Recent News

  • Jun
    30

Chapel Hill condos nearing liftoff after 3 years planning

June 30, 2008

Chapel Hill condos nearing liftoff after 3 years planning
June 30, 2008
By Amanda Jones Hoyle – Triangle Business Journal (Raleigh/Durham North Carolina)

CHAPEL HILL – A $75 million remake of a prime corner of Franklin Street appears to be a go after three years of back and forth between town planners and the developers.

Officials with Ram Development are so near to securing the requisite building permit that they’ve scheduled a June 27 celebration to kick off sales of 140 residential condominiums that will be part of the mixed-use project.

The development will rise on what’s now town-owned parking lot No. 5 between Franklin and Rosemary streets at Church Street.

The building, to be called 140 West Franklin Street, will stand eight stories and, besides the condos, will include 26,000 square feet of ground-level retail space and 337 parking spaces in a deck below the building. “We are fortunate to have gone through this long process and get to this point,” says John Florian, senior vice president of development for Ram Realty Services. “Everybody is really excited about what this means for downtown and for Franklin Street.”

Demolition of the parking lot is scheduled to begin in the late fall, followed by excavation of the site for the construction of the subterranean parking deck. Florian estimates that the complex will be complete in late 2010.

Liz Parham, executive director of the Chapel Hill Downtown Partnership, says the 140 West Franklin project not only will add modern retail space, but it also will link the west and east ends of the mile-long Franklin Street corridor. “The more we add in the middle, the more likely you’ll keep walking down the street,” she says. “We have a long, skinny downtown, … and this project will keep you walking.”

While many visitors to Franklin Street lament the loss of the 1.7-acre parking lot that made shopping in downtown easier, about half of the 140 West Franklin parking spaces will be sold back to the town of Chapel Hill for public parking, Florian says.

Eighteen of the condo units will be sold to the Orange Community Housing and Land Trust, which will in turn sell the units to qualified buyers of affordable housing. All other condo units will be priced from $200,000 to $300,000 for the one-bedroom units, $400,000 to $700,000 for the two-bedroom units, and $800,000 to $1.8 million for the 14 penthouse units.

Florian says that despite the housing slowdown nationally, the condos have generated strong interest due to their location. “There just aren’t many other places where you can duplicate this,” he says.

The project will feature a 27,000-square-foot public plaza decorated with commissioned art. Florian says the complex will be built to Leadership in Energy and Environmental Design standards using energy-efficient HVAC systems and lighting, as well as reclamation of stormwater on the site and recycling of building materials. But Ram has opted not to have the project certified by the U.S. Green Building Council because of costs associated with the certification process.

Bill Strom, a Chapel Hill councilman, says the town council’s goal in partnering with Ram on the project is to bring more people to the town’s core and create more energy in downtown Chapel Hill. “The plaza I envision as a crossroads for the community and a destination location,” Strom says. “It will serve as a living room for the community. Franklin Street needs a strong gathering place.”

  • Jun
    26

Betting On Condo Buyers

June 26, 2008

Betting On Condo Buyers
June 26, 2008
By Jack Hagel, Staff Writer, via The News & Observer
Developers bank on demand in Chapel Hill with mixed-use projects

CHAPEL HILL – Outside a former Franklin Street gas station, hundreds of developers, dignitaries and potential condo buyers will gather under a big tent Friday. They’ll glimpse flashy renderings, nibble smoked salmon crepes and sip adult beverages while a DJ spins adult contemporary tracks.

And they will eventually mosey down to a sales center a block away. At least that’s the hope of Ram Realty Services, which is creating the hubbub to introduce its 140-unit condominium project, 140 West Franklin.

“We’re going to be upbeat,” said John Florian, Ram’s senior vice president of development, “not sedate.”

The scene sounds so 2005.

Back then, when easy lending was fueling the housing boom, lavish parties introducing condominium projects cluttered the calendars of developers and potential buyers across the country.

Now, amid one of the biggest housing slumps in national history, it may seem difficult to take a pre-sales campaign seriously.

But Ram and two chief competitors — East West Partners and Greenbridge Developments — are betting that Chapel Hill is an oasis of pent-up demand.

Buoyed in part by UNC-Chapel Hill’s growth, developers think there will be enough buyers to snap up 368 condos by 2012.

“It has such a broad appeal to so many different segments of the market: retirees, people who are involved with the university, people that just want that as a place to raise children or a place to live,” said Casey Cummings, Ram’s president.

