April 2008

  • Apr

Nationally Recognized Ice Cream Chain Opens at Midtown in Palm Beach Gardens, Fla.

April 23, 2008

Nationally Recognized Ice Cream Chain Opens at Midtown in Palm Beach Gardens, Fla.
April 23, 2008

Marichelli Heredia or Heidi Armstrong
Thorp & Company

Palm Beach Gardens, Fla., April 23, 2008 – Ram, a leader in real estate development and acquisitions, today announced that Marble Slab Creamery, a specialty ice cream store, has opened its first Palm Beach Gardens location at Midtown, Ram’s village-like, mixed-use community on PGA Boulevard.

Located on Main Street in Midtown, Marble Slab Creamery offers a variety of desserts, including fresh and natural egg-free ice cream and frozen yogurt. Marble Slab Creamery has 557 locations in 35 states as well as Puerto Rico, Canada and the United Arab Emirates.

“When we were scouting the Palm Beach Gardens area, we were looking for a location that was in the heart of the city and that offered the right mix of mid-to high-end tenants and customers. We also wanted shops located within walking distance of each other and offering easy access to the major highways,” said Harsha Patel, who co-owns Marble Slab Creamery’s Midtown location with Theresa Tecson. “Midtown has all the right attributes.”

Other unique restaurants and retail stores that have already opened at Midtown include: III Forks Prime Steakhouse, Cantina Laredo, J Alexander’s, Saitos, Field of Greens, Love Garden, Scoops Pilates Studio, Leibowitz Realty and Clayeux.

Cammi Goldberg, commercial leasing manager with Ram, handled the transaction.

Ram continues to successfully lease retail space and sell condominiums in its attractive new mixed-use community at Midtown. The project offers all the convenience and style of urban living, consisting of 225 luxury condominiums, 97,000 square feet of high-end retail, restaurant and office space, a 500-seat cultural center and a 300-seat banquet hall. It is located on PGA Boulevard between I-95 and the Florida Turnpike, offering easy access to the Palm Beach International Airport, downtown West Palm Beach and the beaches. For information about Midtown, visit www.midtownpga.com.

About Ram
Founded 30 years ago, Florida-based Ram pursues the acquisition, development, and redevelopment of commercial, multifamily and mixed-use real estate throughout the Southeast, with a focus on the major markets in Florida, Georgia and the Carolinas. Ram’s development pipeline now exceeds $750 million, to be funded through the recently launched Ram Realty Partners II. In addition to its development activity, Ram acquires existing assets and portfolios where it can add value. Ram has its corporate office in Midtown in Palm Beach Gardens, FL, with regional offices in Fort Lauderdale and Tampa, FL, Raleigh, NC and Atlanta, GA. For more information, visit www.ramrealestate.com.

  • Apr

Weathering the storm

April 21, 2008

Weathering the storm
April 21, 2008
By Paola Iuspa-Abbott / Daily Business Review – Retail Guide 2008

Retail investor Gianny Petrizzo has seen first-hand the effects of the stagnating economy. 

Petrizzo’s modest Tamarac strip mall, which had been filled with mom-and-pop stores serving residents of nearby retirement communities, has lost 40 percent of its tenants in the last eight months. 

“Some tenants are really struggling to pay their rent,” said the owner of the 44,000-square-foot Shoppes of Tamarac. “I had a couple of tenants who left without paying the rent they owed me. They left in the middle of the night.” 

The increased vacancy rate has crippled Petrizzo’s 3-year-old investment, with revenues barely covering expenses, he said. 

But while some small- and medium-size retail properties like Petrizzo’s are struggling, the situation is far from ire for the region’s retail landlords. Larger shopping plazas in visible locations and anchored by supermarkets and national tenants are weathering the economic slump. 

Regionally, overall vacancy rates remain low compared with a year ago and rental rates are not dropping — yet.

Class A retail centers continue to be a favorite of investors, though not many properties are on the block. Declining values have property owners waiting for a better time to sell. 

An economy battered by a housing downturn and a credit crunch is taking a toll on the retail market. Consumers, struggling to make mortgage payments and paying more for gas, are shopping less. So are thousands of South Floridians who have lost their jobs in the construction and real estate industries.
p>In Florida, 72 percent of job losses last year were in construction, according to the Agency for Workforce Innovation, a state-funded employment agency. 

