The 2012 ICSC West Florida Spring Retail Report. Capital Markets trends The U.S. commercial real estate equity market increased its appetite for retail considerably in 2011 vs. 2010 with $42.4 billion in sales of significant retail properties. This volume was a 91% increase over 2010, demonstrating the largest gain among all property types including Hotel, Office, Industrial and Multifamily. Nearly 3,400 properties traded with a greater percentage of portfolio transactions than any year in the last ten years. Portfolio trades totaled $17.1 billion or nearly 40% of the total volume highlighted by the nearly $9.4 billion Centro acquisition by Blackstone, as well as, interests in large regional mall portfolios. Capital is still primarily focused on opportunities at either end of the risk spectrum—core or distressed—creating a ‘bar-bell’ effect on demand. A scarcity of desirable product combined with an abundance of uncommitted capital has created a highly competitive investment market for both stabilized and quality distressed assets. In addition to fund allocation requirements, demand is also being driven by investors that are using real estate as a hedge against inflation or by investors that are taking advantage of reduced pricing as in many cases; CRE values have dropped nearly 30% from peak pricing. The increased data points of comparable transactions have made buyers, sellers, and debt providers feel more comfortable in their valuations leading to the narrowing of bid vs. ask spread and eventually to more closings
The 2012 ICSC Florida Spring Retail Report February 16–17 Tampa Convention Center West Florida Tampa, FL Conference 2012 Keynote Presentation Friday, February 17, 2012 10:45am - 11:30am A panel of leading industry executives will be speaking about the most significant trends in today’s market. The executives will discuss macro trends that are at play both nationally and in Florida as well as factors that are impacting the market in various regions across the state. John Crossman David Conn Crossman & Company CBRE Eric Zimmermann Mitchell Rice Jonathan Levy Eastdil Secured RMC Property Group Redstone Investments rePort Coordinator Melissa Grether Crossman & Company firstname.lastname@example.org 2 Table oF ConTenTs Economic overview ..................................................................................................4 Capital Markets Overview.........................................................................................8 The Capital and Deal Markets: Fueled For Growth..............................................10 2012: A Year of Optimism? .................................................................................. ....12 UF Survey of Emerging Conditions........................................................................14 The future of mixed-use development ..................................................................16 The Panhandle.........................................................................................................17 Tallahassee...............................................................................................................18 Jacksonville...................................................................... ........................................20 Ocala / Gainesville..................................................................................................22 The Villages..................................................................................................... .........23 Daytona Beach / Volusia ........................................................................................24 Orlando...................................................................................................................25 Pasco / Hernando......................................................................................... ...........28 Lakeland / Polk.................................................................. ......................................29 Tampa / St. Petersburg............................................................................................30 Sarasota / Bradenton.............................................................................................32 Martin / St. Lucie.....................................................................................................33 Fort Myers / Cape Coral...................................................................................... ....34 Naples / Collier........................................................................................................36 Palm Beach...............................................................................................................38 Broward / Ft. Lauderdale.......................................................................................40 Miami........................................................................................................................42 Written Report Authors.......................................................................... ...............44 Additional Contributors........................................................................................45 3 Economic Overview 19.1 Million People (2011 Census Bureau) Over 432 Million SF of Shopping Centers $15.29 average rental rate falling from the peak of over $19 in 2008 89.54% occupancy steady since early 2010 “While our industry continues to face challenges related to economic weakness, the recovery (positive GDP 10.0% unemployment growth), virtually no new supply, and a growing population appear to be more than offsetting these challenges and we are seeing real improvements in rents, occupancy, unEMpLOyMEnt RatE: uS vs FLORiDa and leasing spreads. A recent RBC 14.5 analysis is particularly encouraging 12.5 as it reports that its research base Florida US of 2,200 retailers plan a total of 10.5 approximately 72,000 new store 8.5 openings over the next 24 months” 6.5 - David Henry 4.5 ICSC Chairman & Kimco Realty 2.5 Source: US Department of Labor StatEwiDE HiStORiCaL REnt & OCCupanCy 95% 94% $19.00 Occupancy 93% Rental Rate $18.00 92% 91% $17.00 90% 89% $16.00 88% $15.00 87% 86% $14.00 Source: Power Center & Shopping Center Statistics from CoStar Property Report 4 SOutH FLORiDa GROCER MaRkEt SHaRE Retailer % Mkt. wESt/CEntRaL FLORiDa GROCER MaRkEt SHaRE 1 Publix 54.50% 2 Winn-Dixie 14.10% 3 Walmart 11.40% Retailer % Mkt. 1 Publix 42.60% 4 AG Florida 7.10% 2 Walmart 25.80% 5 Sedano's 2.60% 3 Winn-Dixie 9.60% 6 Super Target 2.30% 4 Sweetbay 7.20% 7 Whole Foods 2.30% 5 Super Target 2.70% 8 Southeast Wholesale 2.00% Source: The Mulitcultural Economy 2010 6 Costco 4.14% Includes: Miami, Ft. Lauderdale, West Palm Beach MSA's 7 Super Target 2.91% 8 Save-A-Lot 2.60% 9 AG Florida 1.05% 10 Aldi 1.00% Source: The Multicultural Economy 2010 Includes: Tampa, Orlando, Ft. Myers, Saint Lucie MSA's nORtH FLORiDa GROCER MaRkEt SHaRE Retailer % Mkt. 1 Walmart 29.30% 2 Publix 28.60% 3 Winn-Dixie 17.40% 4 Food Lion 8.00% 5 SUPERVALU 2.10% 6 Save-A-Lot 1.60% 7 Super Target 1.40% 8 Ira Higdon 1.00% Source: The Multicultural Economy 2010 Includes: Jacksonville, Daytona Beach, Tallahassee, Albany, Brunswick MSA's “As the ICSC State Director for Florida, I’m happy to say, the reports of retail’s death were greatly exaggerated. Although business is not where we would like for it StatEwiDE REtaiL FunDaMEntaLS to be, there are certainly some very positive signs of improvement. The ICSC Deal Making conferences are 96% $24.00 showing a 10-20% attendance increase, indicated people Occupancy 94% Rental Rate $21.00 are getting much more active. 92% $18.00 It has been several years since any new product has come 90% $15.00 on line and this is starting to slowly develop a pent-up demand for new space. A number of projects that were 88% $12.00 put on hold several years back are being taken off the shelf 86% $9.00 and dusted off with many being reconfigured and shown with a different tenant line-up” 84% $6.00 - Dale Scott ICSC Florida Director, Sikon Construction Source: Power Center & Shopping Center Statistics from CoStar Property Report 5 “There is continuing evidence, with both Mom & Pop and national retailers, those that are offering ‘value’ in their category, or catering to their core demographics/customer, are showing signs that business is improving, albeit, in modest and reasonable measurements. Those with financial resources are pro-actively looking for and taking advantage of expansion and growth opportunities” - Daniel Taub DLC Management Corp RECEnt SHOppinG CEntER SaLES Property Name City Anchor SF Sale Date Buyer Seller Grand Oaks Village Orlando Fresh Market 86,321 Nov-11 Kimco Realty Corp. Private Seller South Wind Plaza West Palm Beach Foodtown Supermarket, Family Dollar 123,953 Nov-11 Private Buyer LNR Property Corporation The Center at Sawgrass Plantation hhGregg 57,003 Nov-11 Dacar Management Starpoint Commercial Properties Jacaranda Plaza Fort Lauderdale Publix, Stein Mart, Party City 173,024 Nov-11 Ram Real Estate Cohen Commercial Properties Publix at Brooker Creek Palm Harbor Publix 77,596 Oct-11 Publix Supermarkets DDR JV TIAA-CREF Point Plaza Port Richey Beall's , Bealls Outlet, TJ Maxx 209,714 Oct-11 RCG Ventures DDR Riverstone Shoppes Parkland Bassett Furniture 61,698 Oct-11 Private Buyer Private Seller Pines Plaza Hollywood Office Depot, buybuy Baby, Aldi 68,170 Oct-11 The Morris Companies Wachovia Aventura Square Miami Old Navy, Bed Bath & Beyond, DSW 113,450 Oct-11 Equity One Turnberry Associates Broadway Promenade Sarasota Publix 53,375 Oct-11 Stoltz Properties JV RAM Realty & RMC Property Towne Center Plaza Orlando Jo-Ann Superstore, Books-A-Million 82,098 Oct-11 Private Buyer Edens & Avant / JP Morgan Osceola Village Shopping Center Kissimmee Publix, hhGregg 116,645 Oct-11 Thompson National Properties JPM Chase Bank Island Estates Plaza Clearwater Beach Publix 50,046 Oct-11 Publix Supermarkets DAM Properties Intracoastal Mall North Miami Beach Winn-Dixie, TJ Maxx, Theater 234,000 Sep-11 Canyon Capital / Debartalo Bank of America Union Planters Plaza Fort Lauderdale Whole Foods Market, Dick's 155,771 Sep-11 Edens & Avant Wharton Realty Parkhill Plaza Miami Winn-Dixie, McDonald's, Dollar Tree 120,101 Sep-11 Kimco Realty Corp. Private Seller Uptown Station Fort Walton Beach Winn-Dixie, Ross, Party City 300,194 Aug-11 Victory Real Estate Investments Private Seller Sample Plaza Pompano Beach Save A Lot, Dollar General 66,613 Aug-11 Private Buyer Kimco Realty Corp. Shenandoah Square Fort Lauderdale Publix, Walgreens, Dollar Tree 123,646 Aug-11 Global Fund Investments Ramco-Gershenson Properties Sunshine Plaza Fort Lauderdale Publix, Old Time Pottery 237,026 Aug-11 Global Fund Investments Ramco-Gershenson Properties Kings Ridge Shopping Center Clermont Publix 78,979 Aug-11 Prudential RE Investors (PREI) Ezon Inc Summerlin Crossings Fort Myers Publix 89,321 Aug-11 Prudential RE Investors (PREI) Ezon Inc Shops at North Cape Cape Coral Publix 79,253 Aug-11 Prudential RE Investors (PREI) Ezon Inc Santa Barbara Center Cape Coral Publix 103,259 Aug-11 Prudential RE Investors (PREI) Ezon Inc Harbour Village Jacksonville Stein Mart, The Fresh Market 112,821 Aug-11 Global Fund JV MMG Equity Private Seller Crystal Lake Plaza Orlando Winn-Dixie 51,920 Aug-11 Private Buyer Orange Bank of Florida Sea Plum Town Center Jupiter Publix, Starbucks 61,112 Aug-11 Taggart Realty Monroe's Prestige Group Source: Real Capital Analytics, HFF, L.P., and Crossman & Company Proprietary Research 6 uS RESiDEntiaL HOuSinG StaRtS (thousands) uS ExiStinG HOME SaLES 600 6.50 Existing Home Sales $224,000 (Millions) 500 6.00 Median Sale Price $212,500 400 5.50 $201,000 300 5.00 $189,500 4.50 $178,000 200 4.00 $166,500 100 3.50 $155,000 Source: US Census Bureau Source: National Association of Realtors Capital has been chasing deals in the Big 6 ma- jor markets and has bid prices up to pre-crash levels. Good news for us in the SE, equity and debt sources are now pursuing deals in the sec- ondary and tertiary markets. Where we can see positive population growth, positive job growth, we will be active lenders in 2012. CMBS lenders are becoming very active again and the Industry projects to close $50 Billion of securitized loans in 2012. Life Companies will be looking to close at least $50 Billion in 2012 and we see more banks venturing back into new construction loans, on a conservative basis. COnSuMER COnFiDEnCE: uS vs FLORiDa - Kieran Quinn 90 Guggenheim Partners 85 US Florida 80 75 “Consumers continue to be cautious 70 and pessimistic about their own 65 spending, which is also affecting the 60 rate of fundamental improvement” 55 - Tim Becker University of Florida US Data Source: University of Michigan Survey of Consumers / Florida Dada Source: University of Florida HiStORiC GaS pRiCES: uS vs FLORiDa $4.50 tOtaL uS nEw autOMObiLE SaLES US 215,000 $4.00 Florida 205,000 $3.50 195,000 185,000 $3.00 175,000 $2.50 Millions 165,000 155,000 $2.00 145,000 $1.50 135,000 125,000 Source: US Department of Energy - US Energy Information Administration Source: US Census Bureau 7 Courtesy of HFF, L.P. (Holliday Fenoglio Fowler, will rise leading to a corresponding rise in cap rates, REITs L.P.) Retail Capital Markets Team looking to ‘recycle’ capital or prune their portfolios. Capital Markets trends natiOnwiDE CapitaL MaRkEtS tREnDS The U.S. commercial real estate equity market increased its $60.0 8.25% appetite for retail considerably in 2011 vs. 2010 with $42.4 Rolling 12-Mo Volume (In Billions) $50.0 billion in sales of significant retail properties. This volume Average Cap Rate 7.75% was a 91% increase over 2010, demonstrating the largest gain $40.0 among all property types including Hotel, Office, Industrial $30.0 7.25% and Multifamily. Nearly 3,400 properties traded with a greater percentage of portfolio transactions than any year $20.0 6.75% in the last ten years. Portfolio trades totaled $17.1 billion or $10.0 nearly 40% of the total volume highlighted by the nearly $9.4 billion Centro acquisition by Blackstone, as well as, interests $0.0 6.25% in large regional mall portfolios. Source: Real Capital Analytics Capital is still primarily focused on opportunities at either end of the risk spectrum—core or distressed—creating a ‘bar-bell’ who are the buyers? effect on demand. A scarcity of desirable product combined Broker-dealer funds, private REITS for core product that with an abundance of uncommitted capital has created a are flush with cash, foreign investors for trophy quality highly competitive investment market for both stabilized assets in major seaboard markets, High Net Worth private and quality distressed assets. In addition to fund allocation investors, public REITs with capital from successful offerings requirements, demand is also being driven by investors that in 2011 and right-sized balance sheets, as well as institutional are using real estate as a hedge against inflation or by investors investors have largely dominated the investment landscape. that are taking advantage of reduced pricing as in many cases; Opportunistic funds are also plentiful and ready to pounce on CRE values have dropped nearly 30% from peak pricing. The distressed assets. The top 5 buyers by dollar volume in 2011 increased data points of comparable transactions have made in the Retail sector were Blackstone, followed by non-traded buyers, sellers, and debt providers feel more comfortable in REITs Inland Real Estate and Cole Real Estate Investments. The their valuations leading to the narrowing of bid vs. ask spread next five largest were all listed REIT’s. and eventually to more closings. StatEwiDE CapitaL MaRkEtS tREnDS Despite economic concerns, both in the U.S and abroad, $4.5 9.0% the debt markets have shown new life in the beginning of Rolling 12-Mo Volume (In Billions) 8.5% 2012 after hesitation in the second half of 2011 with new Average Cap Rate and existing capital sources desiring to compete for strong $3.0 8.0% sponsorship and prime real estate. Banks and life insurance 7.5% companies have been increasing their leverage levels, tightening spreads and starting to provide interest only on $1.5 7.0% partial or full term for the ‘best of the best’ deals. 