"If you believe everything you hear on the street," quips Sleeth, "then there is about $100 million of Puget Sound product under contract right now." He notes that some of the deals he's hearing about have three or four months to go before their scheduled closings. "And you never know what's actually going to close," Sleeth adds. "Sometimes deals fall out, especially when you're talking about multi-property transactions. They have a lot of moving parts and a higher likelihood of not succeeding."

The downtown Seattle market is out of the loop as far as deal flow. "There aren't that many opportunities for classic retail plays in downtown--most of the buildings with retail are matched with something else above, like offices."

As far as the size of deal flow Sleeth expects to see this year, he says, "We're coming off a year with a high volume, deals tallied just under $500 million. I think 2002 will be more along the lines of an average year, more like $250 million." As far as how the first quarter of this year will pencil out, Sleeth says, "It's anybody's guess, but actual closings will probably be pretty light."

Overall, the Colliers man considers Puget Sound an "under-supplied market" in terms of retail investment opportunities. "There are definitely more buyers looking than there is product available."

"But, probably the biggest piece of news in retail investment," states Sleeth, is the interest rate, which just went up recently by about 50 basis points. We're still in a healthy interest rate environment, but it will be interesting to see what is going to happen to the ten-year T-bill over the next three to six months." Sleeth notes that speculation in the brokerage community is that rate is on its way up to 5.75, or even higher.

"Hopefully rates won't climb," Sleeth offers. "What we'd really like to see is a shrinking of spreads, which would help some in terms of the recent increases." Bottom lines, he says as long a financing can be delivered in the mid-sevens, even 7.25%, investment interest in retail will remain strong.

Instant Insights /

Retail Investment: Strong on Interest, Light on Opportunity

Related Stories

Recommended For You