Commercial Real Estate, Capital, Insurance, Leasing & Management

Low Supply Leaves Retail Investors Hungry

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With the ICSC Southeast Conference in Atlanta right around the corner, now is a good time to take a pulse on the regional retail markets and Florida isn't the only hot market.

ATLANTA—With the ICSC Southeast Conference in Atlanta right around the corner, now is a good time to take a pulse on the regional retail markets. The overarching story: there’s more demand than supply on the investment front and Florida isn’t the only hot market.

“In the retail sector, the amount of capital raised to invest in shopping centers drastically outweighs the amounts of available supply,” Mac McCall, regional managing partner of Franklin Street in Atlanta. “Both 1031 investors and institutional buyers continue to struggle for assets that meet their investment parameters.”

One big deal that recently went down in the Southeast was the sale of the Sunbelt Portfolio, which includes Publix-, Kroger- and BI-LO-anchored shopping centers spanning 513,723 square feet throughout Florida, Georgia, South Carolina, and Texas. All told, the 96.5% occupied collection included seven grocery-anchored shopping centers.

What’s more, McCall says, investors and buyers are still stretching their risk and return profiles to extremely aggressive levels. Cap rates, he notes, continue to compress, especially as investors perceive the retail sector and economy both improving.

“We are starting to see developers get active again in new anchored shopping center development outside of just Florida,” McCall says. “A majority of these new retail developments include a multifamily component, especially in urban markets, as communities, lenders and retailers welcome the mixed-use model.”

A good example is Simon, which is putting a mixed-use spin on Phipps Plaza. The retail real estate behemoth is adding luxury multifamily units to its development in Atlanta’s Buckhead district.

Dubbed Domain at Phipps Plaza, Simon is partnering with Columbus Realty Partners to build the project. When completed, the mixed-use development will offer 319 mid-rise, urban-style luxury units with studio, one- and two-bedroom apartments. DeWayne Herbert, Phipps Plaza’s mall manager, says, “The addition of these high-quality residences at Phipps Plaza expands our ability to deliver a lifestyle embellished with luxury and quality, and creates an exciting new place for Atlantans to call home.” View PDF


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