The Official ICSC Blog and the Voice of the Retail Real Estate Industry

The Official ICSC Blog

April 17, 2014

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Industry Inforgraphic – April 17, 2014

Infographic_Mobile

The ICSC Industry Snapshot is a bi-weekly report presented as an info-graphic; produced by ICSC’s Communications department. This dashboard presents an overview of key industry metrics in an easy to follow and visually pleasing format, so that the user can quickly navigate it and take away a high-level view of industry performance. Furthermore, the dashboard is presented in a mobile format so that the user can easily access it on their smartphone or tablet. Each installment of the snapshot features; U.S Shopping Center sales, Weekly U.S. Chain Store Sales, Shopping Center NOI by Area, the latest ICSC Shopping Center Executive Survey, CMBS Delinquency Rates, U.S. Chain-Store Sales by Segment, U.S. Shopping Center NOI by Type, U.S. Shopping Center Jobs, and other Shopping Center Facts.

April 11, 2014

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Congratulations to Shopping Barra in Brazil

FoundationFridaysCongratulations to Shopping Barra in Brazil, the 2014 ICSC Foundation Latin American Community Support Award recipient. Shopping Barra’s winning campaign, “Tree of Dreams”, was a holiday initiative that granted the holiday wish to needy children in the shopping center’s community. What was remarkable about their “Tree of Dreams” was how many children they reached. Over 4,500 hundred of their generous customers donated gifts to more than 7,000 children. Plus, Santa Clause was on hand to deliver all those gifts to the children.

Shopping Barra isn’t a stranger to helping its community, over the past 14 years it has worked with over 80 different organizations on the “Tree of Dreams” to deliver over 65,000 gifts. In honor of Shopping Barra’s efforts, the ICSC Foundation will contribute $5,000 USD to Irmã Dulce Instituição.

The ICSC Foundation Community Support Award recognizes shopping centers around the world for their philanthropic work to address the needs of its community. The Latin American Community Support Award Winner, along with the winners of the other regional community support awards, will automatically be entered into a competition for the prestigious Albert Sussman International Community Support Award.

The 2014 Albert Sussman International Community Support Award will be announced at RECon Las Vegas on Sunday, May 18th during the general session. Stop by the award ceremony to see which center will take this year’s prize.

April 11, 2014

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Introducing the ICSC Coca-Cola Happiness Lounge at RECon 2014

 

HappinessLoungeScheduleOver the past three years we have been dedicated to help educate our industry on social, mobile and digital strategy at RECon. We started with the Social Media Pavilion in 2011 & 2012, then the #iTechLounge in 2013. We were ready to take this concept to a new level. That’s why we partnered together with Coca-Cola to breathe new life into the lounge for RECon 2014. So we are “Happy” to introduce the ICSC Coca-Cola Happiness Lounge!

The ICSC Coca-Cola Happiness Lounge is where digital, mobile and social platforms will be transformed into unified online marketing strategies (and where you can be transformed from tired and stressed, to rested and happy!). There are 5 ways to learn. You can stop by for a #CrashCourse, #HappinessBreak, #ICSCTechTalks, #REConTweetUp, and our first EVER #MobileMeetUp where you can meet the CRE mobile start-ups! (Forget Silicon Valley!)

We have a great line up of speakers and topics this year that include Coca-Cola talking about their ground breaking social and digital strategies. PayPal will be talking about the new beacon technology, HootSuite speaking on uberVU, COHN presenting on wearable technology and luxury retail. In addition WWD and JLL partner up for a talk on how retailers are using technology, and Deliv on the latest on malls and same day delivery.
MyStepsCount
We are also excited to introduce the #MyStepsCount pedometer app powered by Mall Maverick, Coca-Cola and ICSC. RECon covers more than 1 million square feet of space that is the perfect springboard to getting you back on stride (see what we did there?). With the #MyStepsCount App you can track your steps during the show, compete with your friends and earn prizes. Make sure you check the leaderboard for up to the minute results and stop by the ICSC & Coca-Cola Happiness Lounge to show off your progress with a picture, get a #MyStepsCount T-shirt and take a much deserved #HappinessBreak – so in the words of Martin Lawrence… “Get to Steppin’!” and we’ll see you in Las Vegas!  #MyStepsCount App will be available on May 15.

