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It has been widely discussed that many big box retailers aremaking the move from suburban sprawl to the heart of urban centers.This trend had been triggered by a number of factors includingstrengthened urban demographics, inherent land value and stabledemand for staple products - which big box retailers areincreasingly featuring. Though it may seem like a tight fit, bigbox retailers are showing a willingness to adapt and reconfigure inorder to enter the urban market.
Without question, key urban markets such as Washington DC, NewYork, Chicago, Boston and Miami consistently outperform thesecondary and tertiary markets. This trend has only beenexacerbated by the recession and resulting economic turmoil. Primeurban locations have the advantage of strong inherent value intheir real estate, increased foot traffic and an easier tenantreplacement process. Furthermore, issues such as commute time andcity gentrification are attracting an affluent – often young –demographic to these areas. As a result, cap rates in prime urbanlocations have markedly declined in the past 3-4 years.
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