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rsz_davecheatham_velocityretail_small_2013

Retail Overview: Big Boxes, Big Decisions

 

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.

Roy Vallee, Chairman & CEO of Avnet - AZ Business Magazine Jan/Feb 2011

CEO Series: Roy Vallee

Long-time member talks technology, dealing with global economic problems, adapting to the changing world of technology, and more.

Roy Vallee
Title: Chairman and CEO
Company: Avnet

How you would you assess the current state of your industry?
Things are going pretty well for technology. Calendar 2010 will be a very good year by historical standards for our electronics business and our IT business. And in 2011, I would say things are going to normalize and grow at the secular growth rate for the industries. For us that’s good news because secular growth is kind of 1-1/2 to 2 times overall economic growth, so things are pretty good in technology.

You had a great first quarter. What do you think that portends for the economy in 2011?
Well, I’m not 100 percent sure, of course, but I think a couple of things are clear. Technology is leading this recovery. We’re growing a lot faster than the overall economy, certainly certain segments of the economy. So, I’m very pleased about that. And I think it also does indicate that we are at least in the early stages of a macro-economic recovery, even if it’s a gradual one … and hopefully that cyclical recovery will continue through 2011 and beyond.

Could this improvement possibly be a blip?
I think from an IT spending perspective that the possibility of it being a blip is there, but let’s maybe define blip. … Corporate psychology is such that it’s ready to invest in IT projects after it’s done swapping out the old hardware. I would also like to point out, though, that a significant part of our business is electronic components and a portion of those find their way into a variety of consumer goods, and that part of our business is quite strong, as well. So it’s not just corporate spending that’s driving our growth.

How is Avnet dealing with the various Global economic problems?
We deal in a variety of markets. Some of them are actually quite exciting right now; obviously places like China, India, Brazil, other parts of Asia Pacific, parts of Eastern Europe. There are parts of our business growing very rapidly these days. So the way we deal with that is we gear up and try to support the market that is there. In the areas where the developed countries have been hard-hit by the economic downturn and credit crunch, we simply dial the resources down. … we basically size our business to the amount of opportunity that exists on a local level.

In December, Avnet celebrated 50 years on the New York Stock Exchange. What do you think that says about your company?
It says a lot of things. First and foremost, adaptability: there have been a lot of economic cycles, there’s been changes in technology, there’s been changes in our industry structure at the fundamental value proposition of distributors like Avnet; there’s been globalization. So, the company being (on the NYSE) 50 years says we’re highly adaptable as an organization. … I think another thing it speaks to … is what I would call financial conservatism or fiscal discipline. And I think the third thing … is the culture. We’ve got a culture that is very grounded in our core values.

    Vital Stats



  • Joined Avnet in 1977
  • Appointed president of Hamilton/Avnet Computer in 1989
  • Elected to Avnet’s board of directors in 1991
  • In July 1998, he was elected chairman of the board and chief executive officer
  • Named to the Twelfth District Economic Advisory Council for the Federal Reserve Bank of San Francisco in 2010
  • Member of the Arizona Commerce Authority board of directors
  • Member of the boards of directors for Teradyne and Synopsys
  • Inductee of the CRN Industry Hall of Fame
  • Participates in Greater Phoenix Leadership

Arizona Business Magazine Jan/Feb 2011