6.5% Concerns moving forward still revolve around job growth $0.0 6.0% – one of the most important factors to commercial real estate success - although good news did come in the form of Source: Real Capital Analytics breaking the 10% unemployment rate in Florida which now stands at 9.9%. The fear of inflation, rising energy/oil prices, what is Current Equity pricing? regulatory changes, fears regarding rising costs in health care REITs raised a record $51 billion of equity and debt in 2011 could and pending presidential election could hamper the according to NAREIT and outperformed the benchmark stock positive momentum if shown to be true. indices for 2011. Investors are still seeking ‘best in class’ assets but have more pricing clarity due to increased data points in who are the sellers? the market for sales of comparable assets and competition for Banks and Servicers thru note sales and REO, Pension Funds limited product in the market for sale. Health ratios on tenants adjusting allocations, JV Partnerships that are dissolving or with above market rents, delinquent balances, or near-term need a liquidity event, Institutional Funds at the end their hold rollover are still being critically analyzed, but adjustments are periods, merchant builders particularly groups with maturing being made on a tenant-by-tenant basis rather than a very- construction loans, private owners that believe interest rates conservative broad-brush approach. 8 Cap rates are being driven by positive leverage which is helped what is next? by lower interest rates providing solid yields. Institutional Fundamentals have continued to stabilize from an occupancy investors are focused on a combination of the current cash- and rental rate perspective. Transaction volume will likely on-cash yields and internal rates of return (IRR). Private client continue as an upward trend pending the availability of investors are being driven by cash-on-cash yields, discount to financing from the debt markets. Cap rates have compressed replacement costs and ‘price per pound.’ For most investors considerably and for some retail asset classes have fallen to running IRR metrics, reversionary cap rates are being set at 50 the aggressive leverage-fueled levels of 2006 and 2007 for to 75 bps above the going-in cap rate. Tier I markets on Core product. This will eventually lead to yield-driven investors being priced out of Tier I markets and Current unleveraged / leveraged discount rates are turning to secondary markets as an opportunity for greater approximately: returns. • Core: 6.5% - 7.5% / 7.5% - 9.0% On the distressed side, the demand is very strong pricing the • Value Add: 8.0% - 10.0% / 10.0% - 16.0% ‘opportunity’ out of many of the deals due to competition. • Opportunistic: 12.0+% / 16.0+% Many properties are producing positive cash flow again after several years of fighting for occupancy and increased rental who are the Lenders? rates. Distressed retail is now over 50% worked out according For core stabilized assets, Life Companies, Banks, and CMBS to RCA which should only increase pricing as demand remains lenders have returned to the Florida market. According to strong for a limited amount of product. CoStar, the second quarter of 2011 saw commercial mortgage loan originations that were 107% higher than second Development financing options have returned for select quarter 2010 and the prevailing thought is that the first half multifamily deals, however, has remained scarce for other of 2012 will be even more robust. CMBS lending totaled commercial product types such as retail. Will development approximately $30-$35 billion in 2011, many predict CMBS debt/equity become more prevalent in 2012? It is unlikely to execute north of $50-$60 billion in 2012. A CMBX index that the volumes will be robust in the near term but unique of ‘CMBS 2.0’ will help issuers and investors hedge their risk. product in strong markets could find their way off the drawing For assets that require a turnaround or are not stabilized at board. market occupancy, balance sheet lenders such as banks and debt funds are the primary sources for this type capital. what is Current Debt pricing? Best-in-class sponsorship and reliability of tenancy/income is paramount to obtaining aggressive financing. Real-time current lender underwriting parameters for permanent financing include: Life Companies CMBS Debt Funds Banks Description: CMBS shops are very active and The vast majority of Life Mortgage REITs, and private Nationals/regionals most active; issuing quotes to fill up Companies have increased their equity funds are providing debt some local banks re-entering securitization buckets that are allocations for 2012 by +/-20% as senior, mezz and note competitively. Several over 2011. scheduled for late first quarter financing nationals/regionals offering non- CuRREnt DEbt CapitaL SOuRCES anD pRiCinG Underwriting metrics that 2012. recourse financing for very select retreated in late 2011 have assets with strong sponsorship returned to begin 2012. and low leverage. Considering development for 'special' projects Max LTV: 70% LTV 80% LTV (w/ mezzanine) 85% LTV 65% LTV 65%-70% (without) All-In-Rates: 3.40 - 5.25% (fixed) 4.90 -5.75% (fixed) 6.25 - 8.00% (fixed/floating) 3.00 - 5.50% (floating or fixed) Fees: Mostly PAR Mostly PAR Varies NA Debt Yields: 9 - 10% 9-11% Varies NA Term/Amort: 5-10 year terms; amortization of 5-10 year terms; amortization of 2-5 year terms; interest-only or 3-5 years; amortization of 25-30 30 years. Some interest-only 30 years. Full-term interest-only amortization of 30 years years periods available for lower periods available for lower leverage loan requests leverage loan requests Loan Size $5-$300 MM; most fall under $10 MM; no upper limit (some $10 MM; no upper limit $1-$30 MM without need to Preference: $100 million will consider $5 MM min.) syndicate; no limit with syndication 9 university of Central Florida 58,000 Students Home of the Dr. P. Phillips School of Real Estate UCF is now the 2nd largest university in the United States by enrollment. The Capital and Deal Markets: Fueled for Growth Randy Anderson, Ph.D., CRE Howard Phillips Eminent Scholar Chair and Professor of Real Estate University of Central Florida Joshua Harris, MBA, CAIA Director and Ph.D. Candidate, Dr. P. Phillips School of Real Estate University of Central Florida We start off the New Year with many reasons to be optimistic about the economy and real estate markets. Job growth as actually began to sustain in many private sector industries; further, business leaders are becoming more optimistic according the Conference Board. Perhaps most telling, retail sales set record highs this December despite consumer confidence remaining relatively low. Many are perplexed by this given the still high rate of unemployment (8.5% according to the Bureau of Labor Statistics at the time of writing). Exhibit 1 shows that disposable income is at an all-time high; yes higher than before the recession, according to the Bureau of Economic Analysis. Thus, the reality is that in aggregate we are earning more and spending more; much of this likely the result of powerful UCF’s real estate department was demographic trends such as a growing population and founded in 2005 with the help and increased immigration. funding of the Dr. Phillips Foundation and the Central Florida NAIOP Chapter. They now have both undergraduate and Masters degrees in real estate available. 10 10 yEaR tREaSuRy RatE SitS at HiStORiC LOwS 7% DiSpOSabLE inCOME at aLL tiME HiGHS 6% $12 $12 5% $11 4% $11 $10 3% Trillions $10 2% $9 $9 1% $8 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 $8 Source: U.S. Board of Governors of the Federal Reserve System Exhibit 2 $7 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 Investors appeared to believe this economic assessment as it is estimated that over $200 Source: U.S. Bureau of Economic Analysis Exhibit 1 billion dollars of transaction volume was allowing them to remain in “extend and completed in commercial real estate during pretend” limbo for protracted periods of time. 2011 according to Real Capital Analytics; this Lenders feel more comfortable disposing is projected to grow to over $300 billion in assets because the recovery in fundamental 2012, which is roughly a 50% year over year rental rates and occupancy levels as combined increase. The increase in transaction volume with low cap rates have actually caused real is due to multiple factors. First, the stabilized estate prices to recover significantly for economy has alleviated most fears of a double many stabilized properties. Thus, the banks dip recession occurring anytime soon. Second, are liquidating at far less of a discount than yields on bonds and other fixed income previously thought possible. securities have remained shockingly low. In fact, the yield on ten year treasuries is sitting at In conclusion, we expect 2012 to be a better historic lows and may remain as such for much year than 2011 (which was not bad) on almost of 2012 (See Exhibit 2); this alone is making all fronts. Still Europe is the big unknown as debt on real estate very cheap when available. is the fate of our domestic political system; Third, global investors are seeing the U.S. as a at least we will have some clarity come good investment location, relative to Europe November in this matter. The biggest risk at least. Finally, lenders who have taken back for the long term is cap rate decompression a significant volume of distressed assets are if interest rates rise significantly; investors beginning to actually sell these assets versus should factor this into their analyses. 11 Florida State university 41,000 Students Home of the Center for Real Estate Education & Research FSU’s real estate program was named #2 in the world for their research by the Journal of Real Estate Finance and Economics. “We know that by traditional measures the great recession is over, yet consumer confidence is low and the unemployment rate 2012: A Year of Optimism? remains high” Dean Gatzlaff Mark Bane Professor and Center Director, Center for Real Estate Education & Research, Florida State University It is a presidential election year, and these years (with of course the exception of 2008) have often been good for the markets. So let’s look at the major market trends. By traditional measures the great recession is over and it appears that a double dip feared in 2011 has been avoided. Still, real estate markets have been sluggish this past year. On average, house prices rose about 0.2% nationally in 2011 (S&P Case-Shiller), while commercial property prices (Moody’s/REAL) ended the year (through Nov.) down -1.5% after trending up during the second half (Fig. 1). Thus, recovery in the real estate market continues to be “anemic.” Consistent with the real estate market, annual price changes in the stock (S&P 500) and REIT markets were relatively small at 1.9% and 4.3%, respectively. Both markets experienced moderate price increases during the first half of 2011 followed by price declines in the second half (Fig. 1). Still, there are good reasons to be optimistic about 2012. While the national unemployment rate remains high (8.5%) it has persistently trended down from its high point of 10.1% in October of 2009 and is currently at its lowest level in nearly three years. This trend is also seen in Florida, where the unemployment rate in Dec. (yet to be reported as of this writing) will possibly drop below 10.0%, after seeing rates at 12.0% just one year ago. Most economists expect increases in hiring and decreases in unemployment to continue, barring any unforeseen economic surprises. 12 REaL EStatE pRiCE inDiCES tREnDS in COnSuMER SEntiMEnt & SpEnDinG 3.00 US COMMERCIAL (Moodys/REAL) 2.50 Equity REITs 140.00 10.00% Index Level (2000=1.00) HOUSING (S&P Case-Shiller) S&P500 8.00% 2.00 120.00 6.00% 100.00 1.50 4.00% 80.00 1.00 2.00% Consumer Sentiment (left axis) 60.00 0.00% 0.50 Year-to-Year Chg in Consumer Spending (right axis) 40.00 -2.00% 20.00 -4.00% Figure 1 Figure 2 “Households have been very successful at ridding themselves of debt and their balance sheets, as a whole, have been substantially strengthened. Household debt is at pre-recession levels. Perhaps fueled by the small gains in employment, consumer There have been gains in sentiment and spending have trended upward more recently household wealth, particularly (Fig. 2). Households and firms continue to rid themselves of debt for those above the median and their balance sheets, as a whole, have been substantially income level” strengthened over the past year. And while the share of households with mortgages in distress and foreclosure remains high, the share of households entering distress or foreclosure continues to drop. Finally, while price volatility in gas and food prices will likely continue, economists anticipate “core” inflation to rise at a modest annual rate of 1.5% to 2.5% in 2012. All of this bodes well for the coming economic year; however, there are also good reasons to be concerned. The combined federal deficit and debt is unsustainable; the economy remains susceptible to oil price shocks; and financial issues with possible U.S. contagion effects continue within the European community. 