Shopping Centers Today

OCT 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

Issue link:

Contents of this Issue


Page 37 of 59

38 S C T / O C T O B E R 2 0 1 8 between how much space tenants occupy and the total square footage available to them) hit 96 percent during the second quarter, a 50-basis-point increase year over year. Pro rata occupancy for small shops reached 90.2 percent, the highest level since Kimco began tracking this metric in 2010. "Small businesses like restaurants, services, medical, and health and wellness are really driving that," Flynn said. The New Hyde Park, N.Y.–based REIT boosted its same-property net operating in- come for the quarter by 3.8 percent year on year (3.9 percent when redevelopments are included). Meanwhile, leasing spreads — the average rental rate for new leases versus previous rents at similar spaces —grew by upwards of 10 percent, yet again. "We generated new leasing spreads of 11.5 percent [in the second quarter]," Flynn said. "That's 17 consecutive quarters where they've exceeded 10 percent." On the positioning front, Kimco continues to move away from assets in lower-growth markets and toward those in coastal cities. So far this year, the REIT has sold 38 shop- ping centers and four land parcels for a gross sales price of $556 million. Such dispositions are on target to yield a total anywhere between $700 million and $900 million by the end of the year, capital that Flynn says will be reinvested in developments and redevelopments. On the development front, Kimco is embarking on some RILWV¿UVWPL[HGXVHSURSHUWLHV³7KHVHDVVHWVLQZKDW we call our Signature Series are large in scale, very high quality and in the highest-growth markets in the country," Flynn said. "They're projects that move the needle. Several are set to deliver in late 2018 and through 2019, and then [to] stabilize in 2020." Construction is nearly completed on the $150 million Lincoln Square mixed-use project, in Philadelphia's Center City district, a joint venture of Kimco, Alterra Property Group and MIS Capital. This 300,000-square-foot project will contain 322 residential units and a 32,000-square-foot Sprouts Farmers Market, along with such retailers as PetSmart, Starbucks and Target. Among the amenities: DSDUNLQJJDUDJHD¿WQHVVFOXE an outdoor track, bike storage fa- cilities, a dog run, a pet grooming station and a golf simulator. When the project opens later this year, the Sprouts store will incorporate an adaptive reuse of a 142-year- old train shed. "It's a historic landmark," Flynn said. "Abraham Lincoln's body was displayed there in 1865 as a stop along the funeral tour." The station will become an outstanding community gathering spot, he says. Kimco owns 90 percent of the project. Another example is Pentagon Centre, a mixed-use redevelopment in Pentagon City, Va. "It's right above the Metro station, and we decided to unlock the highest and best use of the real estate by doing a 25-story tower with 440 apartment units," Flynn said. Re- tailers at this venture with the Canada Pension Plan Invest- ment Board include Best Buy, Costco, CVS, Marshalls and Nordstrom Rack, plus such eateries as Chevy's Fresh Mex and California Pizza Kitchen. Average household income in the immediate trade area is about $130,000 per year. Maximizing real estate is what Vision 2020 is all about, Flynn says. "Our redevelopment and development pipe- line," he said, "sets us up for a very nice runway of growth coming into 2019 and beyond." REINVESTING If expanding retailers want only the best locations, Regency Centers is happy to step up, says Hap Stein, CEO of that Jacksonville, Fla.–based REIT. "Those retailers that are continuing to expand are looking for markets where WKHUH¶VVXEVWDQWLDOSXUFKDVLQJSRZHU²GHQVHLQ¿OODQG DIÀXHQWWUDGHDUHDV´KHVDLG³2XUSRUWIROLRLVZHOOSRVL- tioned to take advantage of that." This focus on quality is evident in Regency's numbers. By the company's calculation, average income in the immediate trade areas of its 42 properties stands at about $120,000 per household yearly, with a pop- ulation density of approximately 146,000. Historically, Regency has always pushed for what it calls "200,000 purchasing power" in GHQVHDQGDIÀXHQW86PDUNHWV6WHLQQRWHV "That means at least $100,000 in average annual household income and a population density of at least 100,000 people," he said. "Combine those two, and it equals strong purchasing power." Thanks to Regency's ongoing portfo- lio-positioning strategy, those numbers are POSIT IONED FOR GROW TH CONOR FLYNN AND MILTON COOPER HAP STEIN

Articles in this issue

Archives of this issue

view archives of Shopping Centers Today - OCT 2018