Ram will begin taking reservations at 140 West Franklin next month. Its goal is to finish the building, on a 1.7-acre parking lot at Franklin and Church streets, by the end of 2011. By then, Ram hopes to have sold out.

It’s a lofty goal. Because of the housing and credit crises, it is generally harder for potential buyers to sell their homes elsewhere.

Plus, the project will have to catch up to two competitors: Greenbridge and East 54.

Construction began last year on East 54, off N.C. 54 and U.S 15-501. It’s being developed by East West Partners of Chapel Hill. The project, which is to include shops, offices and a hotel, touts ample parking and proximity to Interstate 40 as the easy choice for Research Triangle Park workers.

Its 53-unit first phase is sold out, and one-quarter of its 40-unit second phase is pre-sold. “We’ve had unbelievable success,” said Roger Perry, East West’s president.

The project will include 175 condos. Perry expects to sell out by early 2009.
The green factor
East 54 also is seeking a designation from the U.S. Green Building Council’s Leadership in Energy and Environmental Design, or LEED, rating system, which would help it compete with Greenbridge, a 98-unit project at Franklin and Graham streets.

Greenbridge got financing through a Bank of America fund aimed at eco-friendly investments, said Tim Toben, a partner in Greenbridge Developments, the Chapel Hill group building the project. It has pre-sold about half its units, he said, adding that much of the project’s planned office and retail space have been leased to eco-conscious businesses attracted by its downtown location and ultra-green design.

Excavation for an underground parking deck is under way. Vertical construction is to finish in April 2010, Toben said.

The 140 West Franklin project has a more central location and more parking than Greenbridge. It will feature earth-friendly design features, but the developer won’t seek LEED certification.

Ram wants 25 percent of its condos to be pre-sold before it breaks ground on the building, which includes 26,000 square feet of shops.

In recent months, lenders have tightened standards for developers, requiring more equity and pre-sales from condo developers. Ram launched an equity fund that can finance $650 million in construction projects across the country, including 140 West Franklin.

The Chapel Hill projects, 368 units in all, range in price between $400,000 and $600,000. “There’s enough to go around out there for all three of us,” Toben said.

That optimism could defy history. It took three of the most robust real estate years — 2004 to 2006 — to sell that many new condos in all of Orange County, according to Market Opportunity Research Enterprises.
Is optimism warranted?
“Developers are very optimistic risk takers,” said Bernard Helm, president of the Rocky Mount company, which tracks North Carolina housing trends. “They have to be.

“While I think there is room for condominium development in exclusive neighborhoods in Chapel Hill, it’s going to require some patience on the part of the developers,” Helm said.

Developers say the town’s arduous, often contentious, planning-approval process limits risk. It took Greenbridge two years to be approved. In downtown Raleigh, a similar project probably would be approved in less than a year.

“If you’re willing to be patient and do things the way the town wants it done, [Chapel Hill is] … a great place to do business,” Perry said. “A lot of people don’t have the time or energy to do that.”

The benefit of patience: “When you build something in Chapel Hill, the market risk is pretty much mitigated, because there’s never enough supply,” Perry said.

Ram is familiar with supply. The company is based in South Florida, the epicenter of the nation’s condo bust. It built 800 condos in recent years, of which 600 have been sold, Cummings said.

Ram isn’t starting condos anywhere else in the U.S., but it’s so comfortable building in Chapel Hill that it is looking past 140 West Franklin to 345 additional condominiums and townhouses it wants to build. Construction of Ram’s Grove Park wouldn’t start until mid-2009, at the earliest.

“If you make the investment in time in a community,” Cummings said, “you’re rewarded for that.”

  • Jun
    26

Inside Metro Atlanta Commercial Real Estate

June 26, 2008

Inside Metro Atlanta Commercial Real Estate
June 26, 2008
The Atlanta Journal Constitution

TRANSACTIONS – Excerpt

Columbia Properties in Marietta paid $4 million for the former Home Depot Landscape Supply Center in Smyrna. The 39,000-square-foot property is located at 4600 South Cobb Drive. Florida-based real estate company Ram was the seller.

Ken Baye, Ram’s senior vice president of development, and Bader & Associates Realty handled the sale. Ram paid Home Depot $22 million this year for 11 sites in Atlanta and Dallas-Fort Worth that were part of Home Depot’s defunct Landscape Supply chain.