13 university of Florida 52,000 Students Home of the Bergstrom Center for Real Estate Studies UF’s real estate program was named #3 in the world for their research by the Journal of Real Estate Finance and Economics. UF Survey of Emerging Market Conditions: Q4, 2011 Dr. Wayne Archer Executive Director and Professor of Real Estate, Bergstrom Center for Real Estate Studies University of Florida Retail Summary & Conclusions Retail occupancy expectations declined for three of the four retail sectors this quarter with only free- standing retail improving. Respondents continue to believe however that occupancies will remain stable at current levels for all sectors. The expectations for rental rates followed a similar pattern to the occupancy outlook. Respondents continue to believe that rental rates will lag inflation in the near term. Cap rates continue to stabilize across retail property types with the exception of strip centers which increased this quarter. Expectations for future cap rates continue moving toward a declining cap rate environment. The investment outlook in retail remained positive for all sectors but large retail with declined to a mixed time to buy. Expected Occupancy Improvements in employment and consumer confidence are providing a boost to the retail sector. Respondents continue to say that quality national retailers are looking for prime locations to expand. The expansion plans may be a year or two away but they are looking to lock in locations early. This is showing up in the expectations for occupancy as all four segments of the retail sector improved. Expectations for Neighborhood Center occupancy reached a survey high with others approaching their survey high. Yields Required yields decreased this quarter for neighborhood centers and free standing retail. Neighborhood center yields dropped 80bps to 9.5%. Free standing yield dropped 30 bps to 9.5%. Large centers and strip centers saw their yields increase to 9.6% and 12% respectively. Expectations for future yields continue to indicate there will be little to no change in future yields across all property types. 14 OutLOOk FOR OCCupanCy: REtaiL Expected Rental Rates Expecting Increase 0.4 Large Centers Neighborhood Centers Expectations for rental rates continued to 0.2 Strip Centers improve this quarter as respondents are gradually starting to believe that rental rates will rise at Free Standing Expecting No Change 0 the rate of inflation for all property types in the Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 -0.2 retail sector. Core, quality properties continue to benefit from increased demand and lower -0.4 rents over the past several years have attracted Decrease Expecting -0.6 retailers to move up. Respondents indicate that leasing activity has grown tremendously over the -0.8 past year and expect that trend to continue as 4Q 2011 University of Florida, Bergstrom Center for Real Estate Studies Survey of Emerging Market Conditions long as the economy and employment situation continue to improve. OutLOOk FOR REntaL RatES: REtaiL Investment Outlook Expecting Increase 0 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q2 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Despite an improving outlook for occupancy -0.25 and rental rates, respondents’ views on the Expecting No Change -0.5 investment outlook declined across all four -0.75 property types with neighborhood centers -1 dropping the most. The drop in neighborhood Expecting Decrease -1.25 centers indicates the lack of supply for quality Large Centers core assets. Grocery anchored centers have been a favored asset along with apartments for Neighborhood Centers -1.5 Strip Centers the investor. Regardless of economic conditions, Free Standing -1.75 4Q 2011 University of Florida, Bergstrom Center for Real Estate Studies Survey of Emerging Market Conditions necessary spending on groceries helps keep these centers a float. Free standing retail is now OutLOOk FOR invEStMEnt: REtaiL the favored retail asset for investment with most 1.2 respondents believing this is a good time to buy. Large Centers 1 Retail Cap Rates Neighborhood Centers Good Time to Buy Strip Centers 0.8 Free Standing 0.6 Cap rates increased slightly for neighborhood 0.4 centers and large centers, with both moving to Mixed Time 0.2 8%. Rates for strip centers and free standing retail to Buy 0 dropped going below 9% and 8% respectively. Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q2 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 -0.2 Slow continued improvement in the economy Bad Time will keep cap rates at current levels over the next to Buy -0.4 -0.6 year. -0.8 4Q 2011 University of Florida, Bergstrom Center for Real Estate Studies Survey of Emerging Market Conditions 15 the Future oF Mixed use develoPMent By: toM harMer, senior viCe President, Pizzuti - naioP Board MeMeBer Recognizing that its members were involved in many diverse communities, living proximate to work, easy and close access to types of commercial developments, in 2009 NAIOP expanded its primary retail services (groceries, dining, etc.), and clustering of focus from office and industrial real estate to include the retail more density into key development areas. sector as well as medical office and mixed use projects. Expanding retailers continue to be selective so a mixed use site has to not only meet the locational requirements but also readily Mixed use development typically combines multiple land meet other criteria that may include signage and branding, drive uses, such as retail and office or retail and multifamily, into a throughs, and other components that are standard on many single project, and might include retail, office, medical office, stand-alone outparcels but are challenging in a mixed use and multifamily. Mixed use developments are favored in some environment. communities and can be encouraged through planning efforts, but real estate fundamentals and the current market will dictate Since the office market is likely to continue to see isolated their long term success. growth, many of the shorter term opportunities will be related to single-tenant build-to-suit projects, multifamily development, Many types of projects could be classified as mixed use. The mix and potentially some specific opportunities related to medical of uses may be vertically integrated or be spread out horizontally office. In the case of medical office there can be some demand or a combination of both within an overall development site. for some limited retail or medical related retail to serve the tenants and their patients and complement the office use, such Vertical mixed use projects tend to be the most complicated. as a pharmacy, or medical equipment storefront, etc. The different market demands across sectors can be a challenge for lease up and have varying absorption rates. As a result, As we look to 2012 and beyond, opportunities for mixed use developers may find it challenging to match the demand of projects may be supported in certain key areas. Those areas the different uses into a single product. There can also be will include sites adjacent to strong employment centers, those natural conflicts between uses and significant differences in site with access to transit systems, and in a limited way, in select core requirements such as parking ratios. downtown environments. In central Florida opportunities are likely on sites adjacent to the planned Sunrail stations. In a tight credit market the more complicated a project is the harder it is to attract capital. In a vertical mixed use development In addition, in Florida, due to changes in transportation and there also can often be a construction cost premium that growth patterns we have a number of examples of older retail increases the lease rates necessary to underwrite the project, properties that are prime for redevelopment. Developers which may make them less competitive. should consider mixed use projects as an infill or redevelopment opportunity on strategic sites where there may be an aged single As a general rule these projects will have to stand on their own, use property. proforma wise, based on their predominant use and the retail component will have to be supportive and/or complementary. As developers, we don’t want to bypass a good opportunity for a For example, an office or multifamily development project may mixed use project, but we have to do the work up front to make need certain retail amenities for the tenants and there may be sure we match the project to the market. a desire to activate the street in front of the project, but the office or residential demand may need to carry the financial Join Us for the Upcoming Legislative Event: performance of the project. NAIOP Legislative Update March 22nd 11:30AM In limited cases there may be a larger retail anchor that can help Downtown Sheraton, drive the project, the SODO Target in South Orlando for example, Orlando, FL but for the most part the retail portion will not be the project’s driving force. Though mixed use developments can be challenging, we can continue to expect continued demand and interest in these projects. The concept of mixed use development is consistent with sustainable planning concepts, i.e. the goal of walkable For more information, visit NAIOP’s webiste at: http://www.naiopcfl.org 16 the panhandle pEnSaCOLa HiStORiCaL REnt & OCCupanCy 94% $16.00 Occupancy 93% Rental Rate $15.00 92% 91% $14.00 90% $13.00 89% $12.00 88% 87% $11.00 Power Center & Shopping Center Statistics From CoStar Property Report panaMa City EMpLOyMEnt Data MY11 YE11 Change Workforce Size 93,944 99,796 5.86% Unemployment Rate 9.5% 10.0% 0.50% Source: Florida Research and Economic Database pEnSaCOLa MSa EMpLOyMEnt Data Market Overview MY11 YE11 Change The Panama City/ Lynn Haven/ Panama City Beach MSA possess a year Workforce Size 214,922 206,851 -3.90% round population of 170,000 and attracts over six million visitors annually. Unemployment Rate 10.2% 9.6% -0.60% Source: Florida Research and Economic Database The region experienced one of the best years on record for tourism this past year. Visitors returned to vacation on the sugary white sand beaches after a disappointing 2010 that was marred by the BP Deepwater Horizon oil spill. Additionally, the area has become easier to access since the opening of Northwest Florida Beaches International Airport (ECP) in May, 2010. ECP’s opening also marked the arrival of Southwest Airlines which began service to the area. In the first year of operation ECP has experienced tremendous increases in both passenger counts and market share. Panama City’s major retail corridor, 23rd Street, has softened in recent years lead by Wal-Mart’s exit to develop a Super Center in neighboring Lynn Haven but the area has recently received positive news with the announcement Wal-Mart will return to their former location and expand in addition to several national retailers back filling vacant spaces. Occupancy rates are on the rise. The enclosed Panama City Mall remains reasonably healthy and recently gained momentum by attracting Bed, Bath & Beyond to relocate from another center in the area. The majority of retail development has been focused at Simon’s lifestyle center, Pier Park, which opened on Panama City Beach in 2008. Pier Park’s success has attracted an additional retail development to the west end of the beach. Glimcher has announced they will be developing Pier Park North along Panama City Beach Parkway. Upon completion this development will add nearly 400,000 SF of additional retail to the area. Dicks Sporting Goods, Bed, Bath & Beyond, Michael’s and Rooms to Go Furniture have been announced as anchors for Pier Park North. The residential condo market on Panama City Beach remains very soft and has yet to find a bottom. A large shadow inventory of residential condos remains and will continue to deflate values well into 2012 and beyond. The silver lining is that it will supplement the beach rental market and allow tourism to remain strong. The Destin and Fort Walton Beach markets have softened like much of the state. There are not any significant vacancies localized in any one property. The Destin Commons lifestyle center and the ever popular Silver Sands Outlet Center in Sandestin remain as the premier shopping destination of northwest Florida. Eglin Air Force Base continues to gain missions while other military bases face downsizing or closure. The Army’s 7th Special Forces Airborne Group is locating its training and operations center to Eglin and the Air Force’s new F-35 will be based out of Eglin with 59 planes and crews. This is expected to increase the overall population by more than 8,000 people. 17 tallahassee 370,021 People 7.3 Million SF of Shopping Centers $11.05 average rental rate down 4.4% since mid-year 2011 90.6% occupancy A 1.6% increase since mid-year 2011 8.2% unemployment taLLaHaSSEE COunty EMpLOyMEnt Data MY11 YE11 Change Workforce Size 193,290 193,327 0.02% Unemployment Rate 8.6% 8.2% -0.4% Source: Florida Research and Economic Database Market Overview Demand has remained strong, in and around campus areas for developers and retailers. With 1,000+ beds either under construction or planned, retailers are aggressively looking for space. The Luxe on West Call & Conradi Street, a 15,000sf Retail/392 bed development is planning to start construction in 2012 and College Town at the intersection of Woodward and Madison Street is still planning delivery some time in 2013. Chick-Fil-A has contracted on the Ruby Tuesday site on West Tennessee Street. University Square the new 24,000sf Retail development is in the “lease up” stage and should deliver space to tenants in the fall of 2013 at the “gateway of FSU” on the corner of W. Tennessee Street and Stadium Drive. Market rents in the downtown area have been holding strong over the last 12 months and demand seems to be picking up for smaller space. 