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Want to sell my Multifamily Property what do I invest in - Surging Economy Boos Retail Sector

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Vacancy in Chicago-area retail properties declined for the second straight quarter during the first three months of 2017.

The rate fell to 9.5 percent, down from 10.1 percent in the fourth quarter—but an increase from the year-earlier period’s 8.9 percent.

Vacancy is expected to remain more or less steady in the near term as supply of new space is pinched.

“I don’t see anything on the horizon that’s going to goose the vacancy,” said Kim McGuire, a senior vice president of CBRE, which conducted the survey. Not that much new construction is hitting the market, he said, and what does is significantly pre-leased.

 

Vacancy-in-Chicago-area-retail-properties-declined-for-the-second-straight-quarter-199x400 Vacancy in Chicago-area retail properties declined for the second straight quarterMoreover, the unemployment rate fell to a 10-year low of 4.5 percent in March, and consumer confidence rose to its highest level since 2000, spurring demand, CBRE said. Asking rents climbed to $18.65 a square foot from $18.54 in the fourth quarter. Asking rents were $18.75 a year ago.

But any optimism on the retail front is tempered by prospects for a record year of bankruptcies in 2017, as the industry adjusts to more online shopping and fewer visits to the mall. Already this year, bankruptcy filers include the Limited, RadioShack, hhgregg and Gander Mountain. Other retailers, like Sears Holdings and Macy’s, are closing stores by the score.

The picture for retail landlords has improved since the third quarter, when vacancy hit a recent peak of 10.2 percent. A major factor was more than 1.3 million square feet flooding the market after Sports Authority’s liquidation.

Although the biggest first-quarter leases were for a Mariano’s supermarket in Crystal Lake and a Dick’s Sporting Goods store in Gurnee, fitness facilities—whether big (LA Fitness) or small (Orangetheory Fitness)—are the hungriest space eaters, CBRE said.

Another bright sector was “power/community” developments, where first-quarter vacancy was 7.2 percent.

Mellody Farm, a  270,000-square-foot mixed-use development  in Vernon Hills announced this month, is due for completion by the end of next year. Anchors include a Whole Foods Market, Nordstrom Rack and REI.

Also in the category is Kildeer Village Square under development in north suburban Kildeer.

The lowest vacancy was in the city north of the Eisenhower Expressway, at 3 percent, while the west suburbs clocked in at 5.8 percent. Far west suburbs had the highest submarket vacancy (12.9 percent), while neighborhood vacancy overall was 13.5 percent.

“Anything that has ‘far’ in front of it has high vacancy,” said McGuire, a result of overly optimistic developer projections for housing growth. (The far southwest suburbs were an exception, with 5 percent vacancy.)

Although fast-casual restaurants have propelled leasing, the category is not immune to competition. Two pizza chains retrenched: Toppers closed all five Chicago-area locations, and Pie Five shut eight of nine local restaurants.

On the South Side, Binny’s Beverage Depot moved its Hyde Park location to 47th Street in the Kenwood neighborhood, increasing its store size to 11,000 square feet from 3,500.

Retail For Sale/lease

Parkview Plaza
519-535 S Bartlett Rd
Streamwood, IL 60107


Property TypeRetail-Strip
SF9050
Avail 750-1500
Built1978 (Reno 2018)
Acres .78
ZoningC-2
Parking 52
Signage Monument
Rate $18 PSF
Price $585000

 

Highlights


  • High Visibility at Intersections S Bartlett Rd & Streamwood Blvd
  • Multi-Unit Retail Strip Center with Complimentary Neighborhood Tenant Mix
  • Good Visibility along busy 127th St
  • New Roof, New HVAC’s recently renovated

Description


High visibility multi-unit Retail Strip Center For Sale/For Lease at the intersection of S Bartlett Rd and Streamwood Blvd. Over 9000 SF of property on 3/4 of an acre offering a complimentary mix of tenants including a Hair Salon, Pet Grooming, Chiropractor and Farmers Insurance. Prime available space at the front of the center ideal for an Owner-occupied buyer or national retailer lease. High population densities of almost 100,000 people within 3-miles of the site. Brand new roof with transferable 20 year warranty, all new rooftop HVAC units. Recently renovated.

