-story, 17.5k SF store on the Third Street Promenade in Santa Monica, which eclipses its existing 6,000 SF store on the Promenade. The computer giant’s landlord is Nakash Holdings, which just purchased the land and building for a reported price just under $60M.

On Friday, we spoke with Colliers International’s Steve Algermissen, who repped sellers Blatteis & Schnur and ASB Capital Management along with Cushman & Wakefield’s Kazuko Morgan. He says part of the property’s appeal to Apple was the location close to the Santa Monica Place mall. The existing Apple store will be closed when the new one opens by year’s end. The site (1415 Third Street Promenade) formerly was occupied by a 30k SF Borders bookstore, which has been vacant for several years. And btw—Steve sold that property to the current sellers for just over $26M.

By SCT Week, June 9, 2012

Retailers expect recovery by 2014: Survey
A majority of the roughly 100 retail respondents to a KPMG survey in April said they do not expect the U.S. economy will improve significantly until 2014 or later. They also said that they would hold cash reserves rather than use them for expansion. Some 77 percent of these executives say their companies have significant cash levels on the balance sheet — up from 72 percent who said so in last year’s survey — and 56 percent say cash positions have increased since last year. Further, 64 percent say revenues are up year on year (versus 47 percent who said so in 2011), and 52 percent say they have added workers. Some 22 percent report that head count has returned to prerecession levels, versus 18 percent who said this last year. “The retail sector has experienced some positive momentum in the past year, but executive leaders aren’t about to throw caution to the wind,” said Mark Larson, KPMG’s global retail leader, in a prepared statement.

Though some 50 percent said they plan to add workers over the next year, the increases are to be modest and, consistent with last year’s survey, one in five respondents said they do not expect their company’s head count to ever return to prerecession levels.

While waiting for the recovery to take hold, 58 percent of respondents said they plan to boost capital spending over the next year. The highest-priority investment area is information technology, including data analytics and digital marketing channels; some 51 percent cited this.

 By SCT Week, June 9, 2012

$100 million buys Starbucks new growth brand
Starbucks announced that it will pay $100 million to acquire Bay Bread, a San Francisco–based chain of French bakeries. Bay Bread operates 19 La Boulange units in the Bay Area and supplies its bread, croissants and pastries to high-end hotels and restaurants. Starbucks will hire the company’s founder, baker Pascal Rigo, who opened the first La Boulange in 1999 in San Francisco, to continue guiding the brand and developing La Boulange foods.

“This is an investment in our core business,” said Starbucks CEO Howard Schultz in a prepared statement. “After more than 40 years, we will be able to say that we are bakers too. In La Boulange bakery and Pascal, we’ve found a company and a culinary artist who share our passion for creating premium products, reinventing and elevating an entire product category, and delivering the best customer experience.”

In recent years Starbucks has enhanced its food offerings based on customer feedback. Changes include avoiding artificial ingredients where possible and offering smaller portions. Food, which now accounts for $1.5 billion in revenues at the U.S. company-operated shops, has grown by double digits in each of the past two fiscal years, Schultz says. Earlier this year the company bought Evolution Fresh, a maker of juice products, for $30 million.

By SCTWeek, May 25, 2012

Retailers expanding despite constrained development, RECon attendees say

Lingering concerns about the economy notwithstanding, retailers that attended RECon demonstrates a mood to grow. Last year’s store closings were down 27 percent from the year before, to just 4,000, according to ICSC Research. Further, even when stores do close, other stores are lined up to take the space. SCT talked to retailers, developers and brokers on the RECon show floor, and our video report is available here.

By Western Real Estate Business, May 24, 2012


LAS VEGAS — The Hispanic market is experiencing tremendous growth, according to participants in Tuesday’s Hispanic Markets panel during RECon 2012, sponsored by the International Council of Shopping Centers. Most of this activity is centered in California, the Southwest and New York.

“We have tremendous growth in the Hispanic market,” said Robert Ayoub, president of Mimco and panel moderator. “We’ve seen some significant growth in household income in Hispanic markets, and [we know] Hispanic households have more shopping trips per week and spend more dollars per trip.”

According to the 2010 Census, about 50.5 million Hispanics reside in the U.S., making them the largest minority population. This figure is up from 35.3 million in 2000. Panelists noted that capturing this market, which accounts for 16 percent of the country’s total population, can be challenging but not impossible. Becoming familiar with the culture and its values was of utmost importance, however.

In general, panelists noted Hispanics tend to be more family-oriented, put society above themselves and are more likely to become entrepreneurs than other minority cultures. Jessica Herrera, who works for the City of El Paso, Texas, also explained that Hispanics tend to have high disposable incomes because many households include grandparents and teenage children who work. Jeff Monge, a principal at Monge Capital Group, believed it was these children and grandchildren who retailers will target in the years to come.

“Hispanics are diversified into first generation and second and third generation,” he said. “National retailers are focusing on second-an-third generation Hispanic youth. That’s the next big explosion.”

Pet supply, party supply and discount retailers like Ross Dress For Less, Payless, T.J. Maxx and Dollar Stores were mentioned as popular co-tenants for retail centers that service large Hispanic populations. Herrera also pointed out that future generations will continue to show a high interest in American goods and retailers.

“As Hispanics start to gain even more income, they’re going to start to deviate from the mercado concept and become more acculturated,” she said. “They’re going to start shopping at retailers that are more Americanized.”

