Tampa Grocery-Anchored Center Sells For $8M

Cushman & Wakefield retail financial investment specialists Jim Michalak and Patrick Berman negotiated for the seller. The corporate buyer, a licensed broker in Wisconsin, represented itself.

The 87,000-sf, 1990-constructed center, sold by Palm Lakes LLC of Lexington, KY., has 25 tenants with a single vacancy. The average asking rent range is $15 per sf to $16 per sf net. Lifestyle Family Fitness anchors Shoppes of Amberly. Re/Max, Hungry Howie's and State Farm Insurance are among the tenants.

Michalak, an annual multimillion-dollar producer who has focused on the retail investment market for the past 17 years, sees 2003 as almost a repeat of 2002 on the sales volume side.

"Based on the level of activity for the six weeks of 2003, it appears as if, once again, demand will far outpace supply," he tells GlobeSt.com. "Limited new offerings have hit the market."

The broker says "necessity retail--grocery-anchored centers--will continue to be the most sought after product type by the majority of investors. However, "fortress malls will continue to be attractive to large institutions, including pension funds and mall REITs," Michalak says.

On fortress mall acquisitions by non-real estate operating companies, joint venture partners "with asset management experience of this product type will form joint ventures," the broker says.

But he predicts shopping center owners will continue to refinance "at these 40-year historical low rates in lieu of selling assets, primarily because they will be able to extract capital and lower annual debt service, compared to their existing mortgages."

Class A and trophy open-air strip centers "will continue to be sparse" even as many "will receive highly competitive bidding, elevated pricing and low cap rates," Michalak tells GlobeSt.com.

"Similar to 2002, a high quantity of C-grade assets will be brought to market, as it is a once-in-a-lifetime opportunity to dispose of these undesirable assets, due to the competitive nature of today's marketplace," the broker predicts.

He says "select buyers will explore joint venture ground-up developments and pre-sales; and will aggressively pursue shadow anchor local space investment opportunities."

On the consolidation side, Michalak says the number of shopping center ownerships will continue to dwindle. For example, he points to the 2002 deals which saw Kimco acquire Konover Property Trust; New Plan's purchase of 78 of the 124 Equity Investment Group properties; Equity One's acquisition of IRT; and Developers Diversified's acquisition of JDN.

"Since there is an abundance of capital and limited acquisition opportunities, large shopping center operators and REITs will continue to pursue portfolio acquisitions and purchase entire companies," Michalak tells GlobeSt.com.

On the leasing side, the broker expects owners to be "very sensitive to the remaining anchor lease terms which will have a direct impact on whether or not they will market the assets for sale in 2003," he says. "For instance, the shorter the lease term, pending new competitive developments or declining sales will result in that specific center to be offered for sale."