111 Monroe Street recently sold to an investor who intends to rehab the property and deliver 18,000sf of class “A” office space downtown. The Midtown area of Tallahassee has seen an increase of leasing and re-development activity from 2011 into 2012. Vintage, formerly Café Cabernet, a 9,000sf restaurant and bar, recently sold to a group who is planning to convert the space into a collection of smaller themed spaces. The former 15,000sf, American Homepatient building is planning a demise of the space into a similar concept which will allow for multiple entertainment/bars to provide tenancy. All of which will support the vision of Tallahassee becoming an 18 hour community. 18 North Tallahassee retail market has seen the entry of new tenants. Gordos has recently signed a lease in Market Square, expanding their footprint in Tallahassee, which had their first location near FSU campus. Jersey Mikes signed a lease and opened 2011 in the Verandas on Market Square. Gulf Coast Dermatology and Jimmy Johns will open in the first quarter of 2012 and Genghis Grill is scheduled to be open mid-year. Tallahassee always has a strong retail market, with current vacancies hovering around 4.5%. The city hosts 70,000+ college students from its three major colleges and universities. The state capital brings a highly-educated and active workforce that makes up a significant portion of the 320,304 person MSA population. Because of the low vacancies and high purchasing power, the growth of retail-related developments around the university, downtown, and highway-corridor areas are expected to grow significantly over the next five years. The average rental rate for available retail space is around $12 NNN; however, the desirable University, Downtown, and Highway corridors spaces fetch above a $22 NNN average. taLLaHaSSEE HiStORiCaL REntS & OCCupanCy 94% $14.50 93% Occupancy $14.00 Rental Rate 92% $13.50 $13.00 91% $12.50 90% $12.00 89% $11.50 88% $11.00 87% $10.50 Power Center & Shopping Center Statistics From CoStar Property Report taLLaHaSSEE REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 YE11 Change Downtown Tallahassee 79,108 $0.98 98.1% 0.0% $12.00 $0.00 -100.00% East Tallahassee 1,334,238 $0.90 90.3% 0.0% $9.87 $9.30 -5.78% Gadsden County 293,967 $0.78 80.7% 2.8% $6.48 $5.64 -12.96% Jefferson County 10,183 $1.00 100.0% 0.0% $0.00 $0.00 0.00% NE Tallahassee 472,877 $0.89 89.0% 0.0% $14.11 $13.02 -7.73% Northeast Leon County 1,764,110 $0.88 90.7% 3.1% $14.59 $14.31 -1.92% Northwest Leon County 396,008 $0.81 81.2% -0.2% $9.35 $8.66 -7.38% NW Tallahassee 371,138 $0.97 96.2% -0.5% $13.64 $13.64 0.00% SE Tallahassee 477,138 $0.86 88.3% 2.7% $8.97 $9.23 2.90% Southeast Leon County 760,001 $0.87 86.9% 0.0% $11.73 $11.73 0.00% Southwest Leon County 126,788 $0.82 81.1% -0.6% $9.00 $9.00 0.00% SW Tallahassee 35,145 $0.86 85.5% 0.0% $0.00 $0.00 0.00% Wakulla County 155,291 $0.95 94.3% -0.9% $10.34 $9.07 -12.28% West Tallahassee 1,000,294 $0.91 92.6% 1.5% $14.35 $13.93 -2.93% Tallahassee Market Total 7,276,286 $0.89 90.6% 1.6% $11.53 $11.05 -4.37% Power Center & Shopping Center Market Statistics From CoStar Property 19 Jacksonville 1.3 Million People 38.6 Million SF of Shopping Centers $13.52 average rental rate down 2.1% since mid-year 2011 87.4% occupancy relatively stable since mid-year 2011 9.5% unemployment JaCkSOnviLLE EMpLOyMEnt Data MY11 YE11 Change Workforce Size 695,538 686,319 -1.34% Unemployment Rate 10.3% 9.5% -0.80% Source: Florida Research and Economic Database Market Overview This year, the National Retail Federation expected $469 billion in holiday sales. Green Monday on-line spending was $1.13 billion dollars and there were a total of 81 million shoppers on Black Friday. Costar reports $46 million in investment sales in 2011, as compared to $99 million in 2010. These investment sales consisted largely of small tenant developments such as Verizon Wireless, AT&T, Family Dollar and Dollar General. Overall shopping center vacancy, as depicted in the Jacksonville Retail Market Overview is about 11.8%, with average lease rates of approximately $13.08 psf. Under construction at the world-famous St. Johns Town Center in the Southeast quadrant of the city, the rush is on for the opening of BJ’s Brewhouse at Butler Boulevard and Gate Parkway and Season’s 52 across between Capital Grill and Butler Boulevard. Over in the Orange Park market, look for Buffalo Wild Wings to open in the former Johnny Carino’s space and Logan’s Roadhouse Grill at River City Marketplace on the Northside of town. Unemployment in Jacksonville is now below 10% at an estimated 9.5%. That was, until a simple announcement in January by Del Haize that they were closing all of their stores in the Florida Market. This amounts to 20 stores and 900 employees. Additionally–– the Sears announcement of the closing of the Kmart at Blanding and Kingsley in Orange Park. This coupled with the existing vacancies created by large retailers who pulled out of the market several years ago, Circuit City, Linens and Things and still more vacancies left by retailers who repositioned themselves with the market (Wal Mart, Marshalls, Fresh Market, Sound Advice) leaves Jacksonville looking at close to 2 million square feet of vacant anchor space. On the bright side, some of this space has been absorbed by the recent announcement of 4 new LA Fitness centers and several Planet Fitness locations. Season’s 52 and BJ’s Brewhouse, both opened in the St. Johns Town Center area, along with a new Pei Wei, which is currently under construction. Smash Burger, M Shack and Logan’s Roadhouse grill also opened. Under construction and to be delivered in 2012 is Sleiman Development’s Villages of Amelia, anchored by Publix, Kohl’s and TJMaxx and Phase 2 of The Fountains at Atlantic and Kernan, anchored by LA Fitness. Globally we are not as good as the best markets nor are we as bad as the really bad markets. 20 JaCkSOnviLLE CapitaL MaRkEtS tREnDS $0.60 9.0% $0.50 Rolling 12-Mo Volume (In Billions) 8.5% JaCkSOnviLLE HiStORiCaL REnt & OCCupanCy Average Cap Rate $0.40 8.0% 94.0% $16.00 $15.50 Occupancy 92.0% $0.30 7.5% Rental Rate $15.00 90.0% $0.20 7.0% $14.50 88.0% $0.10 6.5% $14.00 86.0% $0.00 6.0% $13.50 84.0% $13.00 Source: Real Capital Analytics 82.0% $12.50 Power Center & Shopping Center Statistics From CoStar Property Report “The overall shopping center fundamentals in Florida continue to “Aggressive retailers are acting with Market Makers show recovery, but a renewed interest in backfiling locations much prettier picture parkway Shops that ensure their growth plans are met for Ramco-Gershenson - Northside is being painted by 2010 and 2011. As demand for retail real Shopping Centers in 89,240 SF - Dick’s and Marshalls estate continues to increase, and without Under Construction - Opening March 2013 well located growth new supply coming on line, we expect this areas where demand, trend to accelerate” the Fountains rent, and occupancy are Sleiman Enterprises/Weingarten - West Intracoastal approaching or in some - David Dieterle 400,000 SF - Academy Sports + Outdoors, LA Fitness cases exceeding peak Developers Diversified Realty levels from the previous villages of amelia decade. Sleiman Enterprises - Yulee 400,000 SF - Publix, Kohl’s, TJ Maxx - JJ Bujalski Opening 1Q12 Ramco-Gershenson JaCkSOnviLLE REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 YE11 Change Arlington 2,579,577 81.5% 80.9% -0.6% $11.99 $12.29 2.5% Baker County 523,548 99.7% 99.7% 0.0% $10.72 $10.16 -5.2% Beaches 3,378,453 86.7% 86.6% -0.1% $16.84 $16.57 -1.6% Butler / Baymeadows 1,794,244 90.6% 90.6% 0.0% $16.70 $14.15 -15.3% Downtown Northbank 1,396,884 87.8% 87.7% 0.0% $10.16 $10.16 0.0% Downtown Southbank 61,205 65.4% 62.6% -2.8% $23.00 $23.00 N/A Mandarin 3,326,091 89.7% 90.5% 0.8% $15.54 $14.92 -4.0% Northeast Jacksonville 1,169,690 86.0% 86.6% 0.6% $11.06 $11.33 2.4% Northwest Jacksonville 1,657,677 80.0% 79.7% -0.2% $6.88 $6.88 0.0% Orange Park / Clay County 5,347,799 85.7% 87.0% 1.3% $13.36 $12.96 -3.0% Riverside 5,087,763 92.3% 92.3% 0.0% $12.29 $12.29 0.0% San Marco 1,003,156 74.9% 75.3% 0.4% $13.27 $13.25 -0.2% Southside 7,787,557 87.1% 86.7% -0.4% $14.36 $14.30 -0.4% St Johns County 3,443,048 91.8% 90.8% -1.0% $16.65 $16.44 -1.3% Jacksonville Market Total 38,556,692 87.2% 87.5% 0.3% $13.80 $13.52 -2.1% Power Center & Shopping Center Market Statistics From CoStar Property 21 Ocala / Gainesville 579,082 People GainSEviLLE EMpLOyMEnt Data MY11 YE11 Change Workforce Size 138,290 137,427 -0.63% Unemployment Rate 8.3% 7.7% -0.60% Source: Florida Research and Economic Database OCaLa EMpLOyMEnt Data MY11 YE11 Change Workforce Size 133,035 131,250 -1.36% Unemployment Rate 12.6% 11.6% -1.00% Source: Florida Research and Economic Database “Activity continues to increase with local and national players. It’s really exciting to see local entrepreneurs taking the initative to re-engage the economy” - Bartow McDonald Sperry Van Ness Market Overview The bad news: While office space in Gainesville has seemed to stabilize, both in terms of number of spaces and lease rates, retail still hasn’t gotten a consistent stable footing. For retail, we added 65,000 SF of space in the 1st Quarter, then we added 29,000 SF in the 2nd Quarter, then another 38,000 SF in the 3rd Quarter, and now we’ve added an additional 51,000 SF. Rates have gone up and down during 2011 from $15.54/SF at the start of the year to the current $15.13/SF. While this is down from last quarter, rates have general stayed in this price range since the 2nd Quarter of 2010. Restaurant leasing is the most active but still not happening at a fast pace by any means. Retail leasing under 1,000 SF is more prevalent while anything over 2,500 SF sits for long periods of time. With an average days on the market of almost 1.5 years, it is essential to price it right and make sure the properties aesthetics are in tip top shape. It isn’t uncommon for tenants to receive up to $8/SF in tenant improvements for second generation space or as much as 6 months of free rent on the front end. The good news: Leasing is way up! When you look at year over year volume, far more leases are getting done now then a year ago. The problem is space is hitting the market at a faster pace than the leasing. Retail construction has come to a halt, which is a good thing while inventories are leased up. Positive absorption days are nearing but it is happening very slowly. Grocery anchored centers are averaging roughly 95% occupancy. It is the non—anchored centers, strip centers, neighborhood centers that reach the 15—20% vacancy factor. “As an area developer in Orlando, The Innovation Gainesville movement still dominates the media and is picking up Gainesville, and Tallahassee, I am finding traction around the world. Innovation Square is a development site located between that the soft commercial real estate the University of Florida and downtown Gainesville that is serving as the poster child market is allowing for unprecedented for this movement. The master idea is to become a community where large technical opportuities for the franchise prospects and innovation type companies want to locate their business to by offering incentives, we are working with. The availability sites, and a high quality of living for their employees and owners. On the same note, of tenant improvement monies, free Progress Corporate Park, the original innovation type development, is also working rent and attractive leasing terms have diligently to bring in high quality companies and minds from around the world to their allowed us to continue our aggressive state of the art facilities and beautiful grounds. A REIT has purchased over 50 acres growth in Florida in the right locations of various parcels in anticipation of doing build to suits with these companies as well at the right price” as placing them in move in ready buildings currently available. Lastly, Shands and UF - Samuel Osborne continue to be major economic drivers, building medical facilities on the east side and Tropical Smoothie along the interstate in an effort to spur further development in those areas. 