Shopping Centers Today

AUG 2017

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

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8 S C T / A U G U S T 2 0 1 7 T H E C O M M O N A R E A D E A L S By Edmund Mander Report says Amazon–Whole Foods merger to spur development D E A L B A R O M E T E R W H O ' S P A Y I N G H O W M U C H F O R W H A T $23.4 million Publix Super Markets bought Ovation Town Center, a 96,750-square-foot, Publix-anchored center in Davenport, Fla., from Armstrong Development $24.8 million The Kroenke Group and Quadrant Acquisitions bought Fox Creek Village, a 107,500-square- foot grocery- and drugstore-anchored shopping center in Longmont, Colo., from Retail Properties of America $25.1 million Westwood Financial, of Los Angeles, bought The Arbors at Mallard Creek, a 55,300-square-foot center in Charlotte, N.C., anchored by Trader Joe's $30.5 million A fund managed by Newport Capital Partners bought Lincoln Village, a 164,000-square-foot mall in Chicago, from InvenTrust Properties $43.6 million Donahue Schriber acquired Marigold Center, a 174,428-square-foot center anchored by Vons in San Luis Obispo, Calif., from Kimco Realty $131.8 million Kimco Realty Corp., bought Jantzen Beach Center, a 758,414-square-foot center in Portland, Ore., whose tenants include Target, Best Buy and DSW O pen-air center develop - ment will surge as supermarket chains step up expansion plans as a way of facing the challenge of Amazon.com's entry into the grocery sector, according to Marcus & Millichap. Kroger announced plans to open 55 stores, Sprouts intends to open 40, and Publix and Wegmans are each set to open 20 this year. German discount grocery chain Aldi will open 900 stores by 2022, while rival German discounter Lidl is to open at about 100 locations on the U.S. East Coast by the middle of next year. Combined, these new stores will occupy an estimated 25 million square feet, "which could be difficult to source without additional development," Marcus & Millichap says in a report. "The noteworthy expansion by grocery chains, which typically anchor neighborhood and community centers, will likely outstrip available space and spark additional retail construction." Development The delinquency rate for U.S. CMBS rose by the most it has in five years in June, says research firm Trepp. U.S. commercial real estate loans in CMBS that were at least 30 days delinquent reached 5.75 percent, the firm says, an increase of 28 basis points from May. The retail delinquency rate rose by 15 basis points month on month, to 6.65 percent. By comparison, the industrial delinquency rate grew by 20 basis points, to 7.57 percent, while office property delinquency jumped by 21 basis points, to 7.46 percent. The best- performing sector was hotels, with such loans jumping by only 11 basis points, to 3.53 percent. Six months ago the retail sector delinquency rate was 6.37 percent, and a year ago it was 5.72 percent. Some $2.4 billion worth of CMBS loans went delinquent in June, about two-thirds of them involving borrowers who missed paying off on their balloon date, according to Trepp. n has slowed significantly in recent years, to an average of 48 million square feet annually since 2010, just one-third the yearly rate of the 2000–2008 period, Marcus & Millichap reports. "Significant grocery store expansion will strain retail space availability, as vacancy rates now stand at 5.4 percent on a national level, the lowest in 16 years." Amazon shook up the sector with its $13.7 billion acquisition of Whole Foods in June. n CMBS DELINQUENCIES INCREASED IN JUNE Marcus & Millichap reports more than 1,100 grocery stores in the pipeline

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