Demographics


1 Mi3 Mi5 Mi
Pop16842 95910236857
HH57183239780097
Ave HH Inc$92750$92253$94446

 

Map Overview


 

P1060061-1 New Listing Multi-Unit Retail Strip Center For Sale 521 S Bartlett Rd Streamwood IL 60107

Property Details


Parkview Plaza
519-535 S Bartlett Rd
Streamwood, IL 60107

For Sale
$499,000

Property Type Retail-Strip
SF 9050
Built 1978
Floors 1
Acres .78
Zoning C-2
Parking 52
Signage Monument
Occupancy 78%
Price $499000


Description


High visibility multi-unit Retail Strip Center For Sale at the intersection of S Bartlett Rd and Streamwood Blvd. Over 9000 SF of property on 3/4 of an acre offering a complimentary mix of tenants including a Hair Salon, Dry Cleaner, Staffing Business, Pet Grooming, and Chiropractor. High population densities of almost 100,000 people within 3-miles of the site. Upside potential with improved occupancy and facade renovations. Competitively priced at a little over $55/SF.


Highlights


  • High Visibility at Intersections S Bartlett Rd & Streamwood Blvd
  • Multi-Unit Retail Strip Center with Complimentary Neighborhood Tenant Mix
  • Upside Potential in a Recovering Retail Market (Service Oriented)
  • Good Visibility along busy 127th St

Demographics

1 Mi3 Mi5 Mi
Pop16842 95910236857
HH57183239780097
Ave HH Inc$92750$92253$94446

Download Full Demographic Report

[pw_map address=”521 S Bartlett Rd Streamwood, IL 60107″]

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REIS-Apartments Latest Commercial Real Estate Trends Q3 2016

Armageddon on Hold for Four Quarters

  • The national vacancy rate for multifamily remained moored at 4.4% in the third quarter, unchanged since the fourth quarter of 2015 despite the large number of new deliveries.
  • This confirms what we have posited thus far about demand remaining robust even as supply growth increases. With that said, this equilibrium is tenuous and likely won’t last.
  • For markets that experienced either a large increase in rents over the last few years, or a steady influx of new buildings – or both – landlord pricing power is being tested.
  • Market conditions in the apartment market softened a bit in the third quarter, a period they generally see the highest activity and strongest rent growth.

REIS-Office Latest Commercial Real Estate Trends Q3 2016

On Pause, Those Fine Hopes for 2016

  • We started 2016 feeling fairly optimistic about the prospects of the office sector. With the national vacancy rate declining by 40 basis points last year, we were poised to finally see an acceleration in improvement in fundamentals for the office sector.
  • With national vacancies remaining stuck at 16.0% in the third quarter, it appears that optimistic hopes about the prospects of the office sector have been put on hold – at least till the fourth quarter.
  • While the numbers disappointed in the quarter, much of the decline was a lagged response to tepid employment and economic conditions in the first quarter.

REIS-Retail-2 Latest Commercial Real Estate Trends Q3 2016

Two Steps Forward, One Step Back

  • The national neighborhood and community center retail vacancy rate increased by 10 basis points during the third quarter to 10.0%; the retail mall vacancy rate decreased by 10 basis points to 7.8%.
  • Both minor changes represent a reversal in the second quarter when the neighborhood and community center vacancy rate decreased and retail mall vacancy increased, both by 10 basis points.
  • Neighborhood and community centers have lagged due to the slow growth in median household income that has kept a lid on discretionary spending over the last few years.
  • Both neighborhood and community centers and regional malls face competition from newer and fresher retail concepts as well as e-commerce.

REIS-Industrial Latest Commercial Real Estate Trends Q3 2016

A Downshift in Demand

  • The momentum in the industrial market slowed a bit as demand growth decelerated. Nevertheless, vacancy held steady in the warehouse and distribution sector as net absorption exceeded new construction by a small margin.
  • Although the industrial sector has outperformed other property types in terms of occupancy growth, the down-shift observed in the third quarter puts the asset class on par with office and retail which followed a similar pattern.
  • Echoing the sentiment we expressed last quarter, the slow but steady rate of growth should continue going forward as most metros continue to see demand growth for industrial space.
  • Vacancy declined in the Flex/R&D subsector largely due to a sharp drop in new construction.
  • Net absorption slowed somewhat but remained positive. Market rents increased but also at moderate rates, similar to the second quarter.
  • Once again, every metro posted positive rent growth for the quarter, although some outperformed others.

