(Carl Cronan is editor of Real EstateFlorida.)
JACKSONVILLE, FL-Regency Centers Corp. is forging ahead with development plans in spite of the prospect of losing some retail tenants to the economic downturn. The national owner and operator of grocery-anchored shopping centers says it has 48 projects under development, representing an estimated investment of $1.1 billion.
The company says it is nearing completion of its 318,000-sf Shops at Stonewall community shopping center in Gainesville, VA, nearly a year after acquiring 37 acres at Lee Highway and Old Carolina Road. Wegmans Food Markets Inc. will anchor the center with a 140,000-sf store, marking only the third Virginia location for the Rochester, NY-based upscale grocer.
Besides featuring Wegmans' iconic clock tower, the Shoppes at Stonewall will feature a broad range of retail tenants in 27 stores serving Lake Manassas area residents. Other anchors include Staples, Michaels, Ross Dress for Less and Bed Bath & Beyond.
"This is more of a community center, rather than a typical neighborhood center. It's a much more complete environment," Don Stedham, vice president of investments for Regency Centers, tells GlobeSt.com. He adds that the strength of the center's anchors and other retailers will provide a stronger draw in selling outparcels.
Regency Centers, which owns 450 retail properties totaling 60 million sf in top national markets, this week posted first-quarter financial results including funds from operations totaling $61.2 million or 87 cents per share, just ahead of analysts' expectations. Same-store net operating income grew 3.1% over the quarter, with total occupancy sustaining at 95% from the same quarter a year ago.
"We expect internal growth to moderate as store closings accelerate" during the current quarter, says Paul Morgan of Friedman Billings Ramsey & Co. in his latest research report. He points out that Regency Centers made no acquisitions during the first quarter, yet sold five outparcels for $29 million as well as the residential portion of King Farm Village in Rockville, MD for $9.5 million, at an "impressive" cap rate of just over 4.8%.
In a March interview, Regency Centers president and COO Mary Lou Fiala told GlobeSt.com that the retail sector was preparing for tough times through the remainder of this year. Fiala will become chair of the International Council of Shopping Centers during this month's Las Vegas convention.
"I believe over time there will be more retail bankruptcies and a slight decline in occupancy in most portfolios, and not the kind of rent growth we have had," Fiala said during an ICSC conference in Hollywood, FL. "You have to stand back, do what you need to do and wait for the credit markets to turn back around."
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