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The Retail Connection Taps Weitzman/Cencor Execs to Open Austin Office

2012-04-04 12:00:00

The Retail Connection Taps Weitzman/Cencor Execs to Open Austin Office

By Christine Perez

April 4th, 2012 2:07pm

The Retail Connection today opened an office in Austin, led by former Weitzman/Cencor execs Lance Morris and Carla Neel. Its the fourth Texas location for the Dallas-based firm, which offers a full range of brokerage, advisory, and investment service and focuses on retail real estate and retailers. Steve Lieberman, CEO, said the firm has long been active in the Austin market. The hiring of Morris and Neel allows the firm to extend the depth of its platform throughout Austin and Central Texas, he said. Lance Morris Carla Neel Lance Morris joins the firm from The Weitzman Group, where he served as president and director of brokerage services. A 28-year industry veteran, he’s consistently a market leader and last year inked the city’s top retail sale. In his new role, he’ll oversee and expand operations for The Retail Connection. Neel previously served as vice president of asset and property management in the Austin office of Cencor Realty Services, a Weitzman Group affiliate. Over the course of 10 years, she has been responsible for about 3 million square feet of retail space. She aims to help The Retail Connection grow its institutional services platform. The Retail Connection was formed in 2003. It represents 225 retail and restaurant chains and has more than 25 million square feet of listings, including 2.5 million square feet it has under ownership.

Danger, Will Robinson

2012-02-27 12:00:00

How many of you remember a television series back in the 1960’s called “Lost in Space”? For those of you old enough to remember, in the series there was a young boy named Will Robinson. And there was a robot who acted as a guardian or protector of young Will, who would regularly come across dangers or threats to himself. The robot would yell out “Danger Will Robinson” as Will approached these threats. Why do I raise this? Because as we enter 2012, the same warning is well advised as it pertains to our business. Granted, our economy has gotten better with positive growth now for each of the last 10 quarters. Interest rates are at historic lows and will remain so for a while, maybe even through 2014. There appears to be plenty of capital available for investment and the real estate markets are rebounding with opportunities filling the pipeline. Yet, there are still multiple threats to the completion of our economic rebound. As I see it, there are three obstacles to a sustainable and long term recovery: jobs, housing and consumer spending. On the job front, the unemployment rate is at 8.3%, down from 10% and at its lowest level in 3 years. However, scratch beneath the surface and you have not only the unemployed (people looking for jobs currently) but also the under-employed (people who need full time employment but have settled for part time work) and discouraged workers (people who have been unemployed for so long they have given up looking). These numbers total over 16% of all Americans. Labor experts believe it will take until 2018 or so before we get back to acceptable unemployment rates and there is no fast fix. The housing market is also far from stable. The amount of wealth lost in the housing bubble was over seven trillion dollars and there is strong evidence that home prices have not yet hit bottom. It appears that finding stability in the housing market will remain a challenge for a while to come. Finally, consumer spending, which usually accounts for 70% of all economic activity, remains stagnant. The average household during the recession of 2007-2009 lost 23% of its net worth, totaling fourteen trillion dollars. While retail sales have recently been up, it will take some time to get the consumer’s mind back on spending at the same rate as pre-recession. So, what does this mean to us? First of all, be thankful that we live in Texas because of our healthy business environment, strong job creation, low taxes and very favorable cost of living. Texas remains the strongest of all states as it pertains to our economic recovery. Dallas and Houston are the top two markets in the country in new job creation. Dallas, Houston, San Antonio and Austin are among the top markets nationally in favorable business environment and economic health. And whether you live in Texas or not, we need to be cognizant of the dangers that are still out there. Not everyone has a robot to protect them.

New Lowest Greenville | Update

2012-02-03 12:00:00

On January 19th, over 75 brokers, retailers, land owners and investors came together to hear the latest on the re-development of the New Lowest Greenville, an area encompassing the commercial properties on Lower Greenville between Belmont and Munger. Family owned, Andres Properties, has been involved in the transformation of these 1920’s era buildings since the early 1960’s and are spearheading the master plan along with other landlords and property owners. These efforts are revitalizing the area for nearby homeowners and creating a dynamic destination for visitors from all over Dallas and abroad. [The corner of Greenville and Ross is only two miles east of the Dallas Arts District.] Property owner, Marc Andres announced the streetscape project is complete and the undesirable bars have closed. All of the old concrete streets sidewalks and head-in parking spaces have been replaced with a more intimate two-lane street, parallel parking, and pedestrian friendly sidewalks. The new Planned Development (PD) requiring Specific Use Permits (SUP) to operate after midnight has proven effective in restoring the Avenue as a neighborhood friendly restaurant and retail entertainment district. Andres pointed out that there is an excess of safe, well lit parking spaces to satisfy the new retailers and restaurants moving in. He jokingly noted, unless of course you are looking for a space on St. Patrick’s Day where the area is celebrating with its annual parade. The Retail Connection is overseeing the leasing strategy for the project. There are more than a dozen second generation restaurant spaces available from 1,500 square feet to 7,500 square feet. Most restaurant spaces have outdoor patios with a select few having roof top patios with breathtaking views of Downtown Dallas. Retail space from 1500 square feet to over 10,000 square feet is also available. A grand effort is under way to program the Avenue and attracting the best in class, distinctive tenant mix to ensure its long term success. Dallas City Councilmembers Angela Hunt and Pauline Medrano, whose districts include Lower Greenville, reiterated that the New Lowest Greenville extreme makeover is a cooperative effort with the city, owners of the retail on the street, the neighborhood, and is a catalyst project for other unique areas around the city. They were excited to review the list of improvements they worked hard to secure and made as a result of the over $1.9 million in funds from the city’s bond program. These included: 1. Removal of head-in parking 2. Traffic calming by narrowing the Avenue from four lanes to two 3. Removing the head-in parking and adding parallel parking creating a sidewalk buffer and convenient on street parking 4. New expansive 10’ sidewalks 5. Unique green patterned brick pavers on all sidewalks 6. Oversized 16’ outdoor patios for each storefront 7. Placement of parkway trees throughout the district 8. Soft unique landscaping restating a softened small town feel 9. Benches with sitting walls spread throughout area encourage walking and resting spots 10. A generous number of antique light fixtures 11. New trash receptacles 12. Numerous bike racks encouraging cycling 13. Green pavers in crosswalk areas 14. Multiple obsolete drive approaches were eliminated and replaced with handicap accessible sidewalks 15. Utility poles to be relocated to the rear of the building later in 2012 Future plans are to expand and continue north to Belmont and south to where Greenville becomes Munger, allowing for the New Lowest Greenville to become a multi-block area with a small town feel. Madison Partners announced that the first Trader Joe’s grocery store in Dallas is being built at the corner of Sears and Greenville, the former Arcadia Theatre location. The planned food trailer park will be reconfigured to accommodate Trader Joe’s by adding a dining area, a covered patio, an open air patio, and a commissary kitchen. Stay tuned for more on the evolutionary changes taking place throughout 2012 at the New Lowest Greenville. www.newlowestgreenville.com

Must Face It

2012-02-02 12:00:00

The internet and business sensation, Facebook, is expected to file for its IPO tomorrow with an estimated $75-100 billion valuation, which will make the eight year old enterprise one of the most valuable companies in the world. Facebook has more than 800 million active users, over half of whom log on to the site every day. Over 1.5 million local businesses have active pages on the site, providing a high traffic, densely populated location for their customers to easily access their products 24/7. As for word of mouth reviews and endorsements, there are more than 2 billion posts liked and commented on every day. The internet and social media have enabled information and ideas to flow freely and their influence on the economy, business world, commerce, and our daily lives is only going to increase. The retail world has certainly been impacted, as price transparency and flash sales are clearly here to stay; and the retailers that are figuring out how to take advantage of such are being well rewarded. E-commerce is now approaching $200 billion in revenue in the US alone, accounting for 9% of total retail sales, up from 5% five years ago and less than 1% a decade ago. By 2014, essentially every mobile phone in the US will be a smartphone connected to the internet. Recognizing such, many leading retailers, such as Bed Bath & Beyond now consider the internet their biggest store. Retailers are finding that their digital and physical strategies are not competitive, but rather complement one other increasing their sales and lowering their costs, as their online and offline strategies become seamless. In fact, 60% of the top 10, and over 60% of the top 25, internet retailers are traditional bricks and mortar chains including Walmart, Apple, Macy’s, JCPenney's, Sears, Best Buy, Costco, Target, Gap and all three of the top office product superstores. The key, as with all sea changes, is to adapt. The real estate industry will clearly be impacted as everything from Google Earth to QR codes make information more abundant, accessible and robust, which will make the inefficient aspects of our business that much more valuable means of differentiating ourselves. Face time with your relationships is certainly a great place to start, as is your capacity to use the rest of your heads-- to listen, observe and think. Change is the new constant and with the rate of change of knowledge, we likely have not even heard of the things that we will be facing and adapting to five years from now.