REIS-Construction Latest Commercial Real Estate Trends Q3 2016

New Construction at the Cusp of Economic Change

  • The third quarter of 2016 was marked by a somewhat consistent trend – a pronounced pullback in new completions, relative to recent quarters.
  • This is readily apparent in the apartment and office sectors, but less so in neighborhood and community shopping centers where supply growth has been anemic for several years anyway.
  • What caused this pullback – especially in multifamily where we were expecting a deluge in new supply?
  • Any pickup in activity for new completions is likely to be driven by projects that are already in the pipeline, just waiting to come online in what may well be a deluge for the apartment sector in the fourth quarter.

Source: REIS

Closed Hardees Fast Food Restaurant For Sale Lemont IL

9c4edfdbe9743e90358b.jpeg.1024x1024_q90-533x400 Price Reduced Closed Hardees Fast Food Restaurant For Sale

Price Reduced

Closed Hardees Fast Food Restaurant For Sale

Former Hardee’s Drive-thru Fast Food Restaurant on a highly visible out-parcel of the Lemont Plaza, a vibrant 116,887 sf grocery store-anchored neighborhood shopping center located at the high traffic intersection of State Street (Lemont Road) and 127th, in one of the fastest growing communities in Chicago’s Southwest suburbs.

Anchored by quality retailers such as Chipain’s Fresh Market, Ace Hardware, Goodwill, Dollar Tree, Total Fitness, Subway, Dunkin Donuts and adjacent McDonalds.

Lemont Plaza is the premier local shopping destination for the town with upper-middle-income shoppers.

View Full Listing

Q4-2015-Retail-Cap-Rate-Trends Q4 2015 Retail Cap Rate Trends

Q4 2015 Retail Cap Rate Trends

The mean retail cap rate decline by 30 basis points during the quarter to 7.2%. Despite this, the 12-month rolling cap rate was unchanged at 7.4%. This is the first time in about a year that the mean cap rate has fallen below the 12-month rolling cap rate, indicating some recent pricing momentum in the market and intimating that the 12-month rolling cap rate could be heading lower in the coming quarters.

Moreover, the 12-month rolling cap rate remained roughly 70 basis points below the historical average of that metric. This is a bit wider than what we observed for apartment and office although it is roughly in line with the difference from the last two quarters. Over time, retail properties continue to get more expensive, with all of the aforementioned cap rate measures at or near post-recession lows.
Retail-Cap-Rate-Trends-Q4-2015-1 Q4 2015 Retail Cap Rate Trends

Ongoing improvements in the labor market and consumer spending are slowly translating into more demand for retail goods and space while supply growth remains muted. That doesn’t mean that this property sector isn’t without its challenges, but that despite the obvious headwinds investors are finding some value in retail centers. And this is an interesting point – vis-à-vis the other major property types, it is not a stretch to say that retail (in our case here neighborhood and community centers) faces the most serious structural challenges such as the inexorable rise of e-commerce and the proliferation of new retail subtypes complicates the landscape. Yet, investors are finding enough value that cap rates are at these levels today.

Reis Cap Rate Proforma

Cap rates are a measure of a property’s investment potential, independent of the specific buyer.

Investors, lenders, and appraisers use the current cap rate from Reis to estimate the appropriate purchase price for different types of income producing properties.

Cap Rate = Net Operating Income / Purchase Price

Cap-Rate-Proforma-4 Q4 2015 Retail Cap Rate Trends

To give our clients a complete picture of the income value of a specific property Reis evaluates three cap rates in our proformas, which are included in our sales comps, and can be seen in the cap rates proforma example above.

