As a building owner of a vacant big box (or perhaps soon-to-be-vacant), there are a lot of factors that affect the return on your investment and the success of your asset.
From our experience in working with owners as they analyze their asset, we have found that one common denominator applies to every situation — the owner must be armed with specific market information so that they can make educated decisions.
Market intelligence or market analytics play a key role in nearly every building sale or lease. While it is important to know the vacancy rate in the market, it is even more important to drill down to specifics about your product type and market area.
Following are some questions you can ask yourself about your building or asset:
>> How many vacant big boxes are in the immediate trade area (what is my competition)?
>> Are the big boxes of the same product type? Neighborhood, vs. power center, vs. anchored, vs. unanchored?
>> What is the average length of time these boxes are on the market before they lease or sell?
>> What deals have been completed recently which are similar? What was the rental rate, or concessions such as free rent or TI dollars?
>> Who would be the typical tenants to lease or buy the space? Are they already in the area?
>> Will the other tenants in my shopping center be able to stay open if the anchor space is vacant? If so, for how long?
Chances are you do not know all of these answers, or even know where you can get this information. However, we believe that these answers are critical to a successful outcome for your asset. Whether you want to lease and hold it as an investment, or whether you want to sell it as is, the information you gather to make that decision is critical.
Velocity Retail Group has allocated significant resources over the past two years to create a structured research vehicle aimed specifically at big box owners. We have drilled down to specific product types within cities, market areas and regional areas. Additionally, understanding absorption, vacancy and new construction are critical factors to any real estate decision.
Over the past year, we have been asked to present our information to various economic, industry and governmental groups throughout the Valley. The feedback we receive from these presentations has been extremely positive. In order to help share this information in a format that communicates the analytics succinctly we have created a video podcast series for our clients.
Click on the video at the bottom of this article to watch the eight-minute market overview recapping 2012.
Dave Cheatham is Managing Principal of Velocity Retail Group. He is an authority on retail real estate in the disciplines of brokerage, project leasing, development, consulting and advisory services. He is a senior advisor to merchants, entrepreneurs, investors and senior retail executives throughout the industry.