46,000 Square Feet to be added to Weatherford Ridge Development

2012-01-24 12:00:00

Connected Development Services, the development subsidiary of The Retail Connection, is announcing the addition of 46,000 square feet of new retail development to Weatherford Ridge, located at the Northeast corner of IH 20 and Main Street in Weatherford, Texas. The project is a joint venture between North American Development Group and Connected Development Services the development subsidiary of The Retail Connection, LP.

The shopping center’s final phase will initially deliver the area’s first TJMaxx, a 24,000 square foot store and four additional national and regional retailers. Only 5,000 square feet remains to be leased at this time.

The existing JC Penny and Belk anchored center is the soft goods destination for Parker County, serving the Weatherford market and communities to its West. Originally developed and opened in 2008, the center is presently 300,000 square feet and is 91% leased to a mix of national and regional credit retailers such as Bed Bath & Beyond, Michael’s and Ulta, in addition to more than ten restaurants.

"The center benefits from its wide market reach, I-20 frontage, prime location on the NE corner of I-20 and Main Street, and the recently completed relocation of the I-20 exit ramps to Main Street," said Chad Bradshaw, Vice President of Connected Development Services, and the project’s development partner. “Upon completion, only 5,000 square feet will be available in the to-be-built final phase. In addition, there are a limited number of remaining in-line spaces, a 15,000 square foot box and only four pad sites remaining for sale, lease or build to suit, in the center,” stated Bradshaw.

The construction loan and refinance totaled $28.1MM. Wells Fargo NA is the lender. Ridgemont Commercial Construction will be the general contractor.

Jeremy Zidell, SVP | Brokerage with The Retail Connection, leases the property and NADG manages the property on behalf of the partnership. “Weatherford Ridge is strategically positioned approximately 20 miles west of Fort Worth and enjoys highly regional access catering to a large and growing trade area, said Zidell. “The intersection of I-20 and Main acts as the retail hub in the market, and as a result has been attractive to soft goods and restaurant tenants who are looking to expand into these types of trade areas that have significant populations and fringe major cities,” he further stated.

What Happens to Real Estate Valuations When Interest Rates Begin to Rise?

2012-01-09 12:00:00

by Steve Hefner | President | Connected Acquisitions. The Federal Open Market Committee has recently instituted a new version of Operation Twist, which effectively has them buying more long-term treasuries, which will continue the downward pressure on long-term interest rates. The Fed will continue to buy treasuries and has said that they will do so until 2013. Operation Twist was originally put in play in 1961 under a similar objective to lower rates back then. No meaningful changes in its monetary policy means rates will remain low for the foreseeable future. The obvious reason for doing this today is to keep the slowing U.S. economy from relapsing into recession. Indeed, the FOMC has said that the “pace of economic recovery is likely to be more modest in the near term than had been anticipated.” It restated that it will keep benchmark rates at or near zero for an “extended period,” which really is 2013, according to many on Wall Street. That might be partly because of the upcoming election, but that is a completely different story for another time. So let’s see, if the Fed does stop buying treasuries in 2013, that means two things - economic recovery and job gains. If in 2013 we have those two things, we will clearly be far from recession, double-dip recession or another prolonged stagnant period of no-growth. That’s good news for all of us, but let’s dig deeper. The government has recently bought about 70% of the treasury purchases. China accounts for the remaining 30%. Thank you China! But if the government stops its treasury-buying ponzi scheme (that’s an entirely different discussion), obviously rates will go up, a spike in bond yields will happen (investors demanding a higher return to compensate them for the risks of inflation) and the dollar will depreciate. Not so good for us as it turns out. In my view though, others will step up. Who wouldn’t want to have an ownership in one of the world’s safest investments? However, I doubt if anyone will take the 70% that the fed has been biting off. China’s 30% should continue but I doubt if they will take on more. China has a $3.2 trillion foreign exchange “desk” but it’s unlikely that it would have the firepower to continue to buy at its current pace. Ok, enough of the current economics lesson. If treasuries start to rise in 2013, that means other interest rate benchmarks rise. That further means cap rates rise, doesn’t it? If that is the case, real estate values decrease. Or do they? If you look at any chart comparing historical real estate cap rates and interest rates, the only thing you can say is that the answer is complex. First, increased interest rates in our current economy will most likely reflect improvements in the general economy and in the labor markets particularly. That means that investor’s perceptions about real estate cash flows should improve. That means property income growth should improve, so cap rates shouldn’t rise proportionally to interest rates based on this simple formula. Even if they do, they would tend to offset each other. Thus, at least real estate values wouldn’t free fall from rising interest rates. As an example, let’s say you have $1 million in NOI from an income-producing property. At an 8% cap rate, it is valued today at $12,500,000. Now, if rates increase along with investor/consumer sentiment and cap rates go up 75 basis points, don’t forget that those factors (better economy, consumer sentiment, etc.) will help your NOI, which has now theoretically gone from $1 million to $1.1 million (assume rent bumps, higher market rents and slightly higher occupancy). Cap the new NOI at 8.75% and you would have a higher valued property at $12.57 million. Not such a bad thing for interest rates to go up is it? Absolutely. Just make sure you are not “giving up the farm” in landing new tenants (i.e., giving up higher than market tenant improvements or other concessions) Key points to remember are that cap rates tend to not move with random short-term interest rate movements, but move with trend changes to interest rates. A general school of thought is that interest rates move at a 2 to 1 margin over trailing cap rates. Thus, for every 100 basis point change in interest rates, cap rates will trend 50 basis points. So, the new 8.75% cap rate above would really be about 8.375%, which translates to a new value of $13.1 million for the above property. We are in a period where we’re at the bottom of the real estate cycle and property-level incomes should be increasing. So, if you buy right and you have the right team to increase your income and NOI, a cap rate adjustment upward can be a good thing, as long as interest rates don’t hit the teens like they did in the early 80’s and I don’t think they will. The early 1980’s marked a period of the most serious economic contraction since the Great Depression until the most recent recession. Back then, the Fed established a tight monetary policy to control high inflation. Further, there were real estate tax treatments that helped investors (especially the Japanese) to pour money into real estate. The tax act of 1986 put an end to those tax savings, which put a real damper on commercial real estate. In addition, there was a huge amount of supply in all of the real estate “food groups.” We are in a much different situation today. With a world that is more closely tied to each other than ever with real time reactions, lack of information will no longer create inefficiencies in the market (like the 80’s). In the U.S., the Fed will tighten and loosen lending (among other things) to create softened peaks and valleys of economic change. For real estate, this means there is little reality of double digit lending rates anymore and thus, huge movements in real estate values. The large run up in values that ultimately collapsed in 2007 was the direct result of the collapse in the housing market, brought on by Wall Street pressures for earnings, which included the sub-prime fiasco and lenders underwriting deals that should never have been done in the first place. Mark my words, the next time a lender gives you absolutely unbelievable terms, then my advice is to take the loan, but realize that the real estate cycle is at its peak and you should be a seller, not a buyer. So, what have we learned? Slow growth is good. Real estate is recovering. Interest rates will eventually go up, but so too will tenant’s rental rates (and they will gladly pay them, as sales are increasing). Cap rates will go up, albeit not like interest rates. The result is, as long as you bought right in this recovery stage, effectively manage your properties and create NOI value, even if cap rates go up, you will still have value appreciation and sustainable, predictable current cash flows. That’s our acquisitions attitude at The Retail Connection. Deal flow is picking up and done deals will pick up in 2012. I can’t wait! Here’s to a great 2012.