22 the villages Market Makers brownwood The Villages 350,000 SF Town Center Construction Jul-11 Colony plaza The Villages 130,515 SF - Publix Anchored La plaza Grande The Villages 326,150 SF - Belk, Publix Lake Sumter Landing The Villages 510,555 SF Town Center - Barnes & Noble, Coldwater Creek, Starbucks, Panera, Jos A Bank Spanish Springs The Villages 375,455 SF Town Center - Chicos, Ruby Tuesday, Panera Bread village Crossroads The Benchmark Group - Lady Lake 160,000 SF - Best Buy, JoAnn, PetsMart, BB&B Market Overview The Villages is the largest single site residential development in the United States, spanning over 26,000 acres in adjoining Sumter, Lake and Marion counties. Home to more than 86,000 residents, The Villages has a projected build out of more than 105,000 residents by the year 2017. The Villages retail market is stable and growing. Net retail absorption has been steadily increasing and occupancy rates within the boundaries of The Villages development are near 98%. Development of Phase I of Brownwood, the third town center inside The Villages, is under construction. Brownwood is one part of a massive 300+ acre mixed use regional commercial development which will serve both the southwestern section of The Villages and the surrounding area. The primary economic drivers for the community are discretionary time and income of the area’s retired residents, The Villages Health System, and the professional and service support economy created by the nearly four million SF of commercial space in the area. Additionally, Moffitt Cancer Center opened in October 2011 as part of a 55,000 square foot addition to The Villages medical campus. Residential growth in 2011 surpassed 2010 and is showing no signs of slowing down in the coming year. Locating within The Villages borders offers many unique competitive advantages over sites in the surrounding area. Most of the retailers located inside The Villages accessible to its residents via golf cart, which is their primary means of transportation, are reaping the benefits with increased comparable sales year over year. 23 Daytona beach / volusia 1,040,584 People DaytOna MSa EMpLOyMEnt Data MY11 YE11 Change Workforce Size 254,896 251,540 -1.33% Unemployment Rate 11.0% 10.1% -0.90% Source: Florida Research and Economic Database Market Makers the pavilion CBL - Port Orange Over 550,000SF Outdoor open air shopping center - Ulta, Party City, Petco, Marshalls/ HomeGoods, Michael’s, Olive Garden, Five Guys, Red Robin Market Overview The Daytona Beach / Deltona market will see the first phase of SunRail under construction in 2012! The northernmost stops on the transit line will be DeLand and DeBary, finally making a rail connection between Volusia County and metro Orlando. This project should facilitate development around the two Volusia County stations. Daytona Beach continues to drive tourism with nearly 9 million annual visitors. The Ocean Center’s expansion in 2009 has already generated increased traffic from major national conventions and has brought in popular musical talent. Directly across from the Ocean Center and surrounded by 2,000 hotel rooms including the Wyndham Ocean Walk Resort and the Hilton Daytona Beach, Ocean Walk Village hosts over 2 million visitors annually. These projects lie in the heart of Daytona Beach’s proposed “E-Zone” development, which will include additional hotels, shops, and restaurants as well as a multi-million dollar renovation of the world- famous Daytona Beach Pier, which is planned to include a new Joe’s Crab Shack restaurant which will be their 12th location in Florida. Beach Street Riverfront will continue to be a family-friendly destination, complete with new retail and residential projects, bike paths, and parks. One notable community project which broke ground in early 2012, is a public plaza which will enhance the area with an outdoor garden and seating areas. The Saturday Farmer’s Market brings critical mass to the area each weekend which has helped the retail development along Beach Street. Several new businesses have opened including the widely popular Three Brothers Boards. They hand make wooden stand up paddle boards and ship them world wide, in addition to giving paddle board lessons and eco tours along the Halifax River. Bruce Rossmeyer’s “Original” Daytona Harley-Davidson dealership on Beach Street was recently converted into a year round attraction to preserve the histroy of the motorcyle industry. Daytona Beach will experience growth surrounding Florida Hospital’s 135-acre Memorial “From its bold, geometric shapes Medical Center as the project’s renovation in 2009 opened the trade area to additional and electrifying colors , to its medical, industrial, and residential projects. Much of the surrounding land, including the picturesque setting at the heart of Daytona Beach, The Ocean Walk prestigious LPGA International and its surrounding neighborhoods, is owned by Consolidated- Shoppes & Movies offer visitors Tomoka Land Co. International Speedway Corporation continues to drive significant one of the most unique shopping economic development, seeing strong fan turnout for the signature races and experiencing a and entertainment experiences on record-breaking turnout for the 50th annual Rolex 24 Hour at Daytona race in January 2012. Florida’s east coast. International Speedway Boulevard is thriving as a retail corridor, seeing declining vacancy - Kim Ellis rates and a new BJ’s Brewhouse, Applebee’s, and Buffalo Wild Wings. Ocean Walk Shoppes & Movies 24 Orlando 2.2 Million People “It is interesting how resilient a market can be when the basic commercial real estate fundamentals are right. We are working on an urban 71.5 Million SF of Shopping Centers infill mixed use development called Mills Park. The site has established permanent and daytime population bases and traffic patterns. It is a $14.39 boutique grocery anchored site with opportunity for a few restaurants and average rental rate small shops. Asking low $30s, with estimated NNN’s to be around $8/SF, down 3.7% we have seen a heavy demand from since mid-year 2011 strong national users and have been collecting unsolicited offers at asking price. I think that was the problem in 89.0 % occupancy the boom years…we overlooked the basics” A 0.5% increase since - Jill Rose Pelloni Development Corporation mid-year 2011 9.4% unemployment ORLanDO MSa EMpLOyMEnt Data MY11 YE11 Change Workforce Size 1,125,342 1,148,415 2.01% Unemployment Rate 10.4% 9.4% -1.00% Source: Florida Research and Economic Database Market Overview Orlando is experiencing some encouraging signs as the economy swings back to the positive side of the pendulum, with the expansion of some of its major healthcare systems. Florida Hospital’s Health Village continues to grow the 172-acre, mixed-use project that will include a 200-unit apartment complex, hotel, meeting and medical space and 120,000 SF of retail at their Florida Hospital Orlando campus. Having already completed one medical-office building that will hold over 10,000 SF of retail on the first floor, plans to break ground on additional buildings housing retail will begin in late 2012. Meanwhile, Orlando Health announced plans to expand their downtown Orlando Regional Medical Center campus starting in 2012 with a 90,000 SF expansion of the emergency department as well as adding a new 345,000 SF tower. Both of these hospital locations will be stops along the 61-mile SunRail commuter rail transit system. Construction for Phase I is expected to begin at the end of January 2012, with projections for 4,300 daily passengers being brought into these areas when it begins operation in 2014. Landlords are still in a tenant-friendly economy and therefore are finding “After a multi-year slumber, the bank debt markets ways to get more creative in order to get the “out-of-the-box” deals done. are stirring with activity as the strong independent Often this includes tenant improvement dollars, free rent, shorter terms or a and regional banks have aggressive loan growth combination of these. Restaurants have taken a bigger percentage of leased goals. The most sought after projects will be deals with the food and entertainment combo of Dave & Busters opening the highest quality retail properties with strong on I-Drive, followed shortly by Fogo de Chao’s churrascaria-style restaurant. locations, functional designs and a reliable stream of cashflow from well-established tenants. Credit Winter Park-based company 4Rivers Smokehouse added two additional tenant lease income streams can again command locations in 2011 with plans to move their flagship location down the street LTV ratios in the 75% range. Speculative projects and expand from 1,350 SF to 7,000 SF. Buffalo Wild Wings and Five Guys or projects relying on the sale of outparcels will be Burgers & Fries continue to press on in Central Florida opening up multiple tougher to finance” franchised locations in 2011 with plans for more in 2012. - Steve Cohen American Mometum Bank 25 ORLanDO CapitaL MaRkEtS tREnDS $0.70 9.5% “The Orlando market continues to improve. With essentially no new $0.60 Rolling 12-Mo Volume (In Billions) 9.0% construction, vacancy rates are $0.50 Average Cap Rate 8.5% dropping. $0.40 8.0% There is strong demand / competition $0.30 7.5% for key restaurant locations as $0.20 7.0% expansion sites for brands already established in this market as well as $0.10 6.5% from new concepts to Orlando. $0.00 6.0% - Christie Alexander Source: Real Capital Analytics NAI Realvest ORLanDO HiStORiCaL REnt & OCCupanCy 94% $19.00 “Although the market dynamics based on job growth Occupancy and household formation have not generally been 93% $18.00 Rental Rate conducive for significant new retail development in $17.00 Central Florida, there are some signs of life in certain 92% $16.00 areas. In the tourist corridor, the Orlando Premium 91% Outlets has expansion plans, Unicorp’s I-Walk project $15.00 90% is moving through the approval process featuring $14.00 attractions like a rotating observation tower, 89% $13.00 Madame Tussaud’s wax museum, and 200,000 SF 88% $12.00 other retail. Tourism visitation has increased since about mid-year 2010, resulting in positive year over year comparisons in both hotel occupancies and Power Center & Shopping Center Statistics From CoStar Property Report average room rates, yielding some optimism” - Dave Darsey & Owen Beitsch Real Estate Research Consultants “We saw a substantial increase in activity in 4th quarter of 2011, including some refinancings. It seems like banks are cautiously returning. The deals have lower LTV and higher equity than pre-crash but there is finally some activity” - Terry Delahunty, Esq., LEED AP GrayRobinson, P.A. “Tenants are still difficult to come by for vacant space. We are seeing a lot more leasing activity in the third quarter of the year compared to 1st and 2nd quarters. However, most qualified leads have come through a strategic plan - traditional cold calling and canvassing and not just relying on answering the phone.” - Willow Shambeck Cursor Realty Corp 26 Market Makers Stadium Corners Lake nona planned Development Windcrest Development by Crossman & Company - Viera Tavistock - Lake Nona Publix Super Markets - 69,518 SF 7 Million SF Commercial Entitlements Opening Q1 2012 Nearly $2 Billion Invested in New Construction Casselberry Commons Developers Diversified Realty - Casselberry 215,135 SF Redevelopment - Publix, TJ Maxx, Ross, Stein Mart Orlando premium Outlets Simon - Orlando black Lake village 80,000 SF Expansion Planned, Construction ‘12 Equinox Development Properties - Orlando 6 acres - Joe’s Crab Shack, Texas Roadhouse Saxon Crossings Michael Collard Properties by Forness Properties - Orange City Current at Lee vista Hobby Lobby - 50,000 SF Developers Diversified Realty - Orlando 682,000 SF - Target university plaza North American Development Group - Winter Park Eagle Creek town Center 77,918 SF Redevelopment - Publix, Chase Bank Emerson International - Lake Nona Completion Apr-11 200,000 SF - Grocery Anchored Construction planned 1Q12 winter park village Casto - Winter Park i-Drive pad Sites New leases: Taps, Lime Fresh, Ginger, Soccer Locker, Music Lab, Equinox Development Properties - Orlando Mon Creperie, The Bar Method Fitness Studio, Sprint 9 acres for 6 outparcels - Walgreens, WaWa, Taco Bell ORLanDO MSa REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 YE11 Change 436 Corridor 5,062,188 93.7% 94.1% 0.4% $18.20 $18.48 1.5% Altamonte / Douglas 2,386,682 89.0% 89.4% 0.4% $12.68 $12.49 -1.5% Brevard County 12,900,780 87.2% 86.5% -0.7% $11.66 $11.66 0.0% Casselberry 3,595,867 86.4% 90.2% 3.8% $14.03 $15.31 9.1% Downtown 34,734 98.7% 100.0% 1.3% $16.00 $0.00 -100.0% Kissimmee 3,217,888 89.9% 90.8% 0.9% $16.00 $15.65 -2.2% Lake County 6,312,552 89.7% 89.3% -0.4% $17.06 $15.04 -11.8% Lake Mary 2,151,041 91.6% 92.5% 0.9% $17.72 $18.31 3.3% Lee Road 473,047 91.6% 91.1% -0.5% $15.36 $14.98 -2.5% Longwood 1,037,645 88.1% 87.1% -1.0% $12.73 $12.81 0.6% Maitland 672,918 84.2% 84.0% -0.2% $15.18 $15.60 2.8% Maitland Center 1,534,478 87.1% 87.1% 0.0% $20.16 $19.57 -2.9% Metro West 1,237,098 88.7% 86.1% -2.6% $15.31 $15.87 3.7% North Orlando Outlier 724,445 83.7% 86.5% 2.8% $13.86 $13.24 -4.5% Orlando Airport 94,937 76.6% 75.8% -0.8% $15.70 $16.85 7.3% Orlando Central Park 3,560,221 82.0% 85.8% 3.7% $12.22 $12.58 2.9% Sanford 1,989,627 89.1% 87.5% -1.6% $17.30 $15.89 -8.1% South Orange 901,634 86.1% 90.4% 4.3% $16.19 $16.11 -0.5% South Orlando Outlier 7,254,485 90.2% 90.9% 0.7% $19.47 $18.78 -3.5% Tourist Corridor 5,617,842 86.8% 88.2% 1.4% $20.35 $19.81 -2.7% University 352,667 94.5% 95.5% 1.0% $20.41 $20.04 -1.8% University Research 222,758 91.3% 90.0% -1.3% $18.19 $17.68 -2.8% West Colonial 6,276,994 87.2% 87.2% 0.0% $13.22 $13.22 0.0% West Outlier 1,488,106 89.9% 89.7% N/A 1357.0% $13.79 N/A West University 1,267,165 87.5% 84.4% -3.1% $17.81 $17.57 -1.3% Winter Park 1,109,503 94.5% 94.2% -0.3% $18.12 $18.25 0.7% Orlando Market Total 71,477,302 88.5% 89.0% 0.5% $15.39 $14.85 -3.7% Power Center & Shopping Center Market Statistics From CoStar Property 27 pasco / Hernando 639,611 People 16.2 Million SF of Shopping Centers $14.50 pasco average rental rate Market Overview $11.64 hernando Pasco County continues to be an area of growth in the greater Tampa Bay area. New residential development is once again occurring, especially along SR 54 from Wesley Chapel in the east to Trinity in the west. average rental rate SR 54 widening east of Bruce B. Downs Blvd. to Curley Road in Wesley Chapel was completed at end of 2011, resulting in new businesses looking to locate in the area toward Zephyrhills. After completing the Publix-anchored Shoppes at Sunlake Centre, Amprop Development is starting up its 87.0% pasco project across SR 54 at Sunlake Blvd. Long Lake Ranch will be a mixed-use development anchored by the 450,000 sf T. Rowe Price office campus, with entitlements for 527,000 sf of retail plus offices, multi-family occupancy and a hotel. 89.5% hernando The mostly vacant Trinity Town Center at the NEC of Trinity Blvd. and Little Road is once again offering space for lease, after having been on hold for several years. occupancy The proposed 1.3 million square feet Cypress Creek Town Center on SR 56 by I-75 has suffered through permitting delays since it was first announced in 2004, due to environmental litigation problems. Word has it that the site now appears to be a likely possibility for a Simon Outlet Mall, as the company is researching 11.2% pasco sites in the Tampa area. The Pennsylvania-based Wawa gas/convenience store chain will break ground for its first Pasco locations unemployment this spring at Ridge Road & Little Road and at US 19 & Ridge Road in Port Richey. 