  • Jun
    26

Betting on condo buyers / Developers bank on demand in Chapel Hill with mixed-use projects

June 26, 2008

Betting on condo buyers / Developers bank on demand in Chapel Hill with mixed-use projects
June 26, 2008
By Jack Hagel, Staff Writer – The News & Observer

CHAPEL HILL – Outside a former Franklin Street gas station, hundreds of developers, dignitaries and potential condo buyers will gather under a big tent Friday. They’ll glimpse flashy renderings, nibble smoked salmon crepes and sip adult beverages while a DJ spins adult contemporary tracks.

And they will eventually mosey down to a sales center a block away. At least that’s the hope of Ram Realty Services, which is creating the hubbub to introduce its 140-unit condominium project, 140 West Franklin.

“We’re going to be upbeat,” said John Florian, Ram’s senior vice president of development, “not sedate.”

The scene sounds so 2005.

Back then, when easy lending was fueling the housing boom, lavish parties introducing condominium projects cluttered the calendars of developers and potential buyers across the country. Now, amid one of the biggest housing slumps in national history, it may seem difficult to take a pre-sales campaign seriously.

But Ram and two chief competitors — East West Partners and Greenbridge Developments — are betting that Chapel Hill is an oasis of pent-up demand.

Buoyed in part by UNC-Chapel Hill’s growth, developers think there will be enough buyers to snap up 368 condos by 2012.

“It has such a broad appeal to so many different segments of the market: retirees, people who are involved with the university, people that just want that as a place to raise children or a place to live,” said Casey Cummings, Ram’s president.

Ram will begin taking reservations at 140 West Franklin next month. Its goal is to finish the building, on a 1.7-acre parking lot at Franklin and Church streets, by the end of 2011. By then, Ram hopes to have sold out.

It’s a lofty goal. Because of the housing and credit crises, it is generally harder for potential buyers to sell their homes elsewhere.

Plus, the project will have to catch up to two competitors: Greenbridge and East 54.

Construction began last year on East 54, off N.C. 54 and U.S 15-501. It’s being developed by East West Partners of Chapel Hill. The project, which is to include shops, offices and a hotel, touts ample parking and proximity to Interstate 40 as the easy choice for Research Triangle Park workers. Its 53-unit first phase is sold out, and one-quarter of its 40-unit second phase is pre-sold. “We’ve had unbelievable success,” said Roger Perry, East West’s president. The project will include 175 condos. Perry expects to sell out by early 2009.
The green factor

East 54 also is seeking a designation from the U.S. Green Building Council’s Leadership in Energy and Environmental Design, or LEED, rating system, which would help it compete with Greenbridge, a 98-unit project at Franklin and Graham streets.

Greenbridge got financing through a Bank of America fund aimed at eco-friendly investments, said Tim Toben, a partner in Greenbridge Developments, the Chapel Hill group building the project. It has pre-sold about half its units, he said, adding that much of the project’s planned office and retail space have been leased to eco-conscious businesses attracted by its downtown location and ultra-green design.

Excavation for an underground parking deck is under way. Vertical construction is to finish in April 2010, Toben said.

The 140 West Franklin project has a more central location and more parking than Greenbridge. It will feature earth-friendly design features, but the developer won’t seek LEED certification. Ram wants 25 percent of its condos to be pre-sold before it breaks ground on the building, which includes 26,000 square feet of shops.

In recent months, lenders have tightened standards for developers, requiring more equity and pre-sales from condo developers. Ram launched an equity fund that can finance $650 million in construction projects across the country, including 140 West Franklin.

The Chapel Hill projects, 368 units in all, range in price between $400,000 and $600,000.

“There’s enough to go around out there for all three of us,” Toben said.

That optimism could defy history. It took three of the most robust real estate years — 2004 to 2006 — to sell that many new condos in all of Orange County, according to Market Opportunity Research Enterprises.
Is optimism warranted?

“Developers are very optimistic risk takers,” said Bernard Helm, president of the Rocky Mount company, which tracks North Carolina housing trends. “They have to be. “While I think there is room for condominium development in exclusive neighborhoods in Chapel Hill, it’s going to require some patience on the part of the developers,” Helm said. Developers say the town’s arduous, often contentious, planning-approval process limits risk.

It took Greenbridge two years to be approved. In downtown Raleigh, a similar project probably would be approved in less than a year.