Real Points Daily Reports on Commercial Real Estate New CFO for The Retail Connection

2012-01-09 12:00:00

By: Christine Perez

January 9th, 2012 11:10am

The Retail Connection LP has hired Douglas Nash to be its new chief financial officer. He succeeds Merrill Wertheimer, who’s retiring after serving as CFO since the firm’s launch in 2003.

Nash will report to Alan P. Shor, co-founder and president, and will be responsible for the finance and property management departments of the company.

“We want to first thank Merrill for his outstanding contributions to our company over the last eight years,” said Shor, in a statement. “The position of CFO is critical to our success in taking TRC to the next levels, and Doug is the perfect person for the position. He is best-in-class in the finance arena, and his deep experience in the real estate industry will be a significant asset to us,” stated Shor.

Nash previously held leadership roles with GE Capital Real Estate (where he served as finance and asset manager), Industrial Properties Corp. (where he served as CFO), a private REIT, and fund managed by Crow Holdings. His experience “will be instrumental in helping support our business platforms on both the services and investments sides of our business,” said Steve Lieberman, the firm’s CEO.

The Retail Connection currently represents more than 200 retail and restaurant chains and has more than 20 million square feet of listings, including approximately 2 million of its own projects. Along with its Dallas headquarters, the company has offices in Houston and San Antonio.

Retail Revisited

2011-11-20 12:00:00

Alan P. Shor, a Dallas-area retail consultant, is the co-founder and president of The Retail Connection. A recent Dallas Morning News report examined whether the Collin County suburb of Plano had developed an overabundance of retail space because of past zoning decisions. Points asked Shor, who also teaches real estate and urban land economics at Southern Methodist University’s Cox School of Business, to expand on his idea that the marketplace, more than government, would correct any imbalance. Plano has become known for “four-corner retail,” with shopping at all four corners of many major intersections. As you look across North Texas, how ususual is Plano in this regard and how much of that retail was demand-driven? I don’t think Plano is unique. Retail will usually follow residential construction, and this builds the demand. Visibility and the ability to get in and out of a retail center easily are critical aspects of a retailer’s success and, hence, the desire to land-grab the four corners of a major intersection. This has been a fairly common theme in many metro areas. As a general premise, which comes first, residential demand or retail availability? And why is this so? Retail should always follow residential. It is simply too risky for a developer to build spec retail space in an underdeveloped area. Further, getting a lender to loan capital on speculative space with no material retailer support, particularly in the current environment, is tremendously difficult. Finally, from a retailer’s perspective, it is unlikely that someone will sign up to retail space without the surrounding consumer demand. In a recent news story about apparent retail overdevelopment in Plano, you indicated the marketplace would balance itself, which reads like a supply-and-demand argument. Why is this superior to assertive governmental direction-setting? In my experience, it would be unusual for a governmental entity to try to come in and retroactively rezone or otherwise negatively impact existing real estate. Typically, the marketplace will adjust itself over time, and we are seeing this all over the country. In the down economic cycle that we have been in since 2008, weaker retailers will go out of business, and retail space will contract. Stronger retailers will absorb the better dark locations, and the more inferior retail space will continue to stay dark for a while. In some instances, the retail space will be redeveloped for government, medical or educational uses. Bottom line: Letting the marketplace adjust naturally due to supply and demand usually yields the best results. But it’s not necessarily in city officials’ nature to just let things work themselves out, is it? If retail oversaturation (or under-availability) is a problem in Plano or someplace else, what is the most constructive role a city government could play to help “fix” things? The most constructive thing a city can do in these situations is to create the right incentives for the retailers and/or developers to fix the existing problem. Tax abatements, tax-increment financing, 380 agreements and the like have become fairly common in getting retail developers to take the steps necessary to fix or redevelop an existing center. The developer can, in turn, pass the benefits of these incentives to the retailers key to fixing the problem. A more drastic (and unlikely) approach would be for the city to buy troubled retail real estate and lead the re-deployment. Based on your company’s experience throughout the region, where are some other specific challenges for North Texas cities in retail oversaturation or under-availability? I would answer this from a little different direction. When a submarket gets oversaturated, the marketplace will take care of this by weeding out the weaker retailers, with the quality available space being consumed by the better retailers. There are a couple of casualties in an oversaturated submarket. One is something I mentioned before, that some retail space will get redeveloped into other nonretail uses. The second is the lack of new retail development for a period of time. In an under-saturated market, retailers will absorb any available retail space, and the demand will spur new development. This will result in higher costs and rents to the retailers, which could lead to higher prices to the consumer. The southern half of Dallas seems to have the opposite problem to Plano, with residents clamoring for more retail. Why hasn’t the marketplace balanced that demand with supply? While still early, I do believe the marketplace is balancing in southern Dallas. This part of metro Dallas had to get an improving demographic, which is happening. People with spendable dollars are living and shopping there, and this has led retailers, restaurateurs and hospitality to the area. The new Omni Dallas Convention Center Hotel will be a major catalyst to the area, and the old Sears building was redeveloped into South Side on Lamar, which is almost fully occupied. To help alleviate security concerns, a police station was built right across the street. All of this takes time (and guts), but it is happening. This Q&A was conducted, edited and condensed by Dallas Morning News editorial writer Mike Hashimoto. His email address is mhashimoto @dallasnews.com. Alan Shor’s email address is ashor@theretailconnection.net.

Breath of Life Gala | Steve Lieberman Receives Award

2011-11-11 12:00:00

The Northeast Texas Chapter of the Cystic Fibrosis Foundation’s most prestigious and anticipated event – Breath of Life Gala – will be held tomorrow evening at the Ritz Carlton. The prestigious fete began four years ago and has continued to assist in raising substantial amounts of donations to fund critical research and provide education about cystic fibrosis as well as help fund care centers throughout the United States. The event will bring the Northeast Texas Chapter’s contributions to over $20 million dollars in funds raised. Betty Jo and David Bell, Honorary Chairs and Dr. Robert Harris and his wife Dianna are the Breath of Life event chairs for 2011. This year’s Breath of Life Award recipients are Steve Lieberman, CEO | The Retail Connection, and Jerry Rasansky, Managing Partner | Law Offices of Jerald Rasansky and Lawyers Title. Lieberman and Rasansky have been deemed the North Texas Chapter’s top “go-to” team and team builders as a result of the numerous events they created, built and/or chaired over the last 20 years, including; the Marathon Challenge 100 Holes for a Cure, the Royal Argyle golf tournament and the Drive for the Goal basketball event. Not only did these activities became national models for the Cystic Fibrosis Foundation, they also led to the recruitment of hundreds of new volunteers, thousands of new donors, and millions of dollars raised for the funding of the Foundation’s research initiatives. “Both Steve and Jerry understand the importance in being involved in the community and supporting worthy causes and organizations such as the Cystic Fibrosis Foundation,” said gala chairman, Dick Bowman. “With roots deeply entrenched in the CF Foundation, Steve and Jerry have established long-standing relationships within the Northeast Texas Chapter. Their reputation, experience and ongoing work connecting the Foundation with major donors is widely recognized and offers an unparalleled source of knowledge for the CF Foundation in growing their donor base. It is very fitting they would receive this award,” he stated further. Returning for their fourth year of support, Jacqueline and Richard Bowman are once again the gala’s “presenting sponsor.” Additional sponsors include: American Airlines; Meredith and Jack Woodworth; Dr. and Mrs. Robert Harris; Sloan Wealth Management Casey and Kelly Conway; Lieberman Dell Family; The Retail Connection; Waldman Bros; Mr. and Mrs. John Devon Wayne; Dawn and Todd Aaron; Carol and Steve Aaron; Andrea-Mennen Family Foundation; AT&T; Betty Jo and David Bell; Amber and Travis Carter; Mr. and Mrs. Dorflinger; Glazers; Allison Moran; and Physicians Synergy Group. Skip Hollandsworth, senior editor of Texas Monthly, will serve as the Master of Ceremonies. Guests will enjoy a dinner prepared by world famous chef, Dean Fearing of the Ritz-Carlton, browse the Silent Auction, and view a special video created to honor the award recipients. For more information about the Cystic Fibrosis Foundation or The Breath of Life Gala, please call (214) 871-2222 or visit www.cff.org. # # # Contacts: Tina Garcia, Executive Director Amy McMichael, Development Director tgarcia@cff.org amcmichael@cff.org 214-871-2222 214-871-2222

