ATLANTA—In its latest Retail Investment Advisors Report, Franklin Street describes “significant interest’” in investors willing to go outside their comfort zones and invest into smaller markets. These tenants are expanding into to chase yield that is not available in major markets. Power centers are part of that trend.
GlobeSt.com caught up with Bryan Belk, senior director of Franklin Street Atlanta, to get his thoughts on these trends in part two of this exclusive interview. You can still read part one: Southeast Power Center Trends to Watch.
GlobeSt.com: What were power center sales like in 2015—and what do you anticipate for 2016?
Belk: I expect to see a continued steady flow of transactions much like 2015. I do not anticipate much change in the economy until after the election takes place.
GlobeSt.com: What are you seeing in terms of pricing for power centers?
Belk: Pricing always varies from asset to asset because no piece of real estate is the same. The general price range we are seeing these power centers sell for in secondary markets is a 6.75% to 7.25% cap rate.
GlobeSt.com: Who’s buying and selling and why?
Belk: The is a large variety of buyers and sellers in this market. There are the owners that bought or developed a site back before the downturn in 2006-2007 and are just now getting back to the value they were originally projecting. There are the opportunistic sellers that bought during the downturn and did some leasing to raise the NOI and are taking advantage of the current market.
In the smaller secondary markets these centers are being developed in the primary buyer pool is private investment groups. The larger REITs and institutions are focusing on the core markets like Charlotte, Atlanta, or Raleigh to place their funds.