“If you’re willing to be patient and do things the way the town wants it done, [Chapel Hill is] … a great place to do business,” Perry said. “A lot of people don’t have the time or energy to do that.” The benefit of patience: “When you build something in Chapel Hill, the market risk is pretty much mitigated, because there’s never enough supply,” Perry said.

Ram is familiar with supply. The company is based in South Florida, the epicenter of the nation’s condo bust. It built 800 condos in recent years, of which 600 have been sold, Cummings said. Ram isn’t starting condos anywhere else in the U.S., but it’s so comfortable building in Chapel Hill that it is looking past 140 West Franklin to 345 additional condominiums and townhouses it wants to build. Construction of Ram’s Grove Park wouldn’t start until mid-2009, at the earliest.

“If you make the investment in time in a community,” Cummings said, “you’re rewarded for that.”

  • Jun
    23

Ram Completes the Sale of Two Properties

June 23, 2008

Ram Completes the Sale of Two Properties
June 23, 2008

FOR IMMEDIATE RELEASE
CONTACT:
Marichelli Heredia or Heidi Armstrong
Thorp & Company
(305) 446-2700
mheredia@thorpco.com
harmstrong@thorpco.com

Ram Completes the Sale of Two Properties
Capital from sale to be used to pursue projects throughout the Southeast

Palm Beach Gardens, Fla., June 23, 2008 – Ram, a leader in real estate development and acquisitions, today announced that it has completed the sale of two properties in Georgia and Texas:
• The former 12,260-square-feet Home Depot Landscape Supply Center with an adjacent, outdoor landscape area of approximately 26,713 square feet, was sold to Columbia Properties in Marietta, Ga., for $4 million. The property is located at 4600 South Cobb Drive in Smyrna, Ga. Ken Baye, senior vice president of development with Ram, handled the transaction. Bader & Associates Realty handled the transaction for the buyer. The sale of this property was part of a portfolio of 11 similar sites acquired earlier this year.
• Villages at Old Farm, a 44,000-square-foot Walgreens-anchored strip center located at 8056 Westheimer in Houston, Texas, was sold to a local Houston buyer. The price of the transaction was not disclosed. Rudy Hubbard and Leah Gallagher with Transwestern handled the transaction for Ram. There was no broker for the buyer.

“We’ll use the capital from these sales to pursue projects throughout the Southeast as we continue with our strategy of using our expertise in redevelopment, ground-up development and urban infill to pursue projects throughout the region,” said Casey Cummings, president of Ram.

About Ram
Founded in 1978, Palm Beach Gardens, Florida-based Ram is an affiliated group of companies comprised of Ram Development Company, a leader in retail, residential and mixed-use development and acquisition, and Ram Realty Services, a provider of residential and retail management and leasing services. In addition to the Palm Beach Gardens office, Ram has offices in Fort Lauderdale and Tampa, Fla., Raleigh, N.C., and Atlanta, Ga. Currently, the company manages approximately 2.5 million square feet of retail property and 3,000 apartments and is active in Florida, North Carolina and Georgia. Ram is committed to making places that are socially responsible, economically vibrant and environmentally sustainable. For more information, visit www.ramrealestate.com.

  • May
    1

Retail Landlords Get Their Green Act Together

May 1, 2008

Retail Landlords Get Their Green Act Together
May 1, 2008
By Matt Hudgins – National Real Estate Investor




Retail landlords historically haven’t paid much attention to green building, largely because energy costs at most shopping centers are paid directly by retailers, leaving little incentive for owners to embrace conservation. Those attitudes are quickly changing, however, as a growing number of retailers embrace the concept of sustainability and tie it to their marketing efforts.

“On the retail side you tend to pass through a lot of the costs to the tenant, so there hasn’t been a big incentive to make some of these changes,” says Michael Hammon, chief development officer in the Fort Lauderdale office of Ram Realty Services. Yet Hammon and other retail developers have discovered compelling reasons to incorporate green building into their portfolios, and those factors are a green of a decidedly different hue.

Energy-efficient elements reduce operating costs while boosting an asset’s appeal to retailers and to investors on resale. This year, Ram and its partner, an affiliate of Pinnacle Housing Group, are developing Sheridan Stationside Village, a pedestrian-oriented mix of retail, office, residential and hotel space adjacent to a rail station in Hollywood, Fla. With 300,000 sq. ft. of retail space, it is a pilot project for a new Leadership in Energy and Environmental Design (LEED) certification program of the U.S. Green Building Council based in Washington, D.C.

