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Earth Shoe Retail Stores in Southern California Not Internet

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									                                                                                          2nd Quarter 2010




My Viewpoint

                           Steve Avoyer
                           President
                           The market is evolving with surprises almost daily. Many retailers, some of them
                           dangerously close to the brink last year, have posted spectacular increases in stock
                           value as compared to just 12 months ago. Apple is up 215%, Bed Bath & Beyond is up
                           172%, Office Depot is up 1,600%, Pier 1 is up 1,750%, and J. Crew is up 300%.
                           Doesn't seem to reflect what we are seeing on Main Street, does it? Final Christmas
                           numbers were better than anyone was predicting (up 5% from a year ago) and
                           between the end of 2009 and the end of the 1st quarter of 2010, sales were up a
                           whopping 6%. People seem to be learning to live with the new environment we find
                           ourselves in and (as Americans always do) adapt to make a buck.

                            I still have my doubts about tenants that are trying to be everything to everyone
                            (department stores), but value-oriented users are thriving in high barrier to entry
areas like Southern California. They are expanding, gaining market share and making cut rate lease deals (sorry
landlords) unheard-of only 2 years ago. As odd as it seems, considering what we are led to believe is happening
in the broader market, parking lots at good malls and shopping centers are busy. Why is this? I think it's partly
because Americans simply like to shop as a pastime. So centers that have enough value retailers, possibly an
entertainment component like theaters (movie prices are rising but still less expensive than Disneyland, a
professional sports game or a video arcade), and a spectrum of food choices for different family structures and
incomes; are still able to bring in the bodies. Consumers are still shopping bargains, still wary of completely
opening up the checkbook, still nervous about job status; but are not as paralyzed as they were last year at this
time.

Of course, unemployment is still through the roof (up 22% from a year ago in CA and up 21% in San Diego
County), a true universal residential recovery is still an illusion (although the media is reporting a modest turn
around) and we are still waiting for the other shoe to drop as it relates to CMBS maturities, retail income
property foreclosures and more retail bankruptcies - any of which could change property viability, drag some
borrowers into loan compliance issues (even on good properties) and even send us back into a double-dip
recession.

So at the end of the day, the market has loosened up in some sectors and in selected geographic areas. But low
barrier to entry areas like Vegas, Phoenix, Inland Empire and Imperial County are still really suffering. Some
centers in those areas that shouldn't have been built probably won't make it - they likely will be transformed into
other uses (church, multi-family, government, etc.).

Enormous capital sources are still chasing limited distressed/discounted and investment opportunities in retail. It
seems as if we are somewhat insulated from a truly cataclysmic event in So Cal because most multi-locational
lower price point retailers still want good locations in this fertile demographic area and as most of them are public
companies, still need to provide Wall Street with plans for growth.

The conclusion is that there simply are no universal truths in our business any more. What is happening in
Detroit and Philadelphia simply doesn't relate to what is happening in our submarket. So be careful which tea
leaves you are reading and who sold them to you.

We'll compare notes after Vegas.
Steve
Featured Broker
 Brian Quinn
                        The featured broker this month is Brian Quinn, a veteran of Flocke & Avoyer for over 18
                       years. In his tenure at Flocke & Avoyer, Brian has completed over 700 lease and sale
                       transactions. Brian has represented many private and institutional owners throughout his
                       career and has completed transactions with Wal-Mart, Kohl's, Marshalls, Ross, Dick's
                       Sporting Goods, Sports Authority, Henry's, Saks and many others.
                       Outside of his time at Flocke & Avoyer, Brian enjoys spending time with his 12 year old
                       triplets, Sophia, Olivia, and Stephen, and is on the Board of Directors and is past
                       chairman of Big Brothers Big Sisters of San Diego. An avid sportsman, Brian plays in a
                       basketball league and is the Head Coach for the Poway Pop Warner Lightening Titans
                       team.
                       To contact Brian, email him at bquinn@flockeavoyer.com or call him directly at
                       (858) 875-4672.


Highlighted Listing
                                         SAN DIEGO SPECTRUM
                                         San Diego Spectrum is strategically located on the signalized
                                         intersection of Clairemont Mesa Blvd & Overland Drive in San Diego, CA
                                         and is adjacent to YMCA and the San Diego County Tax Assessors office.
                                         The center includes: Jack in the Box, Panda Express, La Salsa,
                                         Starbucks, Sprint, Togo's, Robeks, and H&R Block.
                                         The property is a multi-tenant daytime population-oriented development
                                         with great street visibility and features:



        Dominant project in immediate hub.
        Strong daytime population and traffic.

