Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/753030
22 S C T / D E C E M B E R 2 0 1 6 U LTA C O M B O > > H M A RT G R O C E RY > > < < L A N D R O V E R / J A G U A R D E A L E R D I C K ' S S P O RT I N G G O O D S > > < < H O M E G O O D S < < B U R L I N G T O N O R C H A R D S U P P LY H A R D WA R E > > L andlords have been successful during the third quarter in retenanting Sports Authority stores that are going dark. The chain filed for Chapter 11 bankruptcy protection in March and announced plans to close about 140 of its 450 stores. "All said, we are on the path to having three-quarters of our Sports Authority exposure resolved in the near term with better retailers, at better rents," said Vincent A. Corno, executive vice president of leasing and development at DDR Corp., whose portfolio includes 12 Sports Authority stores marked for closure. "Dick's Sporting Goods and T.J.Maxx assumed three of our 12 wholly owned locations without an interruption in the rent stream," Corno said. "In the case of the two locations assumed by Dick's in Atlanta and Miami, we recently signed lease amendments that reset those deals with a new, 10- year base term tenant allowance at higher rent. We are at leased or letter-of-intent for six additional Sports Authority boxes that we expect to open in the second half of 2017, all at positive spreads." THE HIGH COST OF BUILDING Construction costs are causing some REITs to cut back on planned projects. "We are seeing changes of say 3 percent to 6 percent depending on the market and it's tied mostly to a shortage in high-skilled labor," said Regency Centers' executive vice president of development, Mac Chandler. For its part, Simon canceled plans to add a residential tower to its Copley Place center in Boston after construction costs escalated too much, the company's chairman and CEO David Simon said. According to the most recent figures from research firm Rider Levitt Bucknall, the U.S. average increase in construction cost was about 1.5 percent between April and July 2016. Los Angeles (3.9 percent) and San Francisco (4.5 percent) experienced the greatest increases during the period. Dick's, T.J.Maxx, Ulta, specialty grocers and gyms are the front-runners for these spaces, Corno said. DDR also owns six Golfsmith stores that will close soon as part of that chain's liquida- tion, but Dick's is buying two of those leases and keeping the stores open, according to Corno. At Kimco Realty Corp., meanwhile, seven of the 25 Sports Authority stores marked for closure have been re-leased to new users, said Kimco President and CEO Conor C. Flynn. The replacements are Dick's, Burlington Coat Factory, Orchard Supply Hardware, a HomeGoods–Ulta Beauty combination, an H Mart supermarket and a Jaguar Land Rover dealership. "Clearly, we have got some work to do there," said Flynn. "But we feel good about the momentum we have displayed this quarter and hope to continue to display each and every quarter." Ramco-Gershenson Properties Trust has brought in Dick's to fill the empty Sports Author- ity store at its Treasure Coast shopping center, Jansen Beach, Fla., and the firm is also near to finalizing leases for three other stores, according to COO John Hendrickson. Equity One's portfolio includes four Sports Authority stores, two of which were quickly replaced with new leases at equivalent rents, ac- cording to COO Michael Makinen. The other two, in Walnut Creek, Calif., and Westbury, N.Y., were rejected and became vacant in the second and third quarters respectively, he said. "Both of these locations have a high level of tenant interest," said Makinen, "and we have a lease currently in negotiations for the Westbury location, which I'm expecting will be executed in the fourth quarter or perhaps early 2017." Good sports Smart landlords are finding new users for Sports Authority stores R E I T S T H E C O M M O N A R E A