Pacific Place, the downtown mall that played a big role in Seattle’s retail revival, sold for $271 million. Property records show Washington D.C.-based Madison Marquette Property Investments is the buyer, and Pine Street Group is the seller.
The DJC reported in May that the five-story, 350,000-square-foot mall was expected to sell soon. The sale does not include the parking garage, which is owned by the city.
Pacific Place was part of a three-block project that included putting Nordstrom’s flagship store in the old Frederick & Nelson department store space, and redeveloping Nordstrom’s old store and the adjacent Seaboard Building that Nordstrom used for office space.
Both the new flagship Nordstrom and Pacific Place opened in 1998, according to a press release from Pine Street Group.
“When we started the three-block project, downtown Seattle was headed downhill like many downtowns in America,” Matt Griffin, managing partner of Pine Street Group, said in a press release. “All four corners of Sixth and Pine were boarded up and other retailers were leaving downtown. With the leadership of Mayor Norm Rice, City Council, Nordstrom and the local investors, the slide was reversed. Today, we are lucky to have one of the strongest and most interesting downtowns in America.”
NBBJ and Elkus Manfredi Architects designed Pacific Place. Lease Crutcher Lewis and Sellen Construction built it. (DJC)
The search for yield is pulling more investors toward the retail real estate sector and this has led to a pop in values. According to the CoStar Commercial Repeat Sales Index (CCRSI), retail asset values appreciated more than those of any other property type in 2013, with prices rising 15 percent. Growth in office building values was far lower at almost 9 percent, and apartment growth the weakest, at 6 percent.
Despite its stronger showing, retail remains cheaper than other property types; NCREIF implied cap rates for retail properties are closer to 6 percent than 5 percent, the average rate for apartment and office assets. In the broader transaction market, many retail assets are trading at an even wider spread to apartment and office properties. Therefore investors are looking harder at the retail sector as a yield pick-up play and, more recently, are testing value-add and opportunistic strategies.
An opportunistic strategy is particularly attractive on paper, as the bifurcation in the marketplace is extreme. Vacancy is concentrated in a few assets. For example, 69 percent of neighborhood center space is less than 10 percent vacant, while 17 percent of neighborhood center space is on average more than 40 percent dark.
However, “fixing” these centers is difficult. First, aggregate demand in the retail sector remains muted. Store closures have slowed, but some former credit tenants continue to close stores by the dozen. Fewer tenants are expanding today, and those that are may not target the same shopper profile that a previous tenant did, or worse, may be unwilling to pay the same rent. Second, consumer patterns shift after a center experiences a substantial dive in occupancy—consumers reroute shopping habits to more attractive centers and it is hard to rewire them to return. Third, investors remain particularly cautious about the retail sector. To date, only the best retail properties have had values recover. The retail CCRSI in prime markets is back to pre-recession highs, but the national index is still down 16 percent from the peak of the previous cycle.
(NREI) Read The Full Article HERE
Fundrise, a website that aims to draw in a broad range of investors to finance commercial real estate deals, has raised more than $31 million in its first round of funding from a group of prominent technology, real estate and other backers.
Fundrise, based in Washington DC, is a pioneer in real estate crowdfunding, allowing individuals to directly invest with as little as $100 in hotels, apartment buildings and other development projects. Until recently, even small-scale real estate projects typically had been the exclusive domain of wealthy investors and private equity firms.
The company was founded by two brothers, Benjamin (@BenMillerise) Daniel Miller, in August 2012, shortly after the JOBS Act legalized crowdfunding, although they began working on the concept as early as 2010.
The new money allows Fundrise to expand nationally and open the platform up to big developers. Over the past several months, almost 300 developers have signed on to the site.
(NY Times:Deal Book) READ MORE…
Financial Advisors and planners in today’s money market are increasingly steering high net worth and family office investment funds toward commercial real estate.
Commercial real estate investments are accompanied by a variety of benefits not found in other investment types such as: the presence of an entire team of commercial real estate specialists who can assist with all the life cycle stages of the investment as well the ability to affect change (read: appreciation) with the asset and not to mention the [likely] ability to decrepciate the asset.
With the help from the commercial real estate team, the Advisor monitor, plan and better prepare for overall estate planning. This increased stability, especially when compared to stock investments that can fluctuate daily, is often a welcome portfolio addition for high net worth investors.