12.7% hernando Hernando County is experiencing growth with a 32% population increase between 2000 and 2010. The majority of its 173,078 residents are found in the Spring Hill and SW Hernando areas. Retail centers along unemployment US Hwy 19, Spring Hill Drive and Cortez Blvd. (SR 50) house major retail chains as well as local tenants, while Suncoast Crossing and the Shoppes of Avalon serve the residents by the Suncoast Parkway. The Airport Industrial and Corporate Parks are home to over one hundred aviation, manufacturing and distribution businesses. The 1.6 M square foot Walmart Distribution Center is the largest in the U.S. and is one of the largest employers in the area. The recently completed expansion at HCA Oak Hill Hospital and the New Pasco-Hernando Community College add to employment opportunities in this area. paSCO COunty EMpLOyMEnt Data MY11 YE11 Change Market Makers Workforce Size 196,015 196,884 0.44% Unemployment Rate 12.0% 11.2% -0.80% Hays towne Center Suncoast Crosssings Source: Florida Research and Economic Database Dunphy Properties - Land O’Lakes Regency Centers - Brooksville 105,000 SF - Publix Anchored McDonalds - Opened Early-11 Opened 2Q11 HERnanDO COunty EMpLOyMEnt Data MY11 YE11 Change Zephyr Commons (phase i) terra bella Workforce Size 62,854 62,895 0.07% North American Development Group Boyd Development - Land O’Lakes Unemployment Rate 13.8% 12.7% -1.10% - Zephyrhills 8 acres Retail in Mixed Use Source: Florida Research and Economic Database 105,743 SF - Publix, Staples Opened ‘11 28 Lakeland / polk 604,792 People $13.05 average rental rate 12.1 Million SF of Shopping Centers down since LakELanD EMpLOyMEnt Data year-end 2010 MY11 YE11 Change Workforce Size 272,201 269,551 -0.98% 90.2% Unemployment Rate 11.7% 10.7% -1.00% Source: Florida Research and Economic Database occupancy above the statewide average this quarter 10.7% unemployment “Polk County may be the most exciting market in Florida at this time. The opening of Legoland, the CSX Integrated Logistics Center, USF Poly Tech, and expanded facilities at the Heart of Florida Medical Center will establish a solid and diversified economic foundation in education, transportation, healthcare, Market Overview and tourism. New jobs will need housing The Lakeland/ Polk County market has seen a consistent increase in activity and new households will need retail and throughout the year in 2011. Tenants are continuing to take advantage of commercial development” reduced rents and the mass of opportunities available to them. Both housing and unemployment continues to trend downward for the fourth consecutive quarter, - Bill Owen W.H. Owen Consulting but they still remain high leaving the overall economic outlook uncertain. The number of Tenants asking for rent relief continues to steadily decrease which could be a sign of coming stability. The existing Tenants who have weathered the Market Makers downturn up to this point have reworked their operations and learned how to stay City Centre at posner park profitable in such a challenging market. Those same Tenants continue to progress Trammell Crow Company - Davenport while many of their competitors are not adapting and closing, creating a greater 450,000 SF - Under Construction market share and potential opportunity for expansion. Gresham village Watkins Retail Group - Lakeland There has, however been a great cause for optimism since the opening of the 89,831 SF - Publix Anchored, Planned Legoland theme park in Winter Haven last October. Just six weeks after its official grand opening, Legoland Florida announced its first expansion - Legoland Water Lakeland park Center Park, which is scheduled to open in summer 2012. This will keep creating more Ramco-Gershenson - Lakeland job opportunities, and will attract millions of visitors to the area giving the market 237,405 SF Planned Development - Spring 2014 a substantial economic boost. This will likely increase the overall speed of the recovery. 29 tampa / St. petersburg 2.8 Million People 97.0 Million SF of Shopping Centers $13.67 average rental rate taMpa MSa EMpLOyMEnt Data MY11 YE11 Change up from a downhill fall Workforce Size 1,301,000 599,437 -117.04% Unemployment Rate 11.1% 9.5% -1.60% since 2008 Source: Florida Research and Economic Database 89.7% occupancy “We have seen an uptick in small, free standing single tenant retail stores. down 0.4% since Larger centers built some years ago are mid-year 2011 being updated along with the conversion of large, single tenant dark boxes into multiple tenant retail. Talking to Architects and Engineers involved with 9.5% retail construction, we expect 2012 will be better than 2011. Some of these firms unemployment report that in the last few months more and more owners are contacting them about projects that have been on the shelf for some time. That’s the best news we have had in years. We are cautiously optimistic for 2012.” - Earl Cooper Hawkins Construction Market Overview The Tampa Bay’s MSA of Hillsborough, Pasco, Pinellas and Hernando counties makes it the 19th largest MSA in the United States. The Tampa Bay area is a progressive, dynamic and growing region. The retail market is showing signs of a slow-moving recovery and will continue through 2012. There is great optimism with the anticipation of the Republican National Convention and with the completion of projects like the Tampa Riverwalk. “Leasing activity, although slower Tampa will be the host of the 2012 Republican National Convention which is an than we would like, has increased opportunity for Tampa Bay to showcase the city and will benefit local business somewhat in Pinellas and owners. The event will be held at the Tampa Bay Times Forum in August with nearly Hillsborough. Rent levels are still 50,000 visitors from all over the globe expected to come to the Tampa Bay area. lower than 2 years ago, but well- Tampa will receive global attention and coverage from each television network with located space is getting hard to find. We see serious competition approximately 15,000 journalists in attendance. for prime spaces between the new hamburger, self-serve yogurt, and The next link to the Tampa Riverwalk is slated to start construction in 2012 and health/fitness concepts” be completed in early February 2013. The pedestrian waterfront walkway along the Hillsbourgh River is proposed to extend around the CapTrust building, between - Cary Anderson MacDill Park and the Brownstone segment of the Riverwalk. The total project cost Regency Centers is $1.44 million. 30 taMpa HiStORiCaL REnt & OCCupanCy taMpa CapitaL MaRkEtS tREnDS 94% $17.00 $1.0 12.0% Occupancy $16.50 Rolling 12-Mo Volume 93% Rental Rate (In Billions) 11.0% $16.00 $0.8 Average Cap Rate 92% 10.0% $15.50 $0.6 9.0% 91% $15.00 $14.50 $0.4 8.0% 90% $14.00 7.0% 89% $0.2 $13.50 6.0% 88% $13.00 $0.0 5.0% Power Center & Shopping Center Statistics From CoStar Property Report Source: Real Capital Analytics Market Makers “With the pending completion of the Riverwalk in Downtown Tampa and the need for more Caladesi Shopping Center university plaza hospitality and service type businesses, we Publix Super Markets, Inc.- Dunedin The Sembler Company - Tampa 76,869 SF - Publix Anchored 12,019 SF - CitiTrends are seeing the redevelopment of several Re-opening 3Q 2012 projects that will have new restaurants, retail, valrico Commons and service based concepts popping up. town Shoppes of bay isles North American Development - Publix Super Markets, Inc. - Longboat Key Tampa Tampa/St. Pete has yet to get a major 61,233 SF - Publix Anchored 125,000 SF - Publix discount retailer center dedicated solely to Re-opening 4Q 2012 Opened Fall 2011 discount or outlet shopping. It’s a void that we need to fill to help drive retail sales in our Metwest international Crossroads marketplace” MetLife by Florida Retail Partners - Tampa The Sembler Company - St. Price Waterhouse Coopers - 250,000 SF Petersburg - Jason Donald New Tower Opening Apr-’13 27,712 SF - West Marine Cushman & Wakefield (Tampa) taMpa MSa REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 MY11 Change Bayside 1,201,134 91.2% 92.4% 0.0% $12.47 $12.36 -0.9% Clearwater CBD 530,465 95.3% 94.8% -0.5% $12.76 $12.16 -4.7% East Tampa 5,941,699 92.2% 92.5% 0.3% $14.75 $15.25 3.4% Gateway 1,617,488 91.8% 92.1% 0.3% $17.55 $16.48 -6.1% Hernando County 4,362,327 90.5% 89.5% -1.0% $12.02 $11.64 -3.2% Manatee 7,442,354 87.0% 87.9% 0.9% $12.42 $13.10 5.5% Manatee Outlying 587,588 90.0% 90.4% 0.4% $15.92 $15.72 -1.3% Mid-Pinellas 6,191,335 89.5% 89.3% -0.3% $12.79 $12.04 -5.9% North Pinellas 7,732,689 89.1% 90.7% 1.6% $14.47 $15.37 6.2% Northeast Tampa 5,424,554 91.2% 91.2% 0.0% $13.50 $13.67 1.3% Northwest Tampa 9,570,044 91.0% 92.3% 1.3% $15.84 $15.57 -1.7% Pasco County 11,814,245 87.0% 87.0% 0.0% $12.23 $14.50 18.6% Polk County 11,939,519 89.6% 90.2% 0.5% $13.38 $13.05 -2.5% Sarasota 8,453,047 88.3% 88.1% -0.3% $16.06 $15.79 -1.6% Sarasota Outlying 2,505,996 81.4% 80.4% -1.0% $11.37 $11.37 0.0% South Pinellas 7,329,242 90.3% 91.4% 1.1% $11.58 $11.52 -0.6% South Tampa 1,451,464 93.3% 92.3% -1.0% $13.43 $14.84 10.5% St Petersburg CBD 232,801 85.4% 85.4% 0.0% $8.40 $8.41 0.1% Tampa CBD 299,734 62.6% 63.8% 1.2% $0.00 $0.00 0.0% Westshore 2,312,952 89.7% 89.2% -0.5% $15.15 $14.71 -2.9% Tampa Market Total 96,940,677 89.3% 89.7% -0.1% $13.39 $13.67 2.0% Power Center & Shopping Center Market Statistics From CoStar Property 31 Sarasota / bradenton 707,224 People 19.0 Million SF of Shopping Centers SaRaSOta MSa REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 MY11 Change Manatee 7,442,354 87.0% 87.9% 0.9% $12.42 $13.10 5.5% Manatee Outlying 587,588 90.0% 90.4% 0.4% $15.92 $15.72 -1.3% Sarasota 8,453,047 88.3% 88.1% -0.3% $16.06 $15.79 -1.6% Sarasota Outlying 2,505,996 81.4% 80.4% -1.0% $11.37 $11.37 0.0% Sarasota Market Total 18,988,985 86.9% 87.1% 0.1% $14.01 $14.15 1.0% Power Center & Shopping Center Market Statistics From CoStar Property “Since 2007, our industry, tenants, Market Makers vendors and customers have adjusted to significant changes in Cortez Commons the Florida economy. State and MLG Commercial by LandQwest Commercial - Bradenton local governments must now make Big Lots - 39,795 SF similar, significant adjustments for Completion Mid ‘11 permanent recovery to occur” Jacaranda Commons - Seth Layton North American Development Group - Venice The Sembler Company 94,700 SF - Publix, CVS Market Overview plaza venezia Michael Collard Properties - Venice Sarasota and Manatee counties follow a lineal form of development 80,000 SF - Publix Anchored through the county. Opening 4Q12 The original and more mature area through this region is the US-41 Siesta promenade corridor. This was the focus of activity with its access to the beaches Benderson Development - Sarasota 261,600 SF Office/Retail and resorts. This attracted people and development close by the airport and the university. Both of the existing Westfield malls are on the US-41 university Groves corridor. W. G. Mills - Sarasota 180,000 SF New growth in the county is now along I-75 and its intersection running Opened Fall ‘11 north and south on the eastern border of the two county area. The university park Center majority of growth has been at the intersections. The southern Sarasota Benderson Development - Sarasota county area (Bee Ridge & Clark Road) is mature and mostly built out, while Kohl’s, Fresh Market the north end (SR 64/SR 70) is newer and less developed. The proposed development of the mall on University Parkway has caused it to become university parkway Shopping Center Heritage Development Company - Sarasota the epicenter of retail in the eastern core. Walmart Supercenter, Walgreens Opened Winter ‘11 For a non-metro market area, Sarasota/Bradenton has had significant expansion of big boxes based on the projected Benderson mall plans for university town Center phase ii eastern county (University Parkway and I-75). This has attracted tenants Benderson Development - Sarasota 1.8 Million SF Mixed-Use - Nordstrom, Muvico such as Super Wal-Mart, Stein Mart, Ross, Guitar Center, and Home Depot. uS-41 & wood Street publix ManatEE-SaRaSOta EMpLOyMEnt Data Shagbark Properties - Sarasota MY11 YE11 Change 46,000 SF free-standing Publix Workforce Size 301,928 299,254 -0.89% Opened Fall’11 Unemployment Rate 10.9% 9.8% -1.10% Source: Florida Research and Economic Database 32 Martin / St. Lucie 426,385 People pORt St. LuCiE EMpLOyMEnt Data 10.5 Million SF of Shopping Centers MY11 YE11 Change Workforce Size 187,038 186,135 -0.49% Unemployment Rate 12.5% 11.2% -1.30% Market Overview Source: Florida Research and Economic Database $16.35 average rental rate Martin & St. Lucie Counties are located along the eastern coast of Florida, known as the Treasure Coast. Some would suggest the Treasure Coast is making its way to becoming the “Research Coast,” and with good reason. down 9% since year-end 2010 WHERE’S THE RETAIL? WHERE THE JOBS ARE! Research bio-tech companies like Torrey Pines and Vaccine and Gene Therapy Institute Florida (VGTI) are set to create an estimated 420 jobs by 2013. In addition, Digital Domain’s 150,000 SF 89.3% occupancy corporate office and production studio will soon be completed with plans to hire an estimated 500 people by 2014. Job creation continues to drive retail markets along the Treasure Coast. St. Lucie West and Tradition are a good example of this. higher than statewide average this quarter Rent ranges from $12.00 PSF - $25.00 PSF NNN. Market rental rates have remained constant over the past 6 months, however occupancy continues to decrease. It has been indicated that the increase in vacancy levels is due in large part to many retailers unable to pay their rent due 12.5% to overall poor economic conditions. unemployment Due to lack of pre-leasing activity in the market, many proposed retail centers have either pushed back construction dates, or remain “on-hold” indefinitely. Most of the retail leasing transactions are occurring in the St. Lucie West Blvd corridor, Jensen Beach Blvd/US1 corridor (includes the St. LuCiE HiStORiCaL REnt & OCCupanCy Jensen Beach Mall) and the Monterey 95% $21.00 Road/US1 corridor in Stuart. Occupancy 94% Rental Rate $20.00 Market Makers 93% 92% $19.00 Harbor point Ocean breeze plaza 91% Century Retail $18.00 North American Development 90% Group & Michael Collard Redevelopment - Publix 89% $17.00 Properties - Vero Beach 88% 92,000 SF - Publix Anchored Rivergate plaza $16.00 87% Opening Fall-12 The Sembler Company 86% $15.00 Port St. Lucie Jensen beach Retail 89,400 SF Redevelopment DeBartolo - Jensen Beach Publix Anchored Power Center & Shopping Center Statistics From CoStar Property Report 50,000 SF Retail - Planned MaRtin/St. LuCiE REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 YE11 Change Fort Pierce 1,840,351 83.7% 83.8% 0.1% $13.46 13.30 -1.19% Martin 2,294,907 92.4% 89.8% -2.7% $16.80 $20.51 22.08% Martin Inland 52,206 100.0% 100.0% 0.0% 0.0% 0.0% 0.00% Port St Lucie 4,819,184 89.2% 89.3% 0.1% $15.31 $16.11 5.26% St Lucie Coastal 88,313 90.1% 87.6% -2.5% $16.19 $16.19 0.00% St Lucie Inland 1,445,854 92.0% 92.7% 0.7% $20.70 $20.05 -3.11% St. Lucie Market Total 10,540,815 