Hartman Simons partner Bob Simons appeared this week on the
“Commercial
Real Estate Show” radio program to discuss the recent performance of the
U.S. retail sector. For today’s Four on Friday, we highlight four comments
Simons made on the show.
• Confidence Is
Rising. The retail sector is benefitting from the growing optimism of all
its important players, Simons said.
“There’s confidence from the consumers – [they] are starting
to spend more money out there,” he noted. “There’s increased confidence from
the equity markets. Going back to ’09, 2010, the equity markets were running as
fast as they could from the retail sector. They’re starting to come back, and
valuations are starting to stabilize, improve, which brings the lenders back to
the fold.”
• Sporting Good
Retailers Are Growing. Chains such as Dick’s Sporting Goods, Academy
Sports, Cabela’s and Bass Pro Shops are expanding aggressively, Simons noted.
Other retailers adding stores at a brisk pace include grocery stores, in
particular the specialty chains that specialize in organic items.
• Investment Sales
Market Is Bifurcated. Core retail properties located in the major, gateway
markets are in demand from investors, Simons said. “Those properties are hot.
Cap rates for those properties are trading back at 2007 levels, maybe even
stronger.”
On the flip side, the market for retail sites in secondary
and tertiary markets is fairly weak, according to Simons. “If you’re the best
site in that location, you’re OK, but if you’re not one of the top two
positioned [retail] properties in that market, you’re going to be in trouble,
and that gap [in investor demand] is going to continue to widen.”
• Be Ready. Many
retail sites are still in trouble, and investors looking to purchase foreclosed
properties need to be able to pull the trigger quickly on a sale, Simons said.
“It’s fast paced. You’ve got to have the equity. You’ve got to have 100 percent
of the price in your pocket and be able to move, to take advantage of an
opportunity quickly and close.”
“If you’re still raising money, or there’s any debt
component to [your proposed deal}, forget it,” he added.
Simons appeared on the episode along with fellow guests Dan
Fasulo of Real Capital Analytics, Jeff S. Fuqua of Fuqua Development and John Crossman of
Crossman & Company. The show is hosted
each week by Michael Bull of Bull Realty.
The
episode is now available for streaming or download at www.CREshow.com and on iTunes.
The
episode also will air from 10 a.m. to 11 a.m. this Saturday in Atlanta on biz 1190 AM. The "Commercial Real
Estate Show" also airs in nine other markets across the United States on
the Wall Street Business
Network .