As the focus shifts from the immigrant population, panelists believed items like electronics will gain ground, while mercados may lose a little steam but will not disappear entirely.

“Mercados are a great idea, and several groups out there do them and do them extremely well, but they’re very difficult to finance,” Monge said. “Finding simple ways to help clients make money in our industry is about balancing credit — balancing national credit tenants and embracing opportunities and high-volume local retailers who know their U.S. Hispanic customers very well.”

While these general trends may provide valuable insight into capturing this demographic, panelists noted it’s important to remember that, at the end of the day, they’re shoppers just like everyone else. “Hispanics are just regular, good customers,” Ayoub said. “Some have more money, some have less money, but they’re just normal customers.”

By Western Business Real Estate, May 22, 2012


LAS VEGAS — Many retailers debuted and detailed new concepts during ICSC’s Global Retail Runway on Monday. Below is a summary of the strategies some of the country’s most well-known and rapidly expanding retailers are working on to drive customers back into stores. Some concepts have already been executed, while others are in the planning or pre-planning stages.

Dunkin’ Donuts: testing out a free-standing drive-thru prototype; renovating existing stores to make them “lighter, brighter and more contemporary;” expanding its reach to between 1,100 square feet and 2,500 square feet; combining some stores with Baskin-Robbins

Chipotle: expanding into airports

European Wax Center: developing a line of at-home products that complement the salon experience

Famous Footwear: designing new store concepts that can adapt to “strip centers, lifestyle centers, free-standing buildings, malls and outlet centers;” engaging with its customers via email

Hobby Lobby: focusing on West Coast expansion, particularly in California; maintaining its own construction department, which allows the company to open a new ground-up store in 5 months or retrofit an existing store in 4 months

Shoe Show: concentrating on the child’s in-store experience; integrating carousels into stores; hiring associates who work especially with children

Starbucks: making all stores LEED certified; introducing digital/multi-media/theatrical experiences into stores; developing everything from 4,000-square-foot, high-profile flagship stores to 400-square-foot, drive-thru and walk-up only locations; re-evaluating store designs based on “local relevance”

By Western Business Real Estate, May 22, 2012


LAS VEGAS — While big box real estate certainly hasn’t vanished entirely, it’s clear some of its biggest players are employing a variety of different “out of the box” strategies to get deals done. With the popularity of online retailers and a fickle consumer base that can vary by region or even city, a number of companies are turning their attention away from the mega spaces to provide more personalized, intimate shopping experiences.

“We are facing unprecedented change in the retail landscape,” said Mike LaFerle, vice president of real estate construction for Home Depot and a panelist at Monday’s “Thinking Outside the Box” session at ICSC. “Customers buy when they want, and they want it quickly and they want to be guaranteed they’re getting the best product and the best pricing.”

This sentiment further bolsters the online arena, where consumers can easily compare prices and purchase products without leaving home. Panelists, including LaFerle, Carl Muller, vice president of real estate and design of Wal-Mart Stores, and Marci Troutman, founder and CEO of SiteMinis, were keenly aware the physical landscape was losing traction to companies that dealt primarily in the virtual arena.

“Five years ago, would you have ever have thought an online retailer would be one of your biggest competitors?” Troutman asked after LaFerle confirmed this was the case for Home Depot. Muller added that retailers must be flexible to remain competitive in today’s market. He pointed to Walmart’s concept stores, including Neighborhood Markets and Walmart Express, as examples. The company has opened 200 Neighborhood Markets so far nationwide, and aims to open 300 more during the next 2 to 3 years. It is currently operating a few Walmart Express test stores in select markets.

“Our strength is delivering 180,000-square-foot super center stores,” he said. “Now we’re going into urban and rural communities and it’s challenging to get those big trucks and deliveries in place.”

Logistics isn’t the only challenge retailers face when penetrating these markets, as John Clifford, a principal at Perkins Eastman, noted. “We have come full circle — our suburbs are over saturated,” he said. “The opportunity markets are now in cities, but it’s hard to go into a city center because these stores must operate almost as individual businesses. A store in Manhattan is going to be very different than a store in Queens.”

Clifford’s point was not lost on the panelists, who agreed bricks-and-mortar stores need to focus on the customer experience. This sometimes includes adapting a store’s traditional format to fit a city’s demographics.

Edward Hogan, national director of retail leasing for Brookfield Office Properties, knows this well. His company recently partnered with Target to launch one of the first five City Targets in the recently redeveloped Figat7th, a 330,000-square-foot shopping center in Downtown Los Angeles. Hogan noted Target typically utilizes 150,000 square feet. However, in order to penetrate this urban area the two companies worked together to successfully integrate a smaller 90,000-square-foot format into the open-air dining and retail center. This included ripping out some older space to accommodate the retailer’s distribution needs.

“What they saw in our project was that we were trying to create something unique to Los Angeles, something unique to the urban experience,” he said. “Retailers are getting smarter and smarter as they figure out how they can achieve the same success in less space.” The new City Target will open in October. It will co-anchor Figat7th along with a sporting goods store that is expected to occupy 28,000 square feet.

The panel was moderated by Kate Peterson, ICSC Southern Division Retail Chair and senior real estate manager at Home Depot, and Andrew T. Stein, a principal at Clark Street Development.