DALLAS-With hefty allocations waiting to be spent, institutional investors have put more than 700,000 sf of high-end retail into their shopping carts in Central Texas. The insatiable appetite for commercial real estate's "darling" has pushed yet another premier offering to market.
"There's so much capital chasing retail that it's a great time to be selling," says James Batjer, managing director for Holliday Fenoglio Fowler LP's Dallas office. The HFF team has added the newest class A piece to the frenzy: a 97%-leased, 123,553-sf center at 13700 E. Loop 1604 in San Antonio's 1.2-million-sf Forum, developed three years ago by the New Hyde Park, NY-based Kimco Realty Corp.
The northeast San Antonio no-minimum offering is just one of a handful to come up for grabs in the region in recent months. The marketing drives are garnering top dollar and a near-record number of offers for the assets, considered trophies by sellers and buyers alike. Within 30 days, deals will close for the 460,795-sf Great Hills Portfolio in Austin and its 105,190-sf Arboretum Marketplace neighbor. Early on predictions were the Great Hills Portfolio would snare $80 million, but there's no way to know until the deals pass the closing table.
From Austin to San Antonio, brokers are making pitches to owners to sell--preferably on the market rather than settle for a quiet trade. "There's so much capital chasing deals and so few quality deals out there that the competitiveness will generate a higher price," Batjer emphasizes.
The appetite and prices for the quality stock are surprising even the sellers. "We were a little surprised by the activity and the quality of the activity," Ken Bendalin with Dallas-based Sarofim Realty Advisors tells GlobeSt.com about the sale of Westbank Market, a 138,196-sf, class A center in the West Lake Hills area of Austin.
Austin sources say Sarofim collected $35 million to $40 million for one of its pension funds from Dallas-based Crow Holdings for the 94%-leased Westbank Market. The pension fund ended an 11-year hold with the trade, which closed just 10 days ago. "We were confident we could get a strong price so that made it time to sell," Bendalin says. Though Crow scored the win, he says buyers from New York and Chicago were particularly aggressive.
"Westbank was one of the most sought-after assets that we've marketed in three or four years," Batjer says. "All investors love Austin because there are no sites to develop in the trade area." In early March, the Indianapolis-based Kite Realty Group paid $36.1 million for Plaza Volente, a 156,308-sf, fully leased, grocery-anchored center in northwest Austin.
San Antonio is pulling its weight with a 90.1% occupancy in its retail stock and 35.3% rent growth since 1995 for shop space. Kimco's Forum offering is 97% filled, with the lion's share of tenants being national and minimal roll in the leases before 2008. About two years ago, Kimco sold all that it had developed at the Forum to AVR Realty Inc. of Yonkers, NY while holding onto abutting developable acreage. And, Batjer says, the REIT intends to hold tight to the land.
In the past 36 months, HFF's Batjer, Barry Brown and Adam Howells have sold more than $1 billion of retail space in Texas. "Retailers have been doing well for 24 to 36 months so investors feel very confident in that asset class," Batjer explains. "They don't have the big swings."
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