Collaboration

2011-11-10 12:00:00

By Steven A. Lieberman and Alan P. Shor We clearly know how fortunate we are to have our terrific team, exceptional clients, great business partners and have our business concentrated around the strongest markets in the country. The pillars of our success are built on such and the strategic relationships we maintain with all our retail partners. Our alliances with our retail clients, property owners, financial partners and governmental entities are the invaluable cornerstones of TRC’s business platform and in 2011, our collaborations with each are once again leading to exceptional activity and productivity across all our business lines. On a macro level, the economy remains unpredictable at best. The country continues to work through a high unemployment rate and the overhang of the U.S. housing market, as well as significant debt challenges abroad. At the same time, TRC has continued to enjoy significant growth. Our team, now almost 80 strong, always puts our clients first, enabling them to extend the reach of their real estate programs and maximize the value of their respective pursuits. Our synergistic alliances with our 200 plus retail clients and third-party owners of over 22 million sf of retail space, provide us invaluable insight and knowledge of the retail and real estate world and enable us to consistently deliver superior results for their programs. Whether it is tenant representation, project leasing, management or the investment side of our business, this is our primary focus. In 2011, we partnered with some of the most successful equity and real estate firms in the U.S., including joint-ventures with Invesco, Fidelity Real Estate Group, Lincoln Property Company and North American Development Group, to acquire and redevelop significant properties; and we look forward to teaming up with these and other partners as we continue to invest in our core markets. Our expanded team, the state’s economy, continues to provide our clients tremendous home field advantage. Texas accounted for over 50% of all U.S. jobs created in 2011. With its low cost of living, no state income tax and a trained, affordable work-force, more companies - and the people they employ - are relocating to the state. Propelled by some of the lowest interest rates in history, institutional investors are extremely focused on Texas. While the economies in most cities throughout the U.S. are generally sluggish, Dallas and Houston are two of the top performing metropolitan areas in the country. DFW shopping center occupancy was up slightly by the end of September of this year. Overall retail occupancy in the DFW area was at 90.3% a significant increase over 2010’s year-end occupancy of 87.9%. Approximately 1.4 million sf of additional retail space will be added in North Texas this year — up from 1.2 million sf of shopping space added in 2010. Large box users and department stores including JCPenney, Walmart and Sam’s Clubs account for the greatest share. Construction under way includes the 420,000 sf Paragon Outlets retail center in Grand Prairie and several new grocery stores and discount retailers. Construction is starting to pick up, with approximately 1.5 million sf of retail space being built in North Texas. However, still only a fraction of the almost 16 million sf of retail space constructed during the peak of the third quarter of 2007. Houston continues to improve in many areas as reflected in its current retail occupancy rate at over 93% - a significant jump over 2010’s 88.9%. Retail job growth is the highest in the country, and the unemployment rate for Houston fell 0.3 percentage points in August 2011 to 8.6%, well under the national rate of 9.2%. With its diverse economic base and structural strength in technology, healthcare, oil and gas, Houston is experiencing tremendous activity. Likewise, San Antonio and its vibrant surrounding areas, have fed the Texas economy with consistent upticks in jobs, housing, retail, and overall consumer confidence. As we forecasted last year, we are seeing the banks start to take back properties after “kicking the can” for an extended period of time, which combined with the equity and credit markets firming up, has led to their putting these assets on the market, providing investors the opportunities to purchase these properties well below replacement cost. With the increased flow of capital into the market and continued investor demand providing predictable exits for these assets as they are fixed, or otherwise stabilized, value-add investors with said capacity are enjoying great success. This is the core focus of TRC’s Connected Development and Acquisition teams. As such, we have acquired 650,000 sf of retail space year-to-date and expect to close on another 200-300,000 sf of centers by year-end. In March of this year, TRC partnered with Lincoln Property Company and Fidelity Real Estate Group on the purchase of Village on the Parkway, a 380,000 sf lifestyle center located at Beltline Road and the Dallas North Tollway. Village on the Parkway has been an important part of the retail and restaurant landscape in North Dallas since 1981, yet no significant redevelopment of the center has taken place, despite the changing nature of the sub-market. This is where collaboration at its best comes in. Now 30 years later, we have very exciting plans underway to execute a major redevelopment of this property into a first class regional retail center. Closely following the purchase of Village on the Parkway, we teamed with Invesco Real Estate in July to acquire Shackleford Crossings, a 271,000 sf newly constructed retail shopping center development in Little Rock, Arkansas. The center, which is one of the largest open-air centers in Arkansas, is ideally located in the western part of Little Rock, a high growth corridor of the city. With strong leasing and additional build-out, this is going to be another very solid value-add for our partners. With these acquisitions, TRC joint ventures currently own over 2 million sf of shopping centers including the 820,000 sf Arlington Highlands - in partnership with the Mathes family, Weatherford Ridge - in partnership with North American Development Group [NADG], Mansfield Point and Quorum Plaza II - in partnership with Granite Properties. While Texas remains a vibrant retail market, significant changes will continue to impact our industry with the advent of technology, smart phones and social media. The most successful and savvy players will provide an immersive, customer-centric, and superior shopping experience on all channels - digital and in-store. We see these shifts as a tremendous opportunity - as our retail partners are some of the most innovative in the country and find ways to augment growth every year by focusing on their strengths and deeply entrenched relationships with their customers. TRC’s primary objective is to always create value for our clients and partners by helping them maximize the connection at every point where retail and real estate connect. We look forward to our future collaborations ahead and the results that will follow.

Team Work

2011-11-09 12:00:00

By Steven H. Zimmerman
TRC’s brokerage group has always believed in teamwork as the foundation of our success. Retail brokerage has historically been a one deal | one broker delivery system. However our commitment to team building flows through every decision made at TRC from our open office design that encourages tremendous sharing of information and support, to the way we run our accounts. We believe teamwork gives our clients a much higher level of service and our teams are strategically formed to meet their needs and objectives. Over 95% of our transactions have a minimum of two brokers working the deal and in some cases as many as four. Typically teams are comprised of a senior broker that provides the strategy, relationships, and overall direction of the account with a junior broker [or two] to assist in the execution of the strategy and provide real-time information to our clients. Careful consideration is given to each team members’ skill set whether we are being asked to lease a 500,000 square foot power center for Inland, handling the nine store disposition for Ashley Furniture in Houston, or designing and executing the national roll-out for Charming Charlie. The internal collaboration goes much deeper than the brokerage team, extending to our research department, marketing department and administrative assistants. Our strategic alliances also extend beyond TRC’s internal teams. As we partner with brokers in other markets in our role as master broker for clients such as Charming Charlie, Bed Bath & Beyond, Eye Masters | Vision Works, Golfsmith, Palm Beach Tan, Altar’d State and we serve as the local broker for clients such as Nordstrom Rack, PetSmart, The Sports Authority, and other retailers master brokered programs. The results speak for themselves, as we track towards another record year of activity, with our year-to-date transaction volume up 9.8% over last year’s record numbers and we added approximately 2M square feet of new listings and twenty-one (21) new representation clients in 2011. Just like our world champion home teams, the Dallas Mavericks and Texas Rangers, the best team wins!

