Wednesday, April 7, 2010

Urban Growth

A new trend is emerging across our nation’s urban areas. Driven by a desire to spend less time in traffic, live in a smaller footprint and work/play within an urban atmosphere, aging boomers and Gen XYZers alike are leaving the edge and making their way back to the city. Developers and retailers are benefiting as properties located in these urban areas are taking advantage of the changing demographic landscape.

This trend is highlighted in a recent Retailing Today story, concerning J.C. Penny’s move into Manhattan. For most of its history, J.C. Penny shied away from Manhattan because of the number of competitors and their store space needs. However, recent times have seriously cut down the level of competition, while also providing new vacant space to occupy. The result was a two-level, 153,000 square foot store, which opened on July 31st. In its first month, the new store surpassed sales expectations by “double digits”. The location, which sits above a subway station and a commuter rail line terminal, relaying 250,000 people past the store’s gates each day.

From a NNN investment perspective, NNN urban properties, like a typical strip center, benefit from a strong anchor or even shadow-anchored presence. A unique aspect of urban properties is that the anchor can be a dense concentration of office space or even a Metro station because the flow of subways, buses, cars, taxis and pedestrians is the engine that drives the street scene. As a result, NNN urban properties are experiencing increased demand, as they have remained successful in spite of the recession.

This coincides with the changing tastes of many investors from high risk/reward properties to ones with more stability and alternative uses. In today’s market, suitable NNN investment property is hard to find. Quality NNN investment property is harder still. Perhaps the hardest of all, are the $1 million to $5 million size transactions where the average investor and 1031 Exchange buyers focus their attention. Urban investments fit this niche and NNN investors have demonstrated a willingness to acquire these assets, often at premium prices.

Rick Fernandez is the Managing Director of Calkain Urban Investment Advisors (CUIA), a division of Calkain Companies, specializing in premier investment properties in high density, urban districts throughout the United States. CUIA builds on Calkain’s record of success in brokering some of the most notable transactions within the urban net lease market and focuses strictly on assets located within metropolitan regions. Calkain’s newest and proven division understands the ever-growing NNN urban investment market and the requirements of investors and developers working within the space. Our advisors guide clients through the many aspects which affect their prospective properties.

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