"Grocery spending per capita is up in many areas, and in growth markets, which include most Florida metropolitan centers, demand for neighborhood retail centers is predictable and reasonably dependable," Crossman tells GlobeSt.com in a new market assessment.
"Continued low interest rates, mediocre stock market returns and poor performance in other commercial real estate sectors mean more investment capital for retail development," Crossman says. "The office (investment) market is still reeling from the tech collapse and may not see full recovery for several years."
However, he cautions that "improvements in the nation's overall economic picture could put the damper on major retail development growth" because "as the economy recovers and investors start looking again at the stock markets, competition for development capital will certainly have an impact."
Crossman projects steady growth in retail facilities development over the next two to three years, with stronger growth in the Sun Belt states and fewer large retail chains leading the way. "Retail development ranks as one of the strongest sectors in U.S. commercial real estate, and the lower returns generated in other investment sectors means well-sited retail facilities in growth markets should continue to demand premium prices through 2007 and perhaps longer," Crossman tells GlobeSt.com.
As an example of robust sales volume, the broker cites the final 2003 production figures in Trammell Crow's retail investment services division which covers markets in Orlando, Tampa, Jacksonville, South Florida, Atlanta and several other markets in Southeast and Mid-Atlantic states. Crossman and C. Whitney Knoll, who heads the Atlanta division, jointly booked $430.2 million in 2003 sales involving 57 properties in 17 states. The largest transaction was a $300-million portfolio sale for Credit Suisse First Boston consisting of 42 retail assets totaling 4.2 million sf. Trammell Crow senior executives Jonathan Geanakos, Wade Wilson and Kate Stroube in the company's New York office, also worked on the Credit Suisse deal.
This year the Crossman-Knoll team expects to do even better with retail property listings already topping $200 million worth of investment grade retail properties in Florida and the Southeast. "Florida and the Southeast is a primary target for investors in retail properties," Crossman tells GlobeSt.com. "For an ideally situated property, investors are paying top prices today and that should continue for some time in the future.
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