Collaboration Overcomes Crazy

2011-11-09 12:00:00

By David Wilson | President | Connected Development Services Our theme for this newsletter is collaboration. Although it is being emphasized in this publication, it is a practice we have followed since the very beginning of The Retail Connection. It is the reason that I decided that TRC is where I wanted to work. Being a part of a team that has the developer, brokers and retailers working together to meet everyone’s needs seemed to me to be the best way to build projects that work for everyone. On all of the TRC/Connected Development Services developments and redevelopments, we have worked closely with brokers to identify the best group of retailers for the project we had in mind. Additionally, we have worked very closely with retailers to make sure that, to the best of our ability, we were delivering a product that provided the opportunity for them to achieve maximum sales. From center layout and colors and signage to the merchandising mix and location of the different uses, we have unashamedly gone to these retailer friends for their guidance. We can’t do everything that is suggested all the time, but we certainly glean from them what we can so that our centers, as a result, are better. I think we do collaboration well and we intend to keep reaching out and paying attention to what our friends have to say. Now, based on collaboration, here is my opinion on this market. I think that the worst is over for retail. I read an article recently about speakers at a seminar who said with unemployment where it is, downgraded debt, the poor housing market, and weak consumer credit that the outlook is uncertain. I disagree with this. Those are all issues that need to be improved upon, for sure. And, I am not saying that the rebound will be quick, but we have hit bottom and we are headed up from here. Here is my chronology for how we arrived at where we are and why I think we are poised for the next step. It doesn’t fit every project and probably misses the overall situation for other states, but I think this is it for Texas and the surrounding states. The consumer has settled in. They have either kept their job, gotten a job they wanted, taken a job they didn’t want but had to have for money reasons, or resigned themselves to living the best they can on what resources they are going to receive from whatever sources they have. The tenants who have survived are for the most part by now making money. Many are making good money and many have been expanding or are looking to expand and increase their market share. This has been a good market for the healthy ones to really take advantage. This stabilization of the existing tenants and expansion flurry by some has filled up quite a bit of the vacant space hangover we have had. With this, the existing landlords, developers or investors who made it through the downturn or lenders/servicers for those who didn’t, have been the beneficiaries of this tenant stabilization and expansion flurry. Their spaces are getting filled up. They have also benefitted from the wonderful gift of low interest rates that we have had for some time now. With the lease up and low interest rates, many are getting healthy enough to turn down the tenants who want too much of a bargain. Many are even raising their rental rates. The tenants who are renewing or are looking for new space are still fighting a good fight, but if the center is full or filling up, and since there is no new space coming onto the market, there won’t be much give by the landlord to the demands of the tenant. So, the project owners are getting healthier and the returns are improving. As the banks see this, they, who have also gotten a good bit healthier of late, are opening up to new lending for acquisitions of projects that have established cash flow and just need to be fixed. And, the investors are into the acquisition game in a big way. Now that the risk level has come down, the investors are choosing to step in and compete for the deals. Their required IRRs have dropped of late. Connected Development Services has ridden the roller coaster. We got hit with the surprise of the market collapsing. We worked with tenants on rent relief when they really needed it and when we could. We received relief from a tenant friend on a co-tenancy default. We continued to lease our spaces at lower rates where we didn’t have as strong of a lineup of quality tenants and at pro forma where our lineup was solid. We didn’t need to work out anything with our lenders and we were able to refinance when we needed to. We benefitted significantly from the very low interest rates. And, although the final outcome is still in the future, I don’t foresee our investors losing money on any of the projects we did since the inception of the company. Now I see us entering a different phase in our economic cycle. This is the time that the bold, capable, and hardest working will make their best deals for some time to come, and this includes everyone involved. Some will say that I am crazy, but we have gotten to a point in certain situations where new development makes sense. I know this because my collaborators tell me so. My broker friends identify locations that their tenants need and my retailer friends agree with them. It won’t be easy. The investors are very proud of their money. The banks will be hard to satisfy. Both will require more in terms of preconstruction prove up and assurances. The retailers will have to pay more than they have recently been used to because the existing space bargains are gone and construction costs aren’t down, they are up. But, given all of this difficulty, for the developer who has and exercises the ability to collaborate with his team, it will be happening soon.

San Antonio – Diverse Industries and Robust Surrounding Towns Contribute to Steady Rebound and Growth

2011-11-09 12:00:00

By Sherman Hinkebein | EVP | Brokerage It seems like large Texas metropolitan areas like San Antonio will always serve as centers for expansion throughout Texas. The South Texas city and surrounding markets continue to hold their own during less than stellar economic times. Per the most recent Perryman report, the San Antonio area, along with a number of smaller metro areas throughout the state, are all forecasted to see healthy growth over the next several decades due to significant population gains in the top 5 MSAs. While we continue to see anxiety in most parts of the country, Texas – and specifically San Antonio - continue to have more shelter from the storm due to strong job growth, relatively good consumer spending, and an optimistic attitude of most business owners. For example, the local unemployment rate is still among the lowest in the country at 7.3%, (down from 7.5% in the Spring of this year) and the city continues to benefit from job creation. For the first half of this year, the annualized rate of employment growth reached 2.8 %. San Antonio’s retail property market segment is setting the pace for the Alamo City’s overall commercial property marketplace. Both the metrics of retail sector rental revenues and space absorption have reflected a rebound quality during the most recent nine months’ trend. Throughout the second and third quarters there was an upswing in mid-sized transactions and new leases and expansion generated approximately 250,000 square feet of positive net absorption which tightened the citywide vacancy rate to 13.0% compared to 13.4% at the beginning of the year. Neighborhood Centers, which have remained sluggish since the start of the recession, led second quarter gains – an encouraging sign and the possible start of a recovery trend. Activity within area Power Centers included JoAnn’s Fabrics (25,000 sf) at Bandera Pointe and The Village at Stone Oak signed Parmida (10,228 sf), an upscale home furnishings retailer. The recently announced closing of all Borders bookstores will darken three locations later this year including Huebner Oaks (NW), Alamo Quarry Market (NC) and The Forum at Olympia Parkway (NE) but the combined total of less than 80,000 square feet will not derail the healthy Power Center market which currently boasts an occupancy rate of 92%. Inching ahead slowly, the citywide average asking rental rate climbed fifteen cents from last quarter to reach $18.21 per square foot per year on a triple net basis – up forty cents compared to the same quarter a year ago for a modest annual increase of 2.3%. Rental rate increases, however, have not been evenly distributed across property types – while Power Centers and Community Centers reflect healthy over-the year gains, Strip Centers remained relatively flat and Neighborhood Centers recorded a slight decline. Overall, momentum is on the upswing and recovery is steady. Speculative construction remains limited but investment activity is on the rise. Notable transactions this quarter included Arbor Park (139,568 sf) purchased by Dunhill Partners and World Class Capital’s purchase of Thousand Oaks Center (69,875 sf) and Westpark Plaza (135,354 sf). San Antonio Retail Report Second Quarter 2011 The upwardly trending pace of San Antonio regional spending generally surpasses the more modest nationwide trend. Since major metro markets of Texas have exceeded the pace of U.S. job generation, it stands to reason that statewide consumer purchasing power and relative income expectations translate to higher retail spending. While regional markets may exhibit relative weakness for new construction and housing sales, the nature of sales has been very broad-based, with restaurant sales, durable goods and services displaying healthy gains. In terms of the comparing theTexas market’s sales tax revenue for current market sales growth, Dallas is followed by San Antonio, then Houston, while the least strong retailing venue is Fort Worth. Austin sits in the middle. As with any country or major city having been impacted by a recession, the collaboration of all industries is what makes growth steady and real. In San Antonio, Military and healthcare continue to be major contributors to economic stability as well as long-term growth. Several other segments such as tourism, manufacturing, business services, and of course, retail, are additional generators of future economic expansion for the area. Exploration and production activity in the nearby Eagle Ford Shale is yet another stimulus to the area. Based on information from the Greater San Antonio Chamber of Commerce, the regional June Business Cycle Index Trend showed San Antonio displaying the best strength among Texas Big Five Metros. The same report showed that the San Antonio – New Braunfels area is one of the healthiest cities to come through the recent recession and is in fact leading the way in recovery.