According to WealthManagement.com, planners should seek out companies with the following attributes:
1. Availability and Responsiveness
2. Accurate and Detailed Reporting
3. Strong Relationships With Registered Representatives
4. Experience Working With Families
5. An Ironclad Track Record Of Privacy Protection
(WealthManagement.com) READ THE FULL ARTICLE HERE
Taxable retail sales increased 7.4 percent to $117.1 billion in 2013, the Washington State Department of Revenue reported, thanks in large part to increases in the sale of both cars and building materials, and a BIG jump in e-commerce sales, which were up 23 percent to $1.7 billion.
New and used car sales were up 12.1 percent to $10 billion, and sales of building materials and garden supplies increased 9.6 percent to $5 billion.
Sales of apparel and accessories grew 4.2 percent to $4.1 billion.
The state reported that the construction industry saw an overall increase of 15.8 percent to $19.3 billion. Building construction was up 17.1 percent over 2012 taxable sales.
See the Full Report HERE >>
Last year, Seattle grew faster than any other major American city, according to population estimates released Thursday by the Census Bureau.
From July 1, 2012 to July 1, 2013, Seattle grew by 2.8 percent — the highest rate among the 50 most-populous U.S. cities. Seattle added nearly 18,000 residents in the one-year period, bringing its population to about 652,000.
Austin, Texas had led the single-year growth rate among the biggest cities for the previous two years. In the 2011 to 2012 census data, Seattle grew by 2.1 percent, which ranked only ninth.
Also in the latest population estimates: Seattle leapfrogged Boston to become the nation’s 21st biggest city. Seattle is within striking distance of returning to the top-20 cities for the first time since 1960.
What’s the reason for Seattle’s population boom? (Seattle Times) READ MORE ….
By the end of the day Tuesday it was clear that the industry’s expectations for the 2014 RECon show had been fulfilled—the retail real estate market is once again vibrant, with tenants signing new leases, lenders clamoring to offer debt for new acquisitions and multiple investor classes looking to buy retail assets, wherever they may find them.
But some major challenges still remain, the biggest among them the question of what’s going to happen to class-B minus and class-C malls that no longer seem to be serving a purpose. (NREI) READ MORE…
CBRE’s National Retail Cap Rate Report was recently released for the first quarter of 2014 and according to the report, average retail capitalization rates did not change significantly this quarter after dropping in the final quarter of 2013.
While there was some movement in the various regions, cap rates remained stable overall nationally. The data is from the CBRE Valuation & Advisory Services (VAS) database from 2003 through Q1 2014.
VIEW THE FULL CAP RATE REPORT HERE >>>
According to an article written by Scott Saunders and published on www.rebusinessonline.com, there are a few pieces of legislation that threaten the longevity of the tax deferral and staple pursued by professional CRE investors throughout the US.
Here are the three pieces noted:
1. Former Sen. Max Baucus (D-Montana), who became U.S. ambassador to China earlier this year, released a draft proposal when he was chairman of the Senate Finance Committee that would potentially eliminate 1031 exchanges. His proposal, which is still before the Senate Finance Committee for discussion, contains other provisions unfavorable to real estate investments, including lengthening depreciation schedules for commercial and residential properties from 39 and 27.5 years, respectively, to 43 years for both and characterizing gains from real estate sales as ordinary income, instead of capital gain.
2. U.S. Rep Dave Camp (R-Michigan), chairman of the House Ways and Means Committee, has released a proposed tax bill eliminating all Section 1031 exchanges beginning Jan. 1, 2015.
3. President Obama, in his 2015 budget proposal, proposes limiting the amount of capital gains deferred in a 1031 exchange to $1 million (indexed for inflation) per taxpayer per taxable year, beginning Jan. 1, 2015.
To be fair, 1031 Exchanges often come under scrutinty of new tax reform, but it will be interesting to see what shakes out… What can “you” do? Scott advises that you contact your representatives in Congress to express support for Section 1031 in its current form.
(REBusinessOnline.com) READ THE FULL ARTICLE HERE
Seattle recently ranked eighth among the nation’s 50 largest cities on an annual list compiled by NerdWallet, a personal finance website.
NerdWallet looked at five criteria to compile its list: funding, human capital, local economy, business friendliness and affordability.
Seattle had the highest percentage of residents with at least a bachelor’s degree (58 percent) and a high per capita income ($42,280). Its business-friendliness score was a pedestrian “B-minus,” based on a survey of small business owners and the number of businesses per 100 residents (12.45).
You can view the list HERE>>>