Stop by 19th Ave. and K Street in the Central Hall for digital, mobile and social crash-courses during “ICSC Tech Talk” sessions, one of Coca-Cola’s scheduled “Happiness Breaks,” live interviews with industry leaders, complimentary Wi-Fi or mobile device charging, or even just a comfortable seat.

So whether you are looking to take the initial plunge into digital platforms, find out the latest trends that will be shaping marketing strategy in the coming months, or for a quick pick-me-up; you’ll find it at the all-new “Happiness Lounge” at RECon.

*All Exhibitor and Full Conference badges will have access to the lounge.

April 3, 2014

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#AverageJoeAdvocate: Who defends our industry?

image001.jpgLast week, approximately 150 ICSC members from 30 states met with 165 Congressional offices to discuss legislation impacting the retail real estate industry during ICSC’s Strategic Leadership Summit (SLS). The issues included tax reform, the Terrorism Risk Insurance Act, the EPA’s proposed expansion of the Clean Water Act and Marketplace Fairness. During SLS, more than 50 SLS participants also engaged in a Twitter campaign specifically focused on asking Congress to pass the Marketplace Fairness Act.

Chances are you missed this event, thinking it wasn’t for you because it’s not a traditional ICSC deal making event.  While you’re correct that SLS is non-traditional, you’re incorrect if you thought it doesn’t directly benefit your business. The people who attended this meeting weren’t political professionals.  They were members of the retail real estate industry, like you, who are responsible for getting deals done. They are worried that if Congress takes away 1031 like-kind exchanges when reforming our tax codes, development opportunities for our industry will be threatened.  They know that if our retail tenants can’t compete fairly against online retailers because of a government-imposed tax burden, it means vacancies in our centers. They see that the only ones looking out for our industry are the people who work in it.

It’s critical to note that your voice matters with elected officials. According to a recent poll conducted by the Congressional Management Foundation, Congressional staff said overwhelmingly that personal contact from a constituent through a meeting (97%), letter (90%), email (88%) or phone call (86%) is more influential than a lobbyist (82%) or news editor (75%).  Unfortunately, they did not ask about engagement over social media, but more than 95% of members of Congress have Twitter handles now and have dedicated staff to managing the interaction with constituents on social media platforms, so this is another effective way for constituents to engage with their elected officials.

The good news is that it’s never too late to get involved. One of the most active issues in Congress impacting our industry right now is the Marketplace Fairness Act, which would level the playing field for our brick-and-mortar tenants as it relates to sales tax collection.  If you aren’t familiar with the issue, you can learn more at www.efairness.org (which is powered by ICSC).  Again, your voice matters, and members of Congress need to hear from our industry on this issue.  You can help by simply taking a moment to email your House Representative.

Stay on the lookout for more Average Joe Advocate posts to learn about policies that impact retail real estate and tips on what you can do protect your business.

ICSC members tweet pics asking Congress to support #efairness legislation

March 26, 2014

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Industry Infographic – March 26

Infographic_Mobile

The ICSC Industry Snapshot is a bi-weekly report presented as an info-graphic; produced by ICSC’s Communications department. This dashboard presents an overview of key industry metrics in an easy to follow and visually pleasing format, so that the user can quickly navigate it and take away a high-level view of industry performance. Furthermore, the dashboard is presented in a mobile format so that the user can easily access it on their smartphone or tablet. Each installment of the snapshot features; U.S Shopping Center sales, Weekly U.S. Chain Store Sales, Shopping Center NOI by Area, the latest ICSC Shopping Center Executive Survey, CMBS Delinquency Rates, U.S. Chain-Store Sales by Segment, U.S. Shopping Center NOI by Type, U.S. Shopping Center Jobs, and other Shopping Center Facts.