Petrizzo doesn’t need to read any statistics to know that. 

Years ago, construction workers would pack the Shoppes of Tamarac’s Mexican restaurant during lunch hour, he said. But after the housing market crashed, the restaurant has been scrambling for customers, Petrizzo said.

More South Floridians are looking for jobs. Palm Beach County saw unemployment rise to 4.7 percent in February, up from 3.6 percent a year ago. Broward County’s unemployment rate jumped to 4 percent, up from 3.2 percent. Miami-Dade County’s unemployment rate edged up to 3.8 percent, from 3.5 percent.

Since the housing market began its descent in mid-2007, owners of small shopping centers have been hurt the most. Spending cutbacks and low consumer confidence ate into sales and pushed small shops out of business. Retaining tenants — rather than attracting new ones — has become critical, said Tim Neal, president of Neal Realty & Investments in Fort Lauderdale. His company manages and leases nearly 45 Class B shopping centers of less than 50,000 square feet across South Florida.

“We need to come up with creative ways to keep our tenants,” he said. “It is all about tenant retention, including payment workouts and temporary rent reductions.”

Neal’s management fee is a percentage of the rent he collects, so as tenants leave or negotiate lower rents, his income goes down, he said. 

“I’m having to work harder for less money,” he said. “Enticing new tenants is becoming more challenging than ever — and I’ve been in this business for 22 years.” 

With fewer retailers expanding, tenants are increasingly in control. Rent payment workouts, free rent and space improvement allowances are back, especially in older shopping centers that don’t have supermarkets or national chains to generate pedestrian traffic.

Larger retail centers aren’t seeing higher vacancy rates but it is getting tougher to find tenants, said Ivy Z. Greaner, managing partner and chief operating officer of RAM in Palm Beach Gardens. RAM owns and leases Class A shopping and strip centers throughout the Southeastern U.S.

“Leases have slowed down a lot,” she said. “We are seeing 50 percent of the volume we saw a year ago. We are seeing more delinquencies in our shopping centers, about 10 percent more than last year.”

Still, the weak retail market hasn’t discouraged RAM from moving forward with construction of Sheridan Station in Hollywood. The 40-acre project at Sheridan Street and Interstate 95, now in the permitting stage, is to have 300,000 square feet of retail space, 245,000 square feet of offices, a 150-room hotel and 1,050 residential units. RAM officials are talking to possible anchor tenants and hope to sign several of them soon.
Retail market thriving
RAM plans to look for financing in the next three months and wants a construction loan in place by the first quarter of 2009, Greaner said. Construction of the first phase is estimated to cost $225 million, she said.

Despite doom and gloom reports, real estate experts insist the retail market is performing well. South Florida’s overall retail vacancy rate is steady at about 5 percent. 

Asking rental rates are in the $25 per square foot triple net range, according to CB Richard Ellis’ retail market report for the first quarter of 2008.

Well-maintained Class A centers in vibrant communities can fetch more than $45 per square foot triple net. Single-tenant, high-end retailers in busy commercial corridors can generate rental rates of up to $125 per square foot triple net, according to CBRE.

But things are poised to change, according to Marcus & Millichap’s 2008 retail market report. 

In greater West Palm Beach, the vacancy rate is projected to jump from 6.6 percent to 6.9 percent. Average asking rents and effective rents (rents collected minus repairs and concessions) are expected to grow 3 percent — to $23.56 per square foot and $21.32 per square foot, respectively.

The rates are especially likely to rise in high-demand areas like West Palm Beach and Boca Raton. The amount of retail space in the market is expected to increase 1.2 percent.

In Broward County, vacancy rates are predicted to jump from 5.8 percent to 6.4 percent by the end of the year, according to Marcus & Millichap. Weaker demand at older properties will slow rental rate growth.

Asking rents are predicted to gain 2.5 percent this year, to $19.90 per square foot. Effective rents will grow 2.2 percent, to $17.83 percent, according to Marcus & Millichap. Developers are on target to complete 1 million square feet of retail space in the county in 2008, compared with 1.9 million square feet that came online last year.