Houston’s Collaborative Business Community is all about Sustaining Business Growth

2011-11-08 12:00:00

By David Stukalin | President | The Retail Connection | Houston Job growth is the most important of all economic indicators and Houston stands out. Most adults know what it means to have a job and unfortunately too many know what it means to lose one. Job growth influences home construction, retail sales, airport traffic, energy prices and tax revenues, to name a few. The lack of job growth plaguing the nation is both a sign and a symptom of a weak economy. BUT NOT IN HOUSTON. The Texas Workforce Commission reports that Houston created 65,600 jobs between August 2010 and August 2011. Metro Houston Employment Outlook Based on Historic Growth Rates 1.89 percent CAGR = 47,800 jobs 2.65 percent CAGR = 67,100 jobs Based on Third-Party Forecasts 2.35 percent (Perryman) = 66,000 jobs 2.11 percent (Woods & Poole) 53,300 jobs Most Recent Performance 2.6 percent (Texas Workforce Commission) 65,600 jobs since August 2010 The Perryman Group, a Waco-based firm, forecasts a 2.35 percent annual growth rate. Based on their projections, job growth for Houston over the coming decade should average 53,300 to 66,000 per year. Again, recent jobs numbers reported by TWC place Houston near the high-end of that range. Clearly, job growth has returned to normal in Houston. More important to us is that Houston is No. 1 in retail job growth, according to the Bureau of Labor Statistics. The report says Houston has created more retail jobs than any U.S. city since 2008, according to the Houston Business Journal. Houston added 4,100 retail jobs in the past three years, according to an On Numbers study of new data from the U.S. Bureau of Labor Statistics. Austin was No. 2 in creating new retail jobs, adding 2,400, the report said. Only eight of the nation’s 100 major markets have higher retail employment now than they did in 2008, when the recession slammed the brakes on consumer spending. Houston is one of them. Houston’s retail market continued to improve in the second and third quarters of 2011 with positive absorption and lower vacancy rates. During the last 2 years, the market posted a positive net absorption with a retail vacancy rate of 7.8%, down from 8.4% a year ago. Average city – wide quoted rental rates are slightly under $15 and development has taken place on over 400,000 square feet of new retail space, including single tenant, strip centers and neighborhood centers – most of which are about 30% pre-leased. Retailers that have recently opened in the Houston general vicinity are Dollar Tree, Fed-Ex, Game Over Videogames, Exclusive’s Women’s Healthcare, DSW, Jo-Ann, and FreeBirds World Burrito. Over the past 30 years, Houston has waded through 4 recessions, sprinted through three employment booms, endured three employment busts, and watched a host of industries such as housing, construction, manufacturing, real estate, energy and trade soar, plummet, rebound, and soar again. In spite of the highs and lows, the region has an impressive record. Since 1981, Houston has: · Added 2.8 million residents · Created more than one million jobs · Built 760,000 single-family homes · Sold more than 7.6 million vehicles · Erected 75 million square feet of office space · Handled 4.7 billion tons of cargo · Served more than 1 billion air passengers From nanotechnology to energy, advanced manufacturing and a bustling retail scene, Houston is all about collaboration and partnerships. The Houston region offers a business friendly environment with a low cost of living and an abundance of available land and space. Add to the mix a well-educated work force and a can-do spirit and businesses can’t help but thrive or at the very least, produce decent profits. Houston will be well positioned to flourish entering into 2012, and The Retail Connection | Houston is excited to be a part of the retail opportunities that are in store for our team. .

Collaboration, Texas Style

2011-11-07 12:00:00

By Steve Hefner | President | Connected Acqusitions Texas has made it thru the recession better than any other state in our nation. There were more jobs created in Texas in the last 12 months than any other state (and those just weren’t quality-dilution jobs that have been created elsewhere), there is a continued low cost of living that prevails, housing values are holding better than other states, plus, more companies seem to be relocating to Texas for the unique dynamics and characteristics that make Texans proud. It is undeniable that Texas is doing something right. Houston is the apex energy, aeronautic and land-sea-air leader. Dallas/Ft. Worth is the corporate headquarter leader. Austin is where government and technology collide and San Antonio is becoming the gateway city for Mexico and a growing military base. All of these cities are flourishing without any direct competition of each other. In short, Texas is the #1 state for doing business today and I think Texas intends to continue that trend for the next 20 years. According to the US Census Bureau, Texas will lead the nation in population by adding an additional 14 million people to the state…and that is a forecast for just the metropolitan areas of Dallas/Ft. Worth, Houston, Austin and San Antonio alone! How are we going to manage all those new Texans and their impact on the economy? I’m not sure I can answer that if I were speaking on behalf of the state of Texas. However, as it relates to The Retail Connection, I would say it would be by continuing to collaborate with our retailers, the landlords we represent and our equity partners for acquisition, development and redevelopment pursuits. Here at The Retail Connection, we have made inroads in this improving economy with new acquisitions and are positioned for several more in the coming months. Some ground up development is even getting attention today. By collaborating with the entire real estate network out there (both internal and external), we are able to find quality properties with which to pursue and it is all because of collaboration. By collaborating with retailers, we know where they want to be in our markets, both from a new store perspective and relocating or expanding existing locations. That kind of collaboration creates opportunities for new acquisitions. If we know a certain retailer wants to be in a particular location, we can either find them space through ownership means, thru traditional brokerage means, or build it for them. If we know where tenants want to be located, that is fodder for us wanting to own those same locations or in those same markets. We want to be in the trenches with our partners, not just hold their hand until they get to the trench. By collaborating with other landlords, we provide a service of leasing and/or property managing centers for them. However, we can also be the take-out source for turning over a property that a landlord doesn’t want to continue to hold long-term. Whether it be because his loan is maturing, or he simply doesn’t want to continue to hold until he finds that last tenant, we can be his answer for a successful take-out. We have the ability to lease-up the vacancies over more time, as that is what our brokerage group is in the business for. As any broker will tell you, it seems to take forever today to get a lease to execution stage. If an owner is not ready or willing to hold on for what seems like an eternity, we can be the logical group to see the property to conclusion for them. By collaborating with our equity partners, we can jointly uncover opportunities. The line of communication works both ways. We have joint venture partners who own other properties, as do we and the real estate community is smaller than anyone thinks. Opportunities abound out there and two heads are always better than one. I recall an opportunity a long time ago that was a “one-off” deal, where I was negotiating the purchase of a single hotel property and the seller was interested in remaining as an equity partner in the deal. By the time it was finished, we had purchased the entire portfolio of 27 properties from this company! Of course, we collaborate internally all the time. Our tenant and landlord reps are great sources of opportunities for acquisition. They are our “eyes and ears” because they know our markets like the backs of their hands. Our internal collaboration gets stronger and stronger every day and that’s going to be a real plus as this Texas market heats up even more in the next few years. At The Retail Connection, it’s the perfect storm. Texas growth is happening with the economy and with new people. That creates opportunity for more retail in our great state and The Retail Connection is poised to synchronize those opportunities with our great partners. We collaborate to ensure that our partners are happy and that we can continue to be a leader in retail real estate. The next 20 years in Texas should be very good for all of us in the retail sector!

Manuel's Creative Cuisine Coming to The Centrum

2011-10-19 12:00:00

Uptown will get another upscale dining option in the first quarter of 2012 when Manuel’s Creative Cuisine opens in The Centrum, a 19-story office, condominium, and retail tower at 3102 Oak Lawn Avenue. The restaurant is taking over 4,000 square feet vacated by Bengal Coast, an Asian fusion restaurant that closed about six months ago. It will be the first U.S. location for Manuel’s, led by noted chef Manuel Arredondo and his wife, Virny. The couple run a restaurant of the same name in Cabo San Lucas. Despite the owners’ and the restaurant’s Mexican heritage, Manuel’s won’t offer Mexican fare, said Mitch Traub of The Retail Connection, who negotiated the direct deal. “That’s what everyone always asks,” says Traub, who assures that the Cabo location will also remain open. He says the restaurant will offer a five-star, chef-driven menu that changes seasonally—sometimes even weekly—at the whim of Chef Manuel, who studied under Chef Gualtiero Marchesi, the first Italian chef in history to receive three Michelin Stars, and whose experience includes catering President George H.W. Bush’s 75th and 80th birthday galas. “There’s nothing like it here,” Traub says of Manuel’s. The restaurant’s Cabo San Lucas location is popular among Dallasites who vacation there—including Judge Ray Robinson, a resident at The Centrum. Robinson alerted the Arredondos to the available space in Uptown, and encouraged them to expand in Dallas. The couple worked with Traub to secure the space. “It’s not right-up front on the street like a Mi Cocina; it’s a little hidden,” says Traub, noting similarities of the future site to Manuel’s first location in Mexico’s historic Ajijic in Chapala, Jalisco. “It’s a jewel of a location, and that’s what they liked about it.” Also in The Centrum, Winston’s Supper Club, a Euro-style lounge, is slated to open later this month.