March 21, 2014

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ICSC Interview with Andrew Silberfein, President and Chief Executive Officer, Rouse Properties Inc.

Andrew_Silberfein_HeadshotInterview conducted by Michael Lagazo

Rouse (NYSE:RSE) is a publicly traded real estate investment trust headquartered in New York City. Among the country’s largest publicly traded regional mall owners, the Company’s geographically diverse portfolio spans the United States from coast to coast, and includes 34 malls in 21 states encompassing approximately 23.4 million square feet of space.

Mr. Silberfein, 49, is the chief executive of Rouse Properties, a publicly traded real estate investment trust based in New York. The company owns and operates 34 malls in 21 states, or around 24.5 million square feet of retail property. Mr. Silberfein previously held the position of Executive Vice President—Retail and Finance for Forest City Ratner Companies, a developer, owner and operator of real estate primarily in the New York metropolitan area, where he was employed from 1995 to 2011. Mr. Silberfein was responsible for managing Forest City Ratner Companies’ retail portfolio, consisting of over 5.1 million square feet of existing and under construction shopping centers and malls. Mr. Silberfein also had the overall responsibility for all aspects of Forest City Ratner Companies’ debt and equity financing requirements for its real estate portfolio. Mr. Silberfein holds a Bachelor of Arts degree from Lafayette College and a Master of Business Administration degree from Columbia University School of Business.

How is Rouse’s business performing? How has the company grown since spinning off from General Growth Properties (GGP)?
We’ve had two very strong years since our formation with the portfolio’s metrics improving across the board. Since our spinoff from GGP in early 2012 we’ve implemented a comprehensive plan to change the direction of the portfolio.

Each asset had really needed to be looked at on an individual basis. We had to put plans in place to effectively unlock the embedded potential and re-establish each asset’s position in the marketplace. We’ve committed to invest capital of approximately $250 million in both what we call cosmetic and strategic capital projects throughout the portfolio to get there.

While we’re at the early stages I am certainly pleased to say that our leasing and capital investment initiatives have already significantly improved our occupancies, our level of permanent leases, and our tenant mix. As it relates to leasing, which is the lifeblood of our company, we leased over 2.3 million square feet in 2013 and 2.1 million square feet in 2012 which was our first year of operation. Now this compares to only 920,000 square feet in 2011 under the prior owner. So we made a lot of progress both on the small shop space as well as on the anchor space. In terms of growth not only are we growing what I call organically but we have been quite active adding external growth as well. We’ve already completed $523 million of acquisitions of additional enclosed malls. The progress that we have achieved is truly a testament to our organizational focus and the talent of the professionals we employ.

 

Mall at Turtle Creek, which Rouse acquired in early 2013.

Mall at Turtle Creek, which Rouse acquired in early 2013.

I see Rouse made several mall acquisitions over the past year. How did these deals come about and what made them attractive?
In 2013 we acquired three malls that we’re obviously very excited about and each deal is unique in its own right in terms of how it was sourced. It was a combination of private sellers and public REITs. What made each deal attractive to us was the opportunity to really strengthen our portfolio by adding a dominant middle market regional mall with considerable upside potential. Each of the malls we acquired really serve expansive trade areas with limited enclosed mall competition. Those are the characteristics we look for when we evaluate a deal. We recognized in each of these assets that we bought the opportunity to unlock the value at the asset level really by leveraging our proven operating platform to improve the metrics, the tenant quality, and the sale productivity in each mall.

I understand the malls in your portfolio are located in secondary and tertiary markets. Why is Rouse attracted to these markets?
Obviously as you alluded to what differentiates us from our industry peers and other mall companies is our focus on owning well located middle market malls. We obviously see considerable potential in the space over both the near and