89.8% 89.3% -0.5% $15.03 $16.35 8.82% Power Center & Shopping Center Market Statistics From CoStar Property 33 Fort Myers / Cape Coral 625,310 People 26.6 Million SF of Shopping Centers Ft. MyERS / CapE CORaL EMpLOyMEnt MY11 YE11 Change $14.03 average rental rate Workforce Size Unemployment Rate ` 269,450 11.6% Source: Florida Research and Economic Database ` 271,425 10.2% 0.73% -1.40% down from a peak of over $20 in 2006 87.1% occupancy relatively stable for the eight consecutive quarter 10.2% unemployment Market Overview Over the second half of 2011 we saw continued improvement in the Southwest Florida economy overall. Jobs were added, home prices were up, sales were up, and permit volumes increased for new residential and commercial development. Improvements in the housing market have led to increased interest in land for new residential development. Interest is coming from existing builders and developers in the Southwest Florida marketplace, as well as new entrants. Some of the new entrants include Centerline Homes and Neal Communities, which all have large residential development operations in other areas of Florida. This resurgence of interest in residential development will likely lead to further improvements in the retail sector over the next 12-24 months because the retail sector has closely followed behind residential development. Headwinds remaining include the steady stream of bank REO properties continuing to hit the market, slow job creation, and high commodity prices. The steady stream of bank REO is putting continued downward pressure on pricing, which is hampering new development. This is likely to continue for another 12-18 months. As the slow job creation continues, it negatively affects primary housing demand and “The renaissance of The can cause an imbalance in the housing market. Further improvements in job creation; however, Downtown River District has are expected over the next 12 months. Lastly, high oil and other commodity prices continue to been a powerful, tangible example of how modern hamper businesses’ ability to hire additional employees. The high prices are likely to remain infrastructure, outstanding until the Federal Reserve raises interest rates, which is not likely to happen until 2014 or later. design and The Arts and Culture can drive economy in a city. Notable new retail buildings and developments are being constructed along the Ben Hill Griffin The best is yet to come. As any Parkway corridor. These new developments include the addition of an Olive Garden Restaurant downtown goes, so goes the and Connors Steakhouse on outparcels located at the Gulf Coast Town Center. Other notable rest of the city” retail developments in the area include two new Publix anchored shopping centers located on Bayshore Road and at the SE corner of US 41 and Del Prado Blvd. - Mayor Randy Henderson City of Fort Myers The Collier County, Southern Lee County (Bonita Springs & Estero), and Cape Coral submarkets are starting to see improvements in vacancy rates as well as rental rates. These improvements have yet to be seen in the Central Fort Myers and Lehigh Acres, where there was a heavy concentration of overbuilding of retail space during the 2005-2007 years. 34 Market Makers “Florida continues to be a priority state for Beall’s Shoppes at Delprado Outlet. ‘Right sizing’ our stores is a major focus. We North American Development Group recently completed relocations and expansions in & Paradise Ventures - North Ft. Myers Lehigh Acres, Melbourne, Marianna and Bartow. Seven 66,560 Publix, Walgreens more projects are slated for October 2011 openings Opening 3Q12 in Fort Myers, Ocala, Tampa, Stuart, Lake City, Marco Island and Poinciana. In the last 2 months, we also university plaza Jacobs Group - Fort Myers completed remodels in Pensacola (2), St. Cloud, St. Opening Mid ‘12 Augustine and Clermont. Our prototypical ‘sweet spot’ is 25,000 SF.” Estero Crossings The Wilder Companies - Estero - Jim Simpson 310,000 SF Open-Air Retail Bealls Outlet publix at Eagle Landing Halvorsen - Ft. Myers 70,000 SF Publix Anchored Opened Late ‘11 “In general, we’ve seen activity significantly patriot plaza increase at our better Grubb & Ellis - Cape Coral properties while we 225,000 SF Veteran’s Medical Facility still struggle with those Opened 2Q11 located in less desirable areas or on the fringe SOutHwESt FLORiDa HiStORiCaL REnt & OCCupanCy of the major retail corridors. We are working 96% $21.00 Occupancy with multiple national 94% Rental Rate $20.00 restaurant chains that are $19.00 new to the area which is a 92% $18.00 positive sign” 90% $17.00 - Matthew Yaniglos, SCDP 88% LandQwest Commercial $16.00 86% $15.00 84% $14.00 Power Center & Shopping Center Statistics From CoStar Property Report FORt MyERS REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 YE11 Change Bonita Springs 2,457,017 79.9% 81.1% 1.2% $13.90 $13.88 -0.1% Cape Coral 4,784,572 85.5% 86.9% 1.4% $13.88 $13.96 0.6% Charlotte County 4,676,145 90.3% 91.1% 0.8% $13.72 $13.86 1.0% City of Ft Myers 2,604,121 86.8% 86.2% -0.5% $11.83 $11.16 -5.7% Estero 720,121 83.6% 86.1% 2.5% $13.33 $13.91 4.4% Lehigh 729,502 91.1% 91.9% 0.8% $16.20 $16.42 1.4% North Ft Myers 1,325,081 87.3% 86.2% -1.1% $9.94 $10.46 5.2% South Ft Myers / San Carlos 8,849,036 85.4% 86.2% 0.8% $14.91 $14.06 -5.7% The Islands 502,645 98.7% 98.2% -0.5% $37.45 $37.45 0.0% Ft Myers Market Total 26,648,240 86.4% 87.1% 0.7% $14.26 $14.03 -1.6% Power Center & Shopping Center Market Statistics From CoStar Property 35 naples / Collier 343,0236 People 11.6 Million SF of Shopping Centers $16.63 average rental rate the third highest statewide this quarter 90.5% occupancy the second highest statewide this quarter 9.5% napLES EMpLOyMEnt Data MY11 YE11 Change unemployment Workforce Size 138,631 143,164 3.17% Unemployment Rate 11.3% 9.5% -1.80% Source: Florida Research and Economic Database Market Overview The economy is gradually warming up in Collier County, as it is in many of Florida’s retirement and vacation hotspots. The County, which blossomed to 333,000 residents over the past two decades, has now slowed down its projections to 400,000 residents by 2020. (Florida Demographic Database, August 2010). Collier County remains attractive for residential and retail growth given its quality of life, beautiful beaches, and upscale environment. Future growth is largely dependent upon job creation and snowbird relocations. Collier County is actively working on holding and expanding Arthrex, an international medical equipment company headquartered in North Naples. Arthrex plans to construct a 198,699-square-foot building on 50 acres in Ave Maria to grow its facilities for over 1,500 employees. This is good news for the county where the December unemployment rate was 9.5%. 2011 showed signs of promise in both the housing and tourism markets. Though the median price of a residential unit ($175,000) is down 4% from 2010, the number of sales in May 2011 was 94% better than May 2007, and available inventory is down to 7,541 residential units. Most importantly, taxable sales in Collier County rose 6% for the year (March 2010-March 2011) according to the Florida Department of Revenue, and this bodes well for retailers looking forward. One of the hotspots for retail continues to be The Mercato which recently added Chipotle Mexican Grill, Sperry Topsider, Rocky Patel Burn Cigar Lounge, Yogurbella, Charming Charlies, and Bio NY apparel. Pikolino’s, an international shoe store from Spain, is planning its first U.S. location in Naples at Mercato. Fifth Avenue South is a growth hot spot in central downtown Naples with the formation of its new Business Improvement District and the expansion of several existing businesses. These include The Inn on Fifth, which will redevelop the property across from its existing location with a Chase Bank and additional boutique hotel rooms, and Fifth Avenue Design Gallery. New development in East Naples is being proposed on US 41 and 951 and starting with a Chase Bank. A 170,000 sq. ft. retail development project is also proposed on 40 acres at Wilson and Golden Gate Blvd. in Golden Gate Estates. 36 “The well performing anchored SOutHwESt FLORiDa CapitaL MaRkEtS tREnDS properties are seeing some small shop absorption. However, rents $0.60 8.0% continue to remain down 20%- 7.5% 30% from their peak” $0.45 Rolling 12-Mo Volume 7.0% - Ryan Joyce (In Billions) Average Cap Rate Kite Realty Group $0.30 6.5% “There is a light at the end of 6.0% $0.15 the tunnel, but the market in the 5.5% southeast region is still unsteady. Retailers such as Dick’s Sporting $0.00 5.0% Goods and HH Gregg are now making their way into South Source: Real Capital Analytics Florida for the first time. They are taking advantage of the more desirable spaces that are now being leased at lower rates. When the market does bounce back, we will have a whole new list of clientele in the area and more retail options for the consumer” - Terry Salzman SRS Real Estate Partners Market Makers promenade at naples GLL Real Estate by The Sembler Company - Naples Golfsmith - 35,000 SF Jo-Ann Fabrics - 25,000 SF napLES REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 YE11 Change East Naples 2,232,111 85.7% 89.8% 4.1% $15.06 $12.95 -14.0% Golden Gate 712,964 92.9% 91.4% -1.5% $15.78 $14.88 -5.7% Lely 534,034 58.5% 73.0% 14.5% $14.55 $16.61 14.2% Marco Island 777,865 94.6% 95.5% 0.9% $18.82 $19.39 3.0% Naples 522,581 93.3% 96.7% 3.4% $16.08 $16.95 5.4% North Naples 6,469,008 90.7% 91.3% 0.6% $18.18 $17.98 -1.1% Outlying Collier County 319,130 93.0% 83.6% -9.4% $11.93 $11.79 -1.2% Naples Market Total 11,567,693 89.2% 90.5% 1.2% $16.93 $16.63 -1.8% Power Center & Shopping Center Market Statistics From CoStar Property 37 palm beach 1.33 Million People 38.8 Million SF of Shopping Centers $17.24 average rental rate the third highest statewide this quarter 90.0% occupancy steadily increasing for the past five quarters 9.7% unemployment paLM bEaCH EMpLOyMEnt Data MY11 YE11 Change Workforce Size 620,316 618,909 -0.23% Unemployment Rate 11.0% 9.7% -1.30% Source: Florida Research and Economic Database Market Overview The Palm Beach County market is continuing to show minor improvements through the end of 2011 and the beginning of 2012. With the down economy and upcoming presidential election, there is still some uncertainty of job creation. Though vacancy rates remain high, new businesses are becoming optimistic about expanding. A decrease in new construction will ultimately help the high but stable vacancy rates slowly begin to recover in 2012. Occupancy has slightly increased with activity in the large transactions market and big box space. Palm Beach County’s vacancy rate has decreased 1.5%, along with an increase in rent of about 1% in the fourth quarter of 2011 compared to 2010. Some users that are beginning to take over vacant Winn-Dixie boxes, and seek new locations include fitness centers (Youfit), grocers (Aldi, Publix), HHGreg, and Wal-Mart. “Values for core properties have rebounded, perhaps at a rate that Available end-cap and out-parcel spaces once occupied by Blockbuster are starting to is faster than anticipated. Overall become occupied by small restaurants (Chipotle, Dunkin Donuts, frozen yogurt) and yields on a relative basis are, however, banks (Bank United, Wells Fargo and Chase). Other developing businesses include attractive to the institutional investor. Batteries Plus and discount retailers (Dollar Tree, Family Dollar). Palm Beach County Despite the improved core valuations, has also seen a significant arrival of casual dining restaurants (Brio Tuscan Grill, Corner there continues to be a significant volume of distressed investment Bakery Café, and Burger Bar by Chef Allen). opportunities for transistional assets. This level of activity should continue to Population growth and a boost in visitors during the winter months prove to be benefiting increase through the end of the year” the Palm Beach retail market, especially in downtown West Palm Beach. Also, an increase in spending during the holiday season has helped local retailers become optimistic for a - Casey Cummings promising 2012. RAM Realty Services 38 paLM bEaCH HiStORiCaL REnt & OCCupanCy 93% $22.00 93% $21.00 Occupancy 92% Rental Rate paLM bEaCH CapitaL MaRkEtS tREnDS 92% $20.00 91% $0.75 9.0% 91% $19.00 Rolling 12-Mo Volume (In Billions) 8.5% 90% $0.60 Average Cap Rate 90% $18.00 8.0% 89% $17.00 $0.45 7.5% 89% 88% $16.00 $0.30 7.0% 6.5% $0.15 Power Center & Shopping Center Statistics From CoStar Property Report 6.0% $0.00 5.5% Source: Real Capital Analytics Market Makers palm beach Mall Shoppes at woolbright new England Development - west palm beach Woolbright Development - Boynton Beach Redevelopment - palm beach Fashion Outlets 156,814 SF - Publix Anchored Opening 2013 whitworth Farms Legacy place Monroe’s Prestige Group - Boynton Beach GLL Real Estate by The Sembler Company - 112,375 SF - Publix Anchored Palm Beach Gardens Shoe Carnival - 11,633 SF, Opening 1Q12 “Capital markets in the Southeast continue trends we publix at Lake worth have witnessed since the start Brandon Partners - Lake Worth of 2010, as core properties 28,000 SF free-standing Publix “The last three years have been extremely receive the majority of Opened Apr-’11 difficult for Florida’s shopping center attention from investors and industry. Nevertheless, all of us at lenders, and cap rates maintain publix at palm beach plaza Woolbright Development are strong a steady decline since their T.L. Pittman - West Palm Beach believers in the long-term growth outlook peak in November of 2009” Redevelopment, Publix - 45,000 SF for Florida’s future. The worst of this crisis is behind us and our best days are ahead - Whitney Knoll publix at Riviera beach of us” Newmark Knight Frank Brandon Partners - Riviera Beach 28,000 SF free-standing Publix - Duane Stiller Opened Late ‘11 Woolbright Development paLM bEaCH REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY 11 YE 11 Change MY 11 YE 11 Change Boca Raton 5,058,642 90.8% 92.2% 1.4% $24.11 $21.36 -11.4% Boynton / Lantana 6,093,274 86.7% 87.7% 1.0% $18.08 $17.29 -4.4% Delray Beach 4,036,040 88.0% 89.3% 1.3% $16.14 $16.19 0.3% Jupiter 2,898,132 93.0% 92.8% -0.2% $20.83 $19.24 -7.6% North Palm Beach 4,547,010 87.9% 88.6% 0.7% $16.08 $15.27 -5.0% Palm Beach 2,825,442 89.8% 91.3% 1.5% $19.78 $20.12 1.7% Palm Springs / Lake Worth 1,109,636 