Creative Retailing

2011-09-19 12:00:00

As the economy continues to limp along retailers are finding creative ways to deliver value to their customers without sacrificing their brand. One of the best examples is the Italian luxury knitwear design house, Missoni, where you can easily spend $5,000 plus on a single dress. Missoni recently launched a much more reasonably priced line to be sold in Target stores. When Target unveiled their much-anticipated collaboration on Tuesday, the frenzy over the beloved line was so well received that Missoni customers actually crashed Target’s website. Missoni is not the only retailer to be creative in today’s environment. Men’s Wearhouse has launched Men’s Wearhouse Big and Tall where you can buy everything from a size 28 EEEE shoe to a size 60 sport coat. Their first metroplex store opened last weekend in Arlington Highlands and is doing quite well. They have plans for additional stores in Houston and New York City. Another example is Dollar Tree. With 70 stores in DFW and 4,500 across the country, Dollar Tree needed to find a way to continue their growth without cannibalizing their existing stores. So, they recently announced the launch of Dollar Stop. These stores will be about one-half the size of a typical Dollar Tree and will sell most of the same items with the exception of groceries. Bed Bath and Beyond has also found creative ways to grow with their purchase and expansion of Christmas Tree Shops. They are bargain stores selling everything from food, toys, and household furnishings, in addition to Christmas decorations. They opened their first Texas location on the Tollway, just north of the Galleria and are actively seeking more locations. Bed Bath and Beyond has also opened, and is actively expanding, their BuyBuyBaby stores which offer one-stop shopping for clothing, cribs, car seats, and practically everything else. Other legendary retailers such as Nordstrom with Nordstrom’s Rack and Neiman Marcus with Last Call Studio have listened to the needs of their customers and delivered a value-oriented option while maintaining their world-class brand. In today’s economy the creative retailer survives…

The Crystal Ball

2011-08-11 12:00:00

By Steve Hefner | President | Connected Acquisitions. We see the explosive volatility of the stock market these days. Up one day by several hundred points, down the next by over 500 points. Politics can drive the stock market. Global events can drive it. Even extreme weather can alter the stock market. But just what drives the retail market? How does a retailer decide to expand or contract? Why does an owner decide it is time to sell his shopping center? What are the forces of nature/economics that can cause core properties (ones with superior locations/demographics, national credit tenants and no appreciable turnover or vacancy) to now trade back to 2006 pricing levels (meaning – sub 6 caps)? The answer is not easy. It involves several variables. One is the flight to quality. As the stock market becomes more volatile, many investment funds and companies move to rock solid returns (treasuries, gold, real estate), even though returns are not necessarily stellar (compared to the S&P). At least, the returns on real estate are enough to pay the company dividend. Another one is capital availability. As the lenders decide to open up their coffers, more properties trade because buyers have options on rate, LTVs, impounds and other terms. In the last month, we’ve seen conduit lending (what little there is), pull back strongly. The life companies and regional banks answer with better terms, thus capital is somewhat plentiful now, but could turn either way quickly. Another answer is loan maturities. In the highly charged times from 2005-2008, there were more commercial real estate transactions in that period than any other time in history. With transactions, there are loans to make. Almost all of the loans on those acquisitions from 2005-2008 were either on 5-year or 10-year terms. That means commercial loans are maturing now thru 2018 for properties of which ALL of them were valued more when bought than they are today. Those are opportunities for us on the acquisitions team at The Retail Connection. Another answer to driving up the real estate market is job growth. Job growth means more disposable income, thus retailers see sales volumes increase. That spurs the entire economic engine for the country. This is probably the most critical variable to ensure a rising retail market. So what does my crystal ball say? It says to trust the traditional real estate cycle. Throughout history, we have seen periods of peaks and valleys. There is no reason to believe those don’t continue. Today, we are in the valley and I have my hiking boots on, because I have my sights set on that peak. We may hitch a ride with some of the variables I just mentioned, but the unknown is just how long it takes us to make the trek to the top. However long it takes, I’m betting that the path will still be a little rocky.

What to do when people say there’s nothing to do

2011-08-05 12:00:00

by David Wilson, President of TRC's Connected Development Services. While I hear people talk about real estate activity lagging and there being nothing to do, at TRC, we’re elated with what we have going on in three different areas: 1. We’re having great success taking care of the assets we built before the meltdown. We’re flooded with tenants that want to join us at Arlington Highlands – credit worthy, locals and nationals that will fill up the last remaining spaces we have. Simultaneously, that’s happening in the other projects we developed as well; we have a new phase we are lining up to build at our Weatherford Ridge project that is being led by a solid retailer - TJ Maxx - and some other high profile national tenants who are taking us to a 91% pre-leased status on this 41,000 square foot final phase. Activity on Mansfield Point and Quorum has also picked up substantially. 2. On the acquisition front, we’ve recently been active. We acquired Village on the Parkway, a 380,000 square foot center in Addison with Lincoln Property Company and Fidelity Real Estate Group and Shackleford Crossings, a 271,000 square foot center in Little Rock, Arkansas with Invesco. Nothing is easy, and we will have to earn our profit since we were the high bidder on both projects, but based on our knowledge of what tenants in these markets were telling us, we feel real good about both projects. We continue to scour the listings for other opportunities like these to add value to centers that for one reason or another had just fallen on hard times. 3. And, as we knew it would, new ground up development is beginning to be talked about again. We are being called by land owners who are interested in working with us to set up their projects for development as soon as the opportunity arises. And, we are having discussions with retailers who want us to build for them in certain locations where they can’t find an empty box to fit in. With all this going on, nothing to do is sure looking busy for us.

Texas is Hot and our retail partners are really hot.

2011-08-03 12:00:00

by Steve Lieberman. Congrats to all of the National Retail Federation’s 2011 Hot 100 Retailers. We are proud to partner with so many of you including Bed Bath & Beyond, Dollar Tree, GNC, rue21, DSW, The Fresh Market, Petsmart and Jo-Ann stores. You continue to update your products and services per consumer demand, to provide the ultimate shopping experience all day, every day, and of course run your real estate programs like champs, continuously maintaining a steady stream of initiatives and approaches that keep you on top-- and we think that’s very cool.

The Retail Connection and Invesco Acquire Shackleford Crossings

2011-08-02 12:00:00

By Daniel Fuller The Retail Connection and Invesco Real Estate teamed up and bought Shackleford Crossings shopping center in west Little Rock, one of Little Rock's high profile retail properties, and we are very excited to have acquired this center. Shackleford Crossings is one of the largest open air shopping centers in the state of Arkansas. The well-designed center with its attractive architectural features including decorative stone and lush landscaping also provides ample parking for the variety of retail stores it offers. With its great demographics, superior access, and our ability to add even more attractive tenants to its current mix, we expect this shopping center to become a gem in the overall retail scene of Little Rock, and we look forward to being a part of that. Shadow-anchored by a new 187,000 square foot Wal-Mart Super Center and a new 104,000 square foot JC Penney, the varied and complementary tenant mix at Shackleford Crossings combines general and specialty retailers such as Babies R Us, Gordmans, Havertys, Edwin Watts, Rack Room, Maurice’s, Rue 21, Verizon, Blue Cross Blue Shield and AT&T. Little Rock has been one of the most resilient local major metro areas in the country in recent years, and ranks at or near the top of all U.S. metros for pro-business environments and employments. As a result, the local retail sector continues to be a stable force in the commercial real estate marketplace in Little Rock, which is one of the main reasons we had significant interest. With exceptional access and close proximity to the University of Arkansas, the Clinton Presidential Center & Park, and the Little Rock National Airport, the center boasts a large daytime population. Additional restaurants, big box users, and small shops are part of the merchandising and leasing strategy the two companies have envisioned to complete the inline shops and peripheral land sites.