Estimated Going-In Cap Rate

  • An overall capitalization rate obtained by dividing the projected net operating income for the first full calendar year of ownership by the purchase price

12-Month Rolling Cap Rate

  • The 12-Month Rolling Metro Cap Rate is calculated from the average of the metro’s mean cap rate from the previous four quarters and provides a benchmark rate of comparison

Reported Cap Rate

  • The Reported Cap Rate (per sale) is reported directly by the buyer, seller or other party to the transaction, and is calculated by dividing reported net operating income by the purchase price

Source: REIS Ryan Severino on Mar 18, 2016

Q3 2015 Retail Trends

serveimage Q3 2015 Retail Trends

Q3 2015 Retail Trends

National Retail Market
On a quarterly basis, retail fundamentals have been improving only slightly. The third quarter was no different – the national vacancy rate for neighborhood and community shopping centers was once again unchanged at 10.1 percent. This marked the second consecutive quarter that vacancy was stagnant. Over the last 12 months, the national vacancy rate declined by just 20 basis points, a rather modest change for that duration of time.

Asking and effective rents both grew by 0.5 percent this quarter. This is just about on par with rent growth over the last couple of quarters. This rate of rent growth is understandable, given the relative lack of demand for these centers.

What about regional malls, the larger property type? During the third quarter, the regional mall vacancy rate was unchanged at 7.9 percent. The vacancy rate has remained essentially the same between the fourth quarter of 2013 and the third quarter of 2015. Asking rents did grow by 0.5 percent during the third quarter – year-over-year rent growth remains at its strongest since before the recession in 2007. However, this continues to be largely driven by the performance of higher end malls. Malls further down the quality spectrum are often burdened with high vacancy rates, often from unfilled anchor tenant space, preventing them from exercising pricing power over current and potential tenants.

Ret-Q32015 Q3 2015 Retail Trends

Supply and Demand Trends
The outlook should be relatively bright for retail sales, with consumer spending still relatively healthy and benefiting from cheaper oil. However, any benefit of said brighter outlook for retail properties is likely to remain muted, given how eCommerce appears to be acting as a constraint on demand for brick and mortar space.

Source: REIS Victor Calanog on Dec 8, 2015

abq-uptown-03 Vacancies Fall Rents Up at Malls and Shopping Centers

Vacancies Fall Rents Up at Malls and Shopping Centers

U.S. malls and shopping centers saw vacancy rates fall and rents tick up during the first quarter, as construction in the retail sector was muted.

Asking rents at strip and enclosed malls increased by 0.5% in the first quarter from the prior quarter, according to real-estate research firm Reis Inc. Shopping-center asking rents are up 1.9% from a year ago, while mall asking rents are up 1.8% annually.

The average vacancy rate for shopping centers fell to 10.1% from 10.4% a year earlier. Shopping centers have struggled to fill retail space since the downturn. Vacancy rates peaked at 11% in 2010 and haven’t fallen meaningfully since then.

Malls, on the other hand, have recovered considerably more quickly. Vacancy rates at regional malls fell to 7.9% in the first quarter from their peak of 9.4% in the third quarter of 2013, according to Reis.

Part of the divergence in recovery has to do with supply, according to Ryan Severino, a senior economist for Reis. There was a surge in shopping-center construction before the downturn and the market has had trouble absorbing that space with new retail leases. Mall construction, by contrast, has fallen dramatically over the past two decades.

Another issue is competition, said Mr. Severino. Consumers have more options for where to buy the items available at strip centers, including the Internet, outlet centers and downtown shops.

“Demand has kind of splintered,” Mr. Severino said. “When it comes to neighborhood and community centers, they’re often selling more mundane products. You don’t find a lot of Gucci stores in those centers.”

Rick Caruso, a real-estate investor who owns 10 open-air shopping centers in Southern California, including The Grove in Los Angeles and The Americana at Brand in Glendale, said rents are rising in large part because online retailers like eyeglasses shop Warby Parker, apparel maker Bonobos and others are seeking a physical presence in shopping centers to showcase their products.

He said Caruso Affiliated, his development firm, has a list of two dozen of these so-called e-tailers seeking brick-and-mortar spaces in his centers.

“We’re pushing up rents across the board, but only when we can have a healthy retailer,” Mr. Caruso said. “Retailers are just more bullish right now.”

Source: Wall Street Journal ROBBIE WHELAN April 3, 2015 12:01 a.m. ET