92.7% 89.8% -2.9% $12.90 $12.79 -0.9% Royal Palm Beach / Wellington 4,888,760 91.1% 91.3% 0.2% $18.03 $16.95 -6.0% West Palm Beach 7,372,132 87.8% 88.9% 1.1% $15.63 $15.77 0.9% Palm Beach Market Total 38,829,068 89.2% 90.0% 0.8% $18.00 $17.24 -4.5% Power Center & Shopping Center Market Statistics From CoStar Property 39 broward / Ft. Lauderdale 1.75 Million People 52.6 Million SF of Shopping Centers $17.67 average rental rate the 2nd highest statewide this quarter 90.4% occupancy relatively stable since year end 2009 8.6% unemployment bROwaRD COunty EMpLOyMEnt Data MY11 YE11 Change Workforce Size 987,898 978,951 -0.91% Unemployment Rate 9.5% 8.6% -0.90% Source: Florida Research and Economic Database Market Overview Broward County, with a stabilized population of over 1.7 million, continues to play an integral role in the South Florida regional economy. The Atlantic Ocean to the east and the Everglades system to the west create natural boundaries for the region, which is largely built-out, so future growth will increasingly take the form of urban infill development and redevelopment. Port Everglades remains one of South Florida’s strongest economic engines with annual operating revenues of more than $66 million. More than 5,300 ships call at Port Everglades in a year forming the basis of a diverse maritime operation that includes a thriving cruise industry and a reputation as the “world’s best cruise port.” Nova Southeastern University is the nation’s seventh largest, not-for-profit, independent university, with more than 28,000 students and 103,000 alumni on a sprawling, 300-acre Fort Lauderdale-Davie campus. Retail development in Broward County is still very limited with less than a handful of smaller retail projects and banks coming out of the ground. Kohls, Aldi, Dicks Sporting Goods, and HH Gregg aggressively pushed into South Florida during 2010 and 2011 but have focused on second generation space. These retailers are pumping new life into some older, very well located centers that are being redeveloped to accommodate them. Michaels, Pet Supermarket, Ross, Toys R “Capital is available again for retail. Debt and equity are readily available for the right Us/Babies R Us and Winn Dixie have also been active in various submarkets. project and the right sponsor.” - James Fried Aztec Group 40 bROwaRD CapitaL MaRkEtS tREnDS $0.8 9.0% bROwaRD HiStORiCaL REnt & OCCupanCy Rolling 12-Mo Volume $0.7 96% $20.00 (In Billions) 8.5% $0.6 Average Cap Rate Occupancy 95% $19.50 8.0% Rental Rate $0.5 94% $19.00 $0.4 7.5% 93% $18.50 $0.3 7.0% 92% $18.00 $0.2 6.5% 91% $17.50 $0.1 90% $17.00 $0.0 6.0% 89% $16.50 Source: Real Capital Analytics Power Center & Shopping Center Statistics From CoStar Property Report Market Makers Sunshine plaza the Fountains Global Fund Investments - Tamarac Developers Diversified Realty - Plantation Marshalls - 27,720 SF, Opening Late ‘12 477,000 SF Redevelopment Completed - Kohl’s, Marshalls/ pompano beach publix HomeGoods “With the slow but steady absorption of Brandon Partners - Pompano Beach Dick’s Sporting Goods, Jo-Ann Fabrics vacancy grocery stores and well located Redevelopment, Publix - 54,000 SF vacant boxes in existing centers our anchor Opening ‘12 pembroke Crossing tenant market is beginning to stabilize. The Prudential - Pembroke Pines 289,000 SF Redevelopment - Old Navy, new Borders vacancies will create more bal Harbour Square Ramco Gershenson - Ft. Lauderdale Babies R Us, Dick’s, PetSmart, ULTA vacancy but most are well positioned and 147,483 SF Redevelopment - Michael’s, Opened Summer ‘11 will be reconfigured to accommodate new PetSmart, ULTA, Chase Bank, Chipotle, tenants to our market as we as some of Pei Wei Asian Diner Regions bank plaza the more established rertailrs that have Opened Fall ‘11 Ft. Lauderdale been in theis market for decades. There Former Winn-Dixie Redevelopment - is an actual shortage of opportunites in Coral Landings iii Dick’s some submarkets for many of the smaller Stiles - Coral Springs national shop merchants, resteraunts, and 155,000 SF Redevelopment the publix at Galleria banks. Aldi, Opened 4Q11 Ft. Lauderdale - Alan Karrh Publix - 28,000 SF, Opened Aug-’11 Stiles Coral Square Mall 941,000 SF Kohl’s - 99,000 SF, Opened ‘11 bROwaRD REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 YE11 Change Commercial Blvd 1,348,384 94.7% 94.9% 0.2% $14.25 $14.68 3.0% Cypress Creek 1,460,217 88.2% 89.7% 1.5% $12.67 $12.89 1.7% Downtown Fort Lauderdale 1,038,463 96.4% 94.7% -1.7% $23.01 $25.21 9.6% Fort Lauderdale 6,305,448 91.4% 91.1% -0.3% $20.23 $18.30 -9.5% Hallandale 1,922,040 92.1% 93.0% 0.9% $15.51 $16.59 7.0% Hollywood 5,729,284 91.9% 92.9% 1.0% $18.58 $19.85 6.8% NW Broward / Coral Springs 6,663,462 86.5% 86.1% -0.4% $15.67 $16.13 2.9% Outlying Broward 2,469,769 90.3% 91.6% 1.3% $19.97 $20.62 3.3% Plantation 7,658,771 86.1% 88.7% 2.6% $15.47 $15.58 0.7% Pompano Beach 8,109,563 88.9% 89.8% 1.0% $17.13 $16.02 -6.5% Sawgrass Park 1,278,861 93.8% 96.2% 2.4% $15.28 $19.67 28.7% Southwest Broward 8,604,941 90.0% 90.8% 0.7% $21.93 $21.37 -2.6% Broward Market Total 52,589,203 89.6% 90.4% 0.9% $17.69 $17.67 -0.1% Power Center & Shopping Center Market Statistics From CoStar Property 41 Miami 2.52 Million People 48.2 Million SF of Shopping Centers MiaMi EMpLOyMEnt Data MY11 YE11 Change Workforce Size 1,311,825 1,311,175 -0.05% Unemployment Rate 13.9% 10.3% -3.60% $21.55 Source: Florida Research and Economic Database average rental rate decreased 1% from the “Retailers are realizing that it third quarter is far better to take advantage of the ‘urban factor’ by being out on the street instead of in the mall. It is also true that retail demand, to an extent 94.7% occupancy never seen before, is being driven by the international consumer interested in the highest statewide shopping in an urbanized and this quarter diverse community” - Bernard Zyscovich, FAIA Zyscovich Architects 10.3% unemployment Market Overview Retail in Miami-Date has the lowest vacancy in the state and with little new supply it’s likely to remain stable through 2012. Additionally, Miami-Dade county’s unique ties to Latin America create a more globally linked economy. ``It’s a story of Miami got hit harder, but it seems to be recovering at a better rate than the rest of the country,’’ said Chris Macke, Costar’s senior real estate strategist. ``With international trade ramping up, that’s going to disproportionately help Miami.’’ “When you get into 2012 and 2013, The Genting Group’s purchase of the Omni Center represents the first step of development Miami should be one of the top for Resorts World Miami, a proposed project that has yet to receive approval. The acquisition performers” of the Omni Center includes the 527-room Hilton Hotel, 2,500-space garage, 300,000 square feet of offices, and 600,000 square feet of retail space. Along with this project would come -Chris Lafakis Moody’s many changes to the downtown Miami retail landscape. Miami-based architecture and planning firm Arquitectonica designed the 30-acre Resorts “With sales continuing to grow World Miami. Plans include four new hotels with more than 5,000 rooms; two residential towers in South Florida, Tijuana Flats is committed to expanding with up to 1,000 units; a luxury retail galleria; a 3.6-acre rooftop lagoon and natural sand beach; into Dade County. It has been more than 50 restaurants, lounges, bars and nightclubs; a high-tech multimedia entertainment tough to find the premium sites area showcasing the music and culture of Florida and South America; and 700,000 square feet of with such low vacancy in all the convention and meeting space. major markets. We are looking forward to opening locations Genting is working with local property owners and officials to help re-envision the 3-mile within the next 12 months. baywalk that, in part, runs along its property, next to Adrienne Arsht Center for the Performing This market has been on our Arts in downtown Miami. Genting wants to transform the baywalk into a 150-acre leisure and radar for years and we are entertainment area beginning at the Miami River and running north to Margaret Pace Park. The excited to dive into it full force” contiguous baywalk would link various properties including Bayfront Park, Bayside Marketplace, the American Airlines Arena and Museum Park, including the under-construction Miami Art - Matthew Livingston Tijuana Flats Burrito Co. Museum and Miami Science Museum, currently under design. 42 MiaMi CapitaL MaRkEtS tREnDS MiaMi HiStORiCaL REnt & OCCupanCy $1.2 8.5% 98% $29.00 Rolling 12-Mo Volume 97% $28.00 Occupancy (In Billions) $1.0 8.0% Rental Rate Average Cap Rate 96% $27.00 7.5% $0.8 95% $26.00 7.0% $0.6 94% $25.00 6.5% 93% $24.00 $0.4 6.0% 92% $23.00 $0.2 5.5% 91% $22.00 90% $21.00 $0.0 5.0% Source: Real Capital Analytics Power Center & Shopping Center Statistics From CoStar Property Report Market Makers the palms town & Country Miami airport village Flagler Development Group - Kendall Courtelis Company & The Easton Group - Miami 700,000 SF - Publix, Kohl’s, Nordstrom Rack 500,000 SF Mixed Use Phase I Open, Phase II Under Construction Opening ‘12 the westchester publix at Hialeah Midwood Investment & Development - Westchester Boos Development / Publix Owned - Hialeah 200,000 SF - Publix, TJ Maxx, Home Depot Publix - 39,000 SF, Open Under Construction publix at plaza De Leon vicenza plaza Global Fund Investments / Publix Owned - Miami Courtelis Company - Hialeah Gardens Publix - 47,000 SF, Open 74,000 SF - Wal-Mart Neighborhood Market, Chase Bank Opening Summer-12 Retail Redevelopment Courtelis Company - Palmetto Bay Shore Square 17,000 SF - Fuddruckers Restaurant, Preschool 56,000 SF - CVS Pharmacy, Family Dollar, Little Caesars Under Construction MiaMi MSa REtaiL LEaSinG Data Submarket Name Inventory Occupancy Rate Rental Rate MY11 YE11 Change MY11 YE11 Change Aventura 2,336,160 96.6% 97.5% 0.9% $31.53 $33.96 7.7% Biscayne Corridor 291,373 81.3% 79.0% -2.3% $22.12 $16.43 -25.7% Brickell 106,419 100.0% 100.0% 0.0% $45.00 $0.00 -100.0% Coconut Grove 489,256 97.7% 96.6% -1.1% $27.74 $28.73 3.6% Coral Gables 415,026 92.3% 94.7% 2.4% $33.36 $35.12 5.3% Coral Way 778,405 93.4% 94.6% 1.2% $28.35 $28.06 -1.0% Downtown Miami 276,988 58.6% 58.6% 0.0% $15.00 $15.00 0.0% Kendall 9,045,378 92.8% 94.7% 1.9% $25.90 $25.86 -0.2% Medley / Hialeah 5,736,685 95.8% 95.4% -0.4% $19.91 $20.55 3.2% Miami 2,195,718 94.5% 94.9% 0.4% $13.70 $13.92 1.6% Miami Airport 5,709,759 93.1% 93.5% 0.4% $19.07 $18.91 -0.8% Miami Beach 1,029,878 95.5% 96.0% 0.6% $45.64 $45.64 0.0% Miami Lakes 2,523,586 93.8% 93.9% 0.1% $20.53 $19.76 -3.8% Miami-Dade Central County 1,244,688 93.0% 93.0% 0.0% $15.51 $15.71 1.3% Northeast Dade 5,459,396 94.5% 95.0% 0.5% $20.34 $20.13 -1.0% Outlying Miami-Dade County 240,907 88.2% 87.6% -0.6% $22.68 $23.40 3.2% South Dade 6,136,372 93.0% 93.9% 0.9% $19.04 $19.04 0.0% West Miami 4,152,642 97.2% 97.0% -0.2% $26.13 $24.95 -4.5% Miami-Dade Market Total 48,168,636 94.1% 94.7% 0.7% $21.84 $21.55 -1.3% Power Center & Shopping Center Market Statistics From CoStar Property 43 Written rePort authors Miami broward palm beach Ashley Thornburg Alan Karrh Bryan Cohen Crossman & Company Stiles Cohen Commercial email@example.com firstname.lastname@example.org email@example.com naples / Collier Fort Myers / Cape Coral Martin / St. Lucie Rod Castan Carl Barraco & Doug Meschko Janine Landolina Courtelis Company Land Solutions, Inc. Treasure Coast Commercial RE, Inc. firstname.lastname@example.org email@example.com firstname.lastname@example.org Sarasota / bradenton tampa / St. petersburg Lakeland / polk Paul Rutledge & Barbara Carnes Tracy Harrison Craig Katterfield Casto Crossman & Company Crossman & Company email@example.com firstname.lastname@example.org email@example.com pasco / Hernando Orlando Daytona beach / volusia Lill Hanson Katherine Rush Whitaker Leonhardt & Kim Ellis American Intl Commercial Realty Crossman & Company Crossman & Company firstname.lastname@example.org email@example.com firstname.lastname@example.org the villages Ocala / Gainesville Jacksonville Geno Jarquin Beau Beery Geneva Henderson The Villages AMJ, Inc. of Gainesville Lat Purser & Associates Geno.Jarquin@thevillages.com email@example.com firstname.lastname@example.org tallahassee the panhandle J.R. Long Kevin Wattenbarger & Franciz Rentz Structure Commercial Real Estate CCIM / Southland Commerical email@example.com KevinW@CCIM.net 44 additional ContriButors American Intl Commercial Realty Kimco Realty American Momentum Bank Kite Realty Group AMJ Inc. of Gainesville LandQwest Commercial Asset Advisors and Managers Land Solutions, Inc. Aztec Group Lat Purser & Associates Bealls Outlet / Bealls Dept Stores Michael Collard Properties Beacon Hill Property Group NAI Realvest Casto NAIOP City of Daytona Beach Newmark Knight Frank City of Fort Myers North American Development Group Cohen Commercial Ocean Walk Shoppes & Movies Colliers International Office Depot Cursor Realty Corp Pelloni Development Corporation Cushman & Wakefield (Tampa) Publix Super Markets Courtelis Company RAM Real Estate Crossman & Company Ramco-Gershenson Darden Restaurants Real Estate Research Consultants Developers Diversified Realty Regency Centers DLC Management S.A. Casey Construction Douglas Property and Development The Sembler Company East Coast Retail Investment Team Sikon Construction Emerson International Sperry Van Ness / Skye Commercial RE Equinox Development Properties SRS Real Estate Partners Equity One Stiles Florida Retail Partners Structure Commercial Real Estate Florida State University Terranova Corporation Forness Properties Tijuana Flats Burrito Co. Global Fund Investments Treasure Coast Commercial RE, Inc. GrayRobinson, P.A. Tropical Smoothie Grubb & Ellis Landauer University of Central Florida Guggenheim Partners University of Florida Hawkins Construction The Villages HFF (Holliday Fenoglio Fowler, L.P.) W. H. Owen Consulting ICSC Woolbright Development 45 www.crossmanco.com www.hfflp.com For questions, comments or to request additional copies of the report please contact Melissa Grether at firstname.lastname@example.org or 407-581-6223. The information in this report, including all charts, graphs, photos and data is believed to be accurate and complete and is not warranted by HFF, L.P., Crossman & Company, any of the contributors, or any of their affiliates.
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