It's Time to Get Over the Debt Ceiling Impasse

2011-07-26 12:00:00

by Alan Shor, President. A timely topic of interest to all Americans is the national debt and our debt ceiling limitation. Every company in every industry is watching the intense debates on Capitol Hill with a close eye and with a hand on their wallets. On May 16, 2011, the U.S. Government hit the $14.29 trillion statutory limit that it can borrow to finance the obligations of our country. The Treasury Department is maneuvering the finances of the United States to keep the country afloat until August 2, at which point the United States cannot borrow anymore and will default on its obligations. If our elected officials cannot reach a compromise and the government does not raise the debt ceiling, we as a country cannot spend any more money and cannot pay our bills—for things such as Medicare and Medicaid, social security, and even our military. The commercial real estate industry will be impacted as much as any other. The most relevant concern for those of us in business is, of course, the credit rating debacle. Rating agencies have warned that they will downgrade the U.S. government’s AAA rating, which means interest rates will spike up, unemployment will get worse, and the economy will head into another recession. This will have a disastrous impact on the ability to leverage and close any real estate transactions. With partisan politics in full swing, this is a clear and troubling example of how our elected officials are a determining factor of our business fate. It is time to put aside political differences and put the American people first. In other words, Congress and the White House should just do their jobs in the capable manner we believe they can. Alan P. Shor co-founded The Retail Connection LP. in 2004. He serves as president and co-chairman and heads up the firm’s investment and merchant banking business. Contact him at ashor@theretailconnection.net.

Getting Smaller is Getting Better

2011-06-28 12:00:00

By Steve Lieberman, CEO There is no question that "bigger is better" is at the heart of capitalism. However, as growth retailers continue to adapt to an environment with little to no new space coming online, we are seeing new concept stores and prototypes being developed to meet the available space in targeted markets. Further, as retailers actively perfect their portfolios [right sizing, repositioning, even looking at reverse cannibalization, whereby they can increase store productivity by closing redundant locations], many are responsively relaxing their requirements, and otherwise adapting their store prototypes, capitalizing on huge opportunities-- and the trend is growing. Some great company's like Bed Bath & Beyond have always known this and their flexibility has been a cornerstone of their success. Others have been served very well by their rigid requirements. However, we are now seeing a proactive trend emerging. Examples include The Sports Authority who has developed a 12,000 sf Elite store [a third the size of their traditional stores] to serve more affluent micromarkets. PetsMart, JoAnn's, and Dollar Tree have each developed new prototypes that are half to two-thirds the size of their traditional stores. WalMart and Toys R Us have each announced "Express" formats. Target is working on a smaller concept store, HEB Central Market is launching theirs, and the list goes on. The concept certainly works the other way around as retailers are rewarded for adapting their prototypes enabling them to lease larger spaces, however that one is not as blog-worthy. The point is that discipline is always valuable, however speed and flexibility are leading to exceptional opportunities for those positioned to responsively seize the moment and many top tier retailers are figuring that out.

Erwin Waldman Golf Tournament | Scholarship Event

2011-06-20 12:00:00

David Fazio, Steve Lieberman, Alan Shor and David Sacher take to the course for the great cause of sending kids to camp!

Retailers coming to DFW | Why the Uptick in Activity?

2011-06-20 12:00:00

Attached is the link to the full interview featuring Steve Lieberman (versus the uncut version) that was aired last night on David Johnson’s CEO spotlight on KRLD 1080 regarding new retailers coming to DFW, and what’s behind the uptick in this activity.

Be Careful.

2011-06-16 12:00:00

We all know that most of the best spaces have been absorbed and there is little to no new product being developed which leads many to think the supply and demand dynamic is going to shift the balance of power back to the landlords....and in many cases, it will. Weak retailers going to landlords for rent reductions are going to find those landlords willing to reduce their rent to zero and terminate their lease so they can release the space to a stronger operator. At the same time, there are no set rules. And retailers, like most businesses have learned to operate more efficiently the last couple of years. That combined with reduced competition, is going to enable certain retailers to let the leases on redundant locations expire, confident they will pick up those sales at nearby stores.

So the point is, real estate is an inefficient business. There are no rules, and the dynamics of what makes for successful retail operations are extensive. No one variable including supply of space is going to change that.

Cautious Optimism

2011-06-13 12:00:00

By Steve Zimmerman, Managing Director of Brokerage | The Retail Connection

Last week’s ICSC convention in Las Vegas was attended by almost 30,000 retail real estate professionals and it had the most positive vibe we have felt in several years. With 10 consecutive months of improving retail sales and a rising stock market, the economy is clearly recovering.

In DFW we have been fortunate to be ahead of this curve. In fact, The Retail Connection experienced record transaction volume in 2010 and that trend is continuing upward in 2011. The market’s increased activity can be attributed to several factors:

The local economy has recovered much faster than the rest of the nation as reflected by DFW being the number one city in the US for job growth in the past 12 months;

Healthier retail sales encouraged retailers to move off the sidelines in 2010 and they are continuing to actively look for sites in 2011;

Centers have stabilized. Their owners (and in some cases new owners) are in a better position to make deals;

Lending has begun to thaw, and centers with tremendous potential are becoming great opportunities for investors. The Retail Connection’s purchase of Village on the Parkway with Lincoln Property Company and Fidelity Real Estate Group is a perfect example.

The overall feeling after the ICSC convention is one of cautious optimism, and the companies that have the relationships, influence and capital will continue to have exceptional opportunities ahead.

Caution: The word of the day with regard to the current economic rebound.

2011-05-02 12:00:00

It appears that most business markets, including real estate, have made a dramatic rebound from this most recent recession. But, will this rebound last? Or are there caution flags that we as investors should look at going forward? People are feeling better about their stock market investments, the ability to get bank debt and growth in general. But, here are five reasons why we should remain cautious: 1. Unemployment is still near its recent highs of 10% with a prospect of significant job growth remaining bleak. 2. Inflation has become a threat in both the U.S. and abroad. 3. While access to the debt markets have eased, the banks are demanding greater equity and less risk, thereby transferring risk to the borrower. 4. Oil prices remain near all time highs, resulting in extremely high gas prices and less discretionary spending by the consumer. 5. External factors (unrest in the Middle East, the natural disasters in Japan) are impossible to predict. Those of us in the investment business will continue to make our investments, but with a cautious and responsible approach. Alan Shor Co-Founder | President The Retail Connection

Breath of Life Gala

1900-01-01 12:00:00

The Cystic Fibrosis Foundation’s Breath of Life Gala will honor Steve Lieberman and Jerry Rasansky as the Breath of Life Recipients for 2011. DALLAS, TEXAS – November 2, 2011-- The Northeast Texas Chapter of the Cystic Fibrosis Foundation’s most prestigious and anticipated gala will be held at the Ritz Carlton in Dallas for 2011.. This is the Foundation’s Fourth year for the gala hoping to raise $300,000 to fund critical research and provide education about cystic fibrosis as well as help fund care centers throughout the United States. Jacqueline and Richard Bowman are once again the gala’s “presenting sponsor” returning for their fourth year of support. Additional sponsors include: American Airlines; Meredith and Jack Woodworth; Dr. and Mrs. Robert Harris; Sloan Wealth Management Casey and Kelly Conway; Lieberman Dell Family; The Retail Connection; Waldman Bros; Mr. and Mrs. John Devon Wayne; Dawn and Todd Aaron; Carol and Steve Aaron; Andrea-Mennen Family Foundation; AT&T; Betty Jo and David Bell; Amber and Travis Carter; Mr. and Mrs. Dorflinger; Glazers; Allison Moran; and Physicians Synergy Group Skip Hollandsworth, senior editor of Texas Monthly, is the Master of Ceremony for the gala this year, with Mike Jones of United Auctioneers leading the Live Auction. A special video has been created to honor our Breath of Life Recipients Steve Lieberman and Jerry Rasansky. Guests will enjoy a dinner prepared by the Ritz-Carlton, featuring some of Dean Fearing’s most famous and bold flavors. During the cocktail reception guests will be encouraged to browse the Silent Auction and place their bids. Live Auction items include a week stay on Hilton Head overlooking the golf course and enjoying guest privileges; a fabulous ski package in Park Cities, Utah for seven nights and eight days. Betty Jo and David Bell are our Honorary Chairs and Dr. Robert Harris and his wife Dianna are the Breath of Life event chairs for 2011.

CBS DFW | CEO Spotlight: Lieberman | Village on the Parkway

1900-01-01 12:00:00