Listing Broker:

Jon Horning
jhorning@flockeavoyer.com
858.875.4667


Highlighted Tenant
                          Flocke & Avoyer has been selected as the exclusive Tenant Representative for USAA in
                          San Diego County!

                          USAA, a Fortune 200 Company, has been in business for close to 90 years. As a
                          company that has traditionally served their customers via the internet and over the
                          phone, USAA has selected San Diego as the second market that they will open their
                          Financial Centers and ATM's. USAA has always been known for their customer service
                          and by opening these brick and mortar locations, they hope to further enhance their
                          reputation for quality customer service.

Site Requirements:


        2,500-3,500 SF
        End-cap preferred but will consider inline
        High visibility, easy access, convenient surface parking preferred
        ATM Opportunities

Click here for USAA's website.

Tenant Representatives:

Tommy Gibbs                        Steve Avoyer
tgibbs@flockeavoyer.com            savoyer@flockeavoyer.com
858.875.4677                       619.280.2600
Earth Day

Earth Fair 2010
@ Balboa Park
April 18th 10am - 5pm

Earth Day at Balboa Park is a great event to learn more about the environment and your community.
There are many attractions for all ages, including live contemporary and folk music. Children can enjoy arts &
crafts, a parade, as well as a children's stage with music and storytelling.
You'll find out-of-the-ordinary food that will make you wish it was available in the park all year long.
Spend an hour browsing the booths or the whole day enjoying the music, parade and people.
http://www.earthdayweb.org/


Community Involvement
Bill Thaxton
Bill Thaxton, Senior Vice President at Flocke & Avoyer, has been a member
of the 550 member Rotary Club of Downtown San Diego for over 12 years.
Through Rotary, Bill has participated in building a kindergarten and medical
clinic in the impoverished east Tijuana area, working on San Diego River
improvement projects, and fundraising activities for a variety of worthwhile
local and international projects.
The San Diego Downtown Club is the sixth largest out of 33,000 Rotary
International clubs, worldwide. Rotary International is the world's first
service club organization, with more than 1.2 million members, and is
dedicated to eradicating polio, combating hunger, improving health and
sanitation, providing education and job training, and promoting peace.
 Bill also enjoys rowing on Mission Bay and spending time with his wife and
son.


Featured Landlord

RUSSO PROPERTIES, LTD.

Written by: Paul Russo, General Partner
Russo Properties, Ltd.

In the late 1970's, The Russo Family was in the motion picture
theatre business in San Diego. At that time, we owned and
operated five drive-in theatres and four indoor theatres. Steve
Avoyer and Jim Flocke were young brokers at Coldwell Banker.
They knocked on the office door at the Campus Drive-In and
began discussions with my father, Bill and me about transitioning
into the shopping center business. With Steve's and Jim's
guidance, we slowly created a plan to sell some properties and use
the capital to develop and purchase others. When Steve and Jim
started their own business in 1985, we did not hesitate to become one of their first clients.

Russo Properties, Ltd. was formed and in 1984, we completed construction of Campus Plaza Shopping Center,
Phase I. The property is located at the corner of College Avenue and El Cajon Blvd, near San Diego State
University. In 1988, after property acquisitions, Phase II was completed.

In 1986, we purchased the partially completed Palomar Square Shopping Center, located at the corner of
Broadway and Palomar in Chula Vista. Build-out and leasing of the project were completed in 1987.

In 1989, we purchased the leasehold interest of the La Jolla Galleria Shopping Center and the adjacent
apartments at the corner of Pearl Street and Fay Avenue in downtown La Jolla. The underlying land was
purchased in 1990.

Flocke & Avoyer Commercial Real Estate served as broker, leasing agent and development consultant for all this
activity. Today, Russo Properties continues to own and operate these properties and Flocke & Avoyer continues to
do all of our leasing. Even though my firm is the quintessential small company, I have always received the best
service on equal footing with their much larger national clients. One of my great pleasures through the years has
been to work closely with several long-time Flocke & Avoyer employees, Bill Thaxton and Stewart Keith, who
have become very successful real estate professionals in their own right. I consider Flocke & Avoyer to be an
invaluable resource in these challenging times for our industry.
Retail Investment Market Report:
4th Quarter 2009




Source: Loopnet.com

								
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