Most new retail buildings are going up west of Florida’s Turnpike, especially in Coral Springs. 

Miami-Dade’s vacancy rate could increase from 5.3 percent to 5.7 percent. Asking rents are to grow 3.5 percent to $25.45 per square foot. Effective rents will rise 3.4 percent, to $23.01 per square foot. Developers will complete 1.6 million square feet of retail space this year, a 1.8 percent increase in the county’s retail stock. Last year, builders completed 1.9 million square feet of retail space.

Real estate broker Joe Byrnes, with Miami-based ComReal Cos., said higher vacancy rates and falling rental rates are limited to properties in more economically depressed areas

Byrnes said he doubts conditions will nosedive across the region. That happened in the early 1990s when an oversupply of retail space drastically increased vacancy rates and depressed rental rates across the board.

“Overall occupancy rates are still above 90 percent,” he said. 

Rents in affluent areas like Weston and Pembroke Pines remain stable, Bynes said. But not all the landlords he represents have properties in well-to-do neighborhoods.

Strip mall owners in Broward County are losing ground, he said. Space in shopping centers along State Road 7 between Oakland Park and Commercial boulevards that rented for $20 per square foot about six months ago, now goes for about $18 per square foot, Byrnes said.

Real estate broker Marty Busekrus specializes in office leases. But a client recently asked him to find tenants for a 10,000-square-foot retail building in Pompano Beach that saw occupancy drop 70 percent in less than a year.

A lot of the now-vacant storefronts had been leased to builders, brokers and other real estate-related businesses that have been hit hard by the residential downturn, said Busekrus, with Busekrus Investment Group in Fort Lauderdale. 

“The landlord never before in 10 years had the need to hire an outside broker,” he said. By hiring a broker, the landlord hopes to reach out to a larger pool of potential tenants.

Love Levy, the marketing manager with Coral Gables-based Flagler Development Group, said she is having no vacancy problems at Town and Country Center in West Kendall. The 293,000-square-foot property is anchored by Publix supermarket and is 90 percent occupied, about the same level as last year, she said.

“My tenants want to expand,” Love said. “We had three requests in the last six months from tenants who want more space.”

Basketball star Shaquille O’Neal’s 24 Hour Fitness Shaq Sport is scheduled to open there next month, taking up 44,000 square feet formerly occupied by a movie theater.

Town and Center is going through a long-awaited renovation and expansion at an estimated cost of $110 million, said Levy, whose company does the leasing and manages the property.

One part of center anchored by Publix recently got a new facade and construction of a 400,000-square-foot, open-air lifestyle center could start within six months. Flagler Development is negotiating with a national retailer for a 40,000-square-foot lease in the new space. Love declined to identify the prospective tenant.

Not all national retailers with a South Florida presence are in a growth mode. For example, furniture and home accessories chain Pier 1 Imports plans to close 25 more stores in the coming year.

Electronics and gadgets retailer Sharper Image filed for Chapter 11 bankruptcy protection in February and plans to close nearly 90 stores.

Women’s apparel retailer Ann Taylor Stores plans to close 117 stores — 39 Ann Taylor outlets and 78 LOFT stores — through 2010 as part of a restructuring program.

“Most national tenants have significantly scaled back or shut down their expansion plans; still, we are working deals with local tenants,” said Stephen Bittel, chairman of Terranova, an owner and manager of South Florida retail properties.

“Local tenants are less impacted [by the economic slowdown] because we have tourism,” Bittel said. 

“We recently lost some tenants, but not more than usual. But we have had more requests than usual from tenants asking if we could reduce their rents,” he said.

Despite a weak retail sector, Bittel is interested in acquiring more well-located retail centers. The problem: not many are selling. 

“Owners put their properties on the market; buyers don’t offer what they want and the owners pull the properties off the market,” he said.

Few Class A retail centers have sold in the last six month, mainly because buyers and sellers disagree over cap rates, which measure the ratio between an income producing property and its market value. The higher the cap rate, the lower the sale price.

“Sellers want a 6 cap and buyers want an 8 cap; so what happens? Sellers don’t sell and buyers don’t buy, and the market stagnates,” real estate broker Tom Brymer said. 

In today’s market, cap rates for Class A shopping centers range from 6.5 percent to 7 percent. Cap rates for Class B properties go from 7 percent to 8.5 percent, said Brymer, owner of Coconut Grove-based Thomas H. Brymer II P.A.

Cap rates have increased about 25 basis points — or a quarter of a percent — compared with last year and could go up by 50 basis points — or half a percent — by the end of the year, he said.

Property values have been falling for the last eight months, since the credit crunch drastically limited the pool of buyers for commercial properties. 

Still, sellers aren’t ready to let go of their properties for a discount unless they own a distressed center, said Brymer, who brokered his last retail sale in July. That property, a 20,000-square-foot Pinecrest building anchored by Blockbuster, sold for $8.4 million with a 6.4 percent cap rate.

Brymer is now marketing Stadium Corners, a 13-acre property anchored by a Wal-Mart Supercenter in Miami Gardens. The asking price is $15.85 million with a cap rate of 6.5 percent. The center is 100 percent occupied by tenants such as Office Depot, Washington Mutual and Wachovia. 

Brymer said he has talked with several potential buyers since the property hit the market in January. 

“We got several offers,” he said. “But the seller doesn’t have to sell — he is holding on to it” until the right offer comes along.

  • Apr

Land Sold To Developers

April 19, 2008

Land Sold To Developers
April 19, 2008
By Joyce Mckenzie, – Tampa Tribune

TEMPLE TERRACE Councilman Mark Knapp equated the decision made at Tuesday’s city council meeting to “living a dream.”

The city council voted 4-1 to sell 20.36 acres southeast of Bullard Parkway and North 56th Street for $14.9 million to Ram Development Co./Pinnacle Realty Advisors to redevelop the property into a pedestrian-friendly, mixed-use project. Plans for the site include retail, office, restaurant and residential components. Council members Knapp, Ron Govin, Ken Halloway and Alison Fernandez voted in favor of the deal, and Frank Chillura was against its approval.

Ram/Pinnacle agreed to deposit $400,000 into an escrow account that will be paid to the city at the property sale closing.

The city has the option of retaining 1.5 acres, at a cost of $500,000, to build an arts center — a decision that must be made before the closing. Bob Skinner, Ram Development Co. managing partner, said the development partnership is on track to unveil its plan to the city on Wednesday and should be prepared to close July 1.

Chillura would rather the city put the arts center on another city-owned parcel, outside the property being sold to the developers. To do so would give the city complete control over its activities, he said.

If it is built on the 1.5-acre tract, the city would have to adhere to the developer’s criteria of acceptable events, classes and office space, he said. City Attorney Mark Connolly emphasized that there is a lot of room for further negotiations on that and other issues with the developer. Skinner agreed.

“We have talked collectively, and we want what is best for both parties,” he said. “I don’t think it would be as restrictive as it may appear.”

  • Apr

Ram Realty Services Acquires Home Depot Landscape Supply Portfolio

April 1, 2008

Ram Realty Services Acquires Home Depot Landscape Supply Portfolio
April 2008
Shopping Center Business / Newsline Retailer Update

Ram Realty Services has purchased 11 Home Depot Landscape stores totaling 74.4 acres in the Atlanta and Dallas areas from The Home Depot, which closed all its landscape supply stores in November 2007. Ram Realty Services is evaluating the portfolio to determine which sites will be sold and which will be redeveloped. The sites range in size from 4.5 to 9 acres and contain a former Landscape Supply store building of approximately 12,000 square feet.

  • Apr

Ram’s Midtown receives certification first tenants

April 1, 2008

Ram’s Midtown receives certification first tenants
April 1, 2008
Florida Real Estate Journal

PALM BEACH GARDENS – Ram has received its certificate of occupancy for two of its condominium buildings at the Residences at Midtown, and the first condo owner has moved in.

The residences in the two four-story buildings range from 733 sf to 2,030 sf . Two more residential buildings – another four-story building and a two-story building above the retail shops of Main Street – will soon be complete, according to the firm.

Midtown is a mixed-use community on PGA Boulevard between I-95 and the Florida Turnpike. The project consists of 225 luxury condominiums priced from $200,000s to $600,000s, 97,000 sf of high-end retail, a 500-seat cultural center and a 350-seat banquet hall.