Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/669097
In Seoul, South Korea, Taubman's 1.7 million-square-foot Hanam Union Square super-regional mall is slated to open late this year. The firm teamed up with Shinsegae Group on this project, which is set on a lake and will be the country's largest shopping center. This $1.1 billion mall will have a Shinsegae department store anchor And in Australia, renovation projects will add on some 10.7 mil- lion square feet to shopping centers, including projects from GPT Stock- land, Mirvac, Vicinity and Westfield, according to The Shopping Centre Council of Australia. LOOKING AHEAD "We've seen more mixed-use projects over the last six months than the last six years," said JLL's Jaggi. Active mar- kets such as Atlanta, Chicago, Dallas, Houston and similar gateway cities are the prime targets. Retail reinvestment in the urban cores of major markets will continue, spurred by the Millenni- als' migrations, predicts Jaggi. "We're also going to continue to see more of the great grocery-anchored projects across the country, and I don't see that changing in the next five years. There is still consumer confidence and good housing demand." There are caveat points, however. In mixed-use projects with large condo components, restaurant cli- ents remain iffy about joining the mix, according to consultant Smith. "While many of our restaurant cli- ents have an interest, they're skep- tical about anticipated residential occupancy rates," he said. "Selling $500,000-plus condos requires peo- ple with a lot of cash and credit to move to town." Additionally, Wall Street is con- cerned that the present economic growth period, stretching nine years now, is getting abnormally long. But JLL, for one, does not see it that way, because the fundamentals remain sound, according to Jaggi. There has also been concern about soft apparel sales the past winter, though those are largely attributable to unusually warm weather, Jaggi says. "Most peo- ple in the industry, including myself, are still bullish on the rest of 2016 and 2017." Other uncertainties include the impact of the U.S. presidential elec- tion on consumer behavior; increasing interest rates; a labor shortage paired with rising wages; and the mildly tight- ening credit markets. One national de- veloper complained that he shopped a new project to more than 30 lenders and got only two responses. "Credit tenants are certainly the safe bet right now," Smith said. Adam Richmond, head of U.S. credit strategy at Morgan Stanley, noted in an investment advisory that 13 of the last 15 bear markets on the credit side coincided with imminent recessions. The two exceptions — a 1986 crunch caused by declining oil prices and a 2011 decline spurred by global-growth fears — do share simi- larities with today, he notes. Multifamily, office and industrial space may continue to be the com- mercial real estate investment prod- ucts of choice in the U.S. through t h i s y e a r , s a y s B r i a n M c A u l i f f e , CBRE's president of institutional properties and capital markets, in the firm's 2016 Americas investor survey. "But more capital will pivot ahead to- wards retail [in 2016]," he said, "than compared to 2015." SCT B r u x s e l o p e n s i n B r u s s e l s , B e l g i u m , t h i s o c t o B e r "We've seen more mixed-use projects over the last six months than the last six years. there is still consumer confidence and housing demand." M a y 2 0 1 6 / S C T 147