May 24, 2018 — Just back home to Miami after my 35th year in a row attending the International Council of Shopping Center’s annual RECon convention in Las Vegas with a big team from Terranova. It was an intimate gathering of nearly 40,000 of our closest friends in the retail real estate industry including tenants, lenders, debt and equity capital providers, owners, developers and all the attendant professionals and vendors from lawyers and architects, to maintenance companies, title firms to sign companies, and on and on and on . . .
“This year was different” is a thought I have every year. Foremost this year is that my two sons, both in the industry, Daniel with Global Fund and Ari, working on his own endeavors to establish himself in Miami’s real estate market after moving from New York, were at the convention. I was proud to have them dine with us in the evening, prior to my usual early bedtime.
Traffic on the trade show flow seemed less than last year, but still way above 2009, the darkest moment in the industry. Much of the chatter was about experiential retail, something Terranova has been talking and writing about for a few years: we need to give people a reason to visit our properties. Food Halls are all the rage and Terranova is right there with our Lincoln Eatery, just off Lincoln Road, getting set to turn over spaces to our tenants in the next weeks for them to get ready for a winter opening. The brick and mortar retail competition with the internet is an ongoing topic, combined with the retail/ecommerce industrial surge. We got that message loud and clear with our purchase in December 2017, of the Pepsi distribution facility on the Palmetto Expressway (State Road 826) in the city of Doral where we plan to build a state of the art industrial park on the final, last mile site to Miami International Airport. So, we felt good that we were focused on all the right things.
The usual world of parties was meaningfully restrained from prior years for a variety of reasons: cost containment in a transaction reduced market, an era of great transition in social interactions, and the overlap with the Jewish holiday of Shavuos. Attendees seem to have arrived later than usual and most departed on Tuesday, making it a shorter than usual trip.
Leasing activity seems steady, but measured, with every deal taking a bit longer but with leases getting done. Service retail and restaurant uses seem to lead the way. Capital markets transactions seem influenced by caution as well with the slow ascent of interest rates giving pause to most buyers. The best assets in the best markets still seem to price well with lots of buyers as almost a trillion dollars of capital for this sector raised and unspent, worldwide. Anything less than the best—has much less interest and unsatisfying pricing for the sellers, with pricing definitely off the peak. Fund buyers need to keep putting out money, while REIT and private buyers have pulled back, negatively impacting pricing as compared to two years or more ago.
Overall, in a world of internet retailers going to bricks and mortar stores, and old-line retailers trying to find their path forward, we continue to experience the continual evolution of retail, in malls, open air centers, and high street retail. The change is what keeps it interesting, and our challenge to stay ahead of the change is what keeps us awake at night and engaged. Retail real estate continues to provide a significant gathering place for people to stay connected to one another and seems to have a secure but changing place in our economic ecosphere going forward.
Stephen Bittel
Industrial Revolution – The E-Commerce Merger of Retail & Industrial
/in Trending topics, TrendsJune 6, 2018 — TERRANOVA TRENDS — BY ANDREA SPEEDY Over the past five years, industrial real estate has been turning in annual returns approximately 1.3% higher than the entire real estate industry average. Typically, the historical norm for industrial properties stood at 10% annual returns on an unleveraged basis… but recent performance is now closer to 12.8%. While this has definitely caught the eye of capital markets looking to diversify investment portfolios with real estate that has been delivering above office, retail, and apartments – the shift reveals an evolution taking place in the overall commercial real estate market.
Supply and Demand
Big changes are already underway in traditional retail development – from building more immersive store environments, to innovative mixed-use properties, to adaptive re-use and re-development of under performing spaces. On the other side of the spectrum, the industrial property inventory has been unable to keep up with ravenous demand from e-commerce uses, driving up the cost of industrial space. In South Florida in particular, this supply-demand scenario is heightened by a lack of available large parcels of land suitable for new industrial development. Since 2008, residential and mixed-use has driven much of the development landscape in Miami-Dade County, with commercial properties joining the development cycle a few years later.
Changing dynamics on the demand side of the equation are also shaping a new future for industrial real estate – not least of which is the ever-increasing business related to e-commerce fulfillment. As more and more businesses look to serve digital consumers with prompt (or even same-day) delivery of everything from apparel to electronics to groceries, industrial warehousing space has become a highly sought-after commodity.
A recent Terranova joint acquisition in Doral was selected for precisely this reason. “Our new industrial property in Doral has unbeatable proximity to the Palmetto Expressway (SR-826) as well as Miami International Airport,” says Stephen Bittel, Chairman for Terranova.
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Terranova at ICSC RECon 2018
/in Bittel on BusinessMay 24, 2018 — Just back home to Miami after my 35th year in a row attending the International Council of Shopping Center’s annual RECon convention in Las Vegas with a big team from Terranova. It was an intimate gathering of nearly 40,000 of our closest friends in the retail real estate industry including tenants, lenders, debt and equity capital providers, owners, developers and all the attendant professionals and vendors from lawyers and architects, to maintenance companies, title firms to sign companies, and on and on and on . . .
“This year was different” is a thought I have every year. Foremost this year is that my two sons, both in the industry, Daniel with Global Fund and Ari, working on his own endeavors to establish himself in Miami’s real estate market after moving from New York, were at the convention. I was proud to have them dine with us in the evening, prior to my usual early bedtime.
Traffic on the trade show flow seemed less than last year, but still way above 2009, the darkest moment in the industry. Much of the chatter was about experiential retail, something Terranova has been talking and writing about for a few years: we need to give people a reason to visit our properties. Food Halls are all the rage and Terranova is right there with our Lincoln Eatery, just off Lincoln Road, getting set to turn over spaces to our tenants in the next weeks for them to get ready for a winter opening. The brick and mortar retail competition with the internet is an ongoing topic, combined with the retail/ecommerce industrial surge. We got that message loud and clear with our purchase in December 2017, of the Pepsi distribution facility on the Palmetto Expressway (State Road 826) in the city of Doral where we plan to build a state of the art industrial park on the final, last mile site to Miami International Airport. So, we felt good that we were focused on all the right things.
The usual world of parties was meaningfully restrained from prior years for a variety of reasons: cost containment in a transaction reduced market, an era of great transition in social interactions, and the overlap with the Jewish holiday of Shavuos. Attendees seem to have arrived later than usual and most departed on Tuesday, making it a shorter than usual trip.
Leasing activity seems steady, but measured, with every deal taking a bit longer but with leases getting done. Service retail and restaurant uses seem to lead the way. Capital markets transactions seem influenced by caution as well with the slow ascent of interest rates giving pause to most buyers. The best assets in the best markets still seem to price well with lots of buyers as almost a trillion dollars of capital for this sector raised and unspent, worldwide. Anything less than the best—has much less interest and unsatisfying pricing for the sellers, with pricing definitely off the peak. Fund buyers need to keep putting out money, while REIT and private buyers have pulled back, negatively impacting pricing as compared to two years or more ago.
Overall, in a world of internet retailers going to bricks and mortar stores, and old-line retailers trying to find their path forward, we continue to experience the continual evolution of retail, in malls, open air centers, and high street retail. The change is what keeps it interesting, and our challenge to stay ahead of the change is what keeps us awake at night and engaged. Retail real estate continues to provide a significant gathering place for people to stay connected to one another and seems to have a secure but changing place in our economic ecosphere going forward.
Stephen Bittel
SOLVE at MIT 2018
/in Bittel on BusinessMay 18, 2018 — Flying back right now from the SOLVE at MIT 2018 conference in Cambridge. What a remarkable gathering of social and environmental entrepreneurs and funders engaging together with an enduring passion to improve the world. The exchange of ideas and coaching was extraordinary. Two “solvers” selected from the sustainable urban communities track were amongst eight social entrepreneurs chosen in 2017, really igniting my passion.
Komal Ahmad is the Founder and CEO of San Francisco based Copia, a platform that enables Copia’s certified food handlers to collect surplus food from businesses and deliver it to local communities in need. The platform helps businesses track surplus trends, that can then be used to make more efficient purchasing decisions and also simplify access to tax deductions for donated unused food that otherwise would go to waste. Forty percent of prepared food is wasted while nearly one in six Americans are in need. Copia’s for profit business model matches excess prepared food with those in need and is now operating in several U.S. communities. One of their most effective partnerships is with the San Francisco 49er football team.
Gregorio Landel is the Founder and CEO of CityTaps, the producer of a smart prepaid water meter coupled with a billing software that bridges the gap between water utilities and the urban poor. The device that contains a 10-year battery, also detects pipe leaks discovering savings for utilities while at the same time facilitating cell phone payment for many who otherwise might not have water access. I immediately shared with Greg a commercial application in our buildings where we have paid firms to sub meter commercial tenant spaces, and physically read and bill tenants monthly.
These are just two of many great new technological creations to do good on a for profit model that came forth to respond to MIT’s Solve Challenge, under the leadership of remarkable Executive Director, Alex Amouyel. In a world barraged by troubling news, I left the conference feeling hopeful again for the future and excited to look for ways to apply these types of innovative solutions in our community.
Stephen Bittel