Green office buildings currently command higher prices than conventional office buildings, with investors accepting about 50 basis points less on their capitalization rate, or initial rate of return based on the purchase price, Hammon says. He estimates the green premium for retail is at least 25 basis points and may grow to 50 basis points. “Are there institutional buyers who are going to pay a low cap rate for a green project? We think there are.”
A niche blooms
After a slow start earlier this decade, sustainable design gained momentum among retail developers two years ago. In 2006, the number of retail projects registered to pursue LEED certification grew to 39, up from 17 in 2005. In 2007, projects seeking the designation mushroomed to 186.

“In 2007, the leading retailers realized this isn’t going away and they began to respond to different consumer expectations and increased energy costs,” says Justin Doak, the Green Building Council’s retail sector manager. As Doak suggests, electric bills may be fanning the green flames in retail. Energy prices for commercial customers nationwide increased less than 2% from 2003 to 2004, but climbed 6% the following year and then swelled 9% from 2005 to 2006, according to the U.S. Department of Energy. Analysis for 2007 isn’t yet available, but energy prices are expected to show continued acceleration.

Even so, sustainability has been on a back burner for most retail investors and tenants. Of 4,693 leases signed by retailers and wholesalers in the past two years, only 1%, or 34 deals, were in green buildings, according to CoStar Group.

Sustainability has been slow to catch on with retail developers in part because they have fewer tools to work with than their counterparts in the office sector. An office provider who wants to increase a building’s energy efficiency can register the project with the Green Building Council and obtain a checklist of possible improvements. With enough green elements in the design, the project should pass muster for LEED certification.

The Council doesn’t yet offer a single, standard checklist for LEED Retail certification. The organization’s LEED Core and Shell certification program addresses retail and other commercial buildings apart from interior finishes. A separate interiors program rates the environmental impact of stores within a retail project. A single checklist for the two programs is expected to be available for a program kickoff this fall.
Pioneering efforts
Forest City Enterprises didn’t wait for the LEED Retail program before embracing the sustainable design concept. In 2004, the Cleveland-based company registered its Northfield Stapleton lifestyle shopping center as a pilot project in the LEED Core and Shell program, earning certification from the Green Building Council for a portion of the project in 2006. When Northfield was under development, the Council hadn’t set up its LEED Interiors criteria, says Jon Ratner, Forest City’s vice president of sustainability initiatives. So the company mounted its own outreach and awareness program to convince tenants of the need for sustainable design in their spaces. web api security The company produced a whitepaper that is still distributed to its renters today. It also published a strategy booklet of steps a tenant could take to lower energy costs and usage.

Each tenant was required to act on at least 17 of 51 strategies, which specified water fixtures, air-conditioning and heating units and other available products to help with LEED certification. “Now we give them a LEED scorecard rather than our own 51-point system,” Ratner says.

Another pioneer in green retail is Regency Centers, a Jacksonville, Fla.-based REIT that owns 451 retail properties with 59.2 million sq. ft. in its portfolio. Regency is participating in the Green Building Council’s pilot retail program with Shops of Santa Barbara, a 67,226 sq. ft. center anchored by a Whole Foods in Santa Barbara, Calif. Regency has also registered its Deer Springs Town Center in Las Vegas for LEED certification.

The company wants to pursue LEED certification for 20% of its new development projects in 2008, increasing that goal to 40% next year and 60% in 2010, according to Mark Peternell, vice president of sustainability for Regency. The company launched its first sustainable project in Santa Barbara, where an ordinance requires green building for new developments. In the process, Regency discovered a development niche.

“More and more municipalities and counties have certain green building requirements and/or incentives that make it more economically attractive,” Peternell says. “Often those are markets that we want to be in.”
Means to a green end
An environmentally responsible project is easier to market to retail tenants than conventional space, according to developer Mark Schuster, founder and CEO of The Schuster Group in Seattle. “We’ve been able to increase our marketability to companies that are trying to align with those values,” he says. The group is developing Mosler Lofts, a mixed-use condo and retail project in Seattle.

Mixed-use and infill projects meet important objectives for green building, says Dawn Clark, a principal in the Seattle office of global architecture firm NBBJ. “The first issue is the use of land and the re-use of land that has already been developed, not using greenfield sites,” she says.

After site selection, the developer’s next priority is a super-efficient heating, ventilation and cooling system. High-quality insulation and a white, heat-reflecting roof help make the most of mechanical systems. Using sustainable materials helps preserve natural resources while improving interior air quality.

Meeting LEED standards with environmentally friendly materials increases construction costs by about 1% over conventional methods. Upon completion, most owners reap sufficient savings through reduced operating costs to recoup the extra expense in as little as six months to two years, says Doak.
Image sells
The gradual return on investment generated by green building projects presents a problem for tenants constructing their own retail interiors, however. Many chains revamp their stores annually and have less opportunity to enjoy an overall savings from using costly green materials and furnishings.

“Usually the life cycle is what chokes retailers because they can’t amortize the cost over a longer period like a developer can,” says Eric Lagerberg, a principal in the retail studio of Callison, a Seattle-based architectural firm. Store operators’ support of a green platform is due more to shopper expectations than energy savings, Lagerberg says. “The more proactive retailers are adopting an environmental position to differentiate themselves from their competitors who may not have that position.”

Green chic is changing the way architects incorporate green elements into retail design, moving solar panels from an inconspicuous section to where customers can see and appreciate their presence. “Now they’re almost brought out like a billboard,” Lagerberg says. “The challenge is to bring some sophistication to that.”

Properties that provide bicycle racks, access to mass transit, natural lighting, water-conserving landscape and other green features help to reinforce any pro-environmental stance taken by tenants – a bargaining chip in demanding premium rent. “If they’re built into the infrastructure, it’s a great launch point for a retailer trying to go green,” Lagerberg says.

Green may boost a developer’s chances of landing financial leverage as well, says Clay Wilson, executive vice president of commercial real estate lending at Coral Gables, Fla.-based BankUnited. “A green-oriented project would have one more item in the plus column,” he says. “Having another plus is an advantage when lenders have a higher level of scrutiny of all commercial real estate projects.” With $14.4 billion in assets, BankUnited is the largest Florida-based banking institution.
Over the horizon
While developers have made strides toward sustainable shopping centers and retail additions to mixed-use projects, the industry must overcome unique challenges if green building is to become standard practice. Aside from government mandates, widespread adoption of sustainable design hinges on whether developers find ways to benefit from tenants’ reduced energy consumption.

One solution would involve restructuring retail leases, which typically require tenants to pay utility consumption costs directly to the provider. An alternative might require tenants to pay the landlord part of the savings the retailer enjoys from reduced monthly operating costs as a result of green building features.

The industry needs to calculate the energy savings of green techniques and systems before landlords can participate in a tenant’s utility savings, says Peternell of Regency Centers. “Out of the gate, we’re not expecting to capture higher rents. Once we have proven that a green building operates more efficiently, either higher rents will be paid, or there will be a way to share those savings.”

Another objective for the industry is to coordinate energy-saving features of shell buildings with each tenant’s interior construction. Unlike office providers, the retail developer leaves much of a building’s interior construction to tenants. That can put the developer and tenant at odds, such as when a developer provides natural light via skylights that don’t match the retailer’s lighting scheme. In this case, the result would be increased utility bills from heat loss through the skylight without a corresponding savings in lighting.

“The key to success in green design is integrated design, meaning the entire project team is working to accomplish the goal,” Peternell says. “If those two groups [landlords and retailers] don’t start working more closely to achieve integrated designs, the retail sector will never be able to achieve the same level of sustainability as the office sector.” Green retail will undoubtedly become more profitable as retailers and municipalities grow more aware of the nation’s proliferating eco-friendly shopping centers. The effect of increased demand on rent – and any consequences for non-green retail centers – remains uncertain.

Ratner of Forest City says the green phenomenon is just starting to take hold in the shopping center industry with many issues still unresolved. “We’re at the beginning of the curve in understanding how far this can go.” Matt Hudgins is an Austin-based writer.

  • Apr
    23

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
FOR IMMEDIATE RELEASE:

Contact:
Marichelli Heredia or Heidi Armstrong
Thorp & Company
305.446.2700
mheredia@thorpco.com
harmstrong@thorpco.com

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
    21

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
    19

Land Sold To Developers

April 19, 2008

Land Sold To Developers
April 19, 2008
By Joyce Mckenzie, – Tampa Tribune
SECTION: STATE AND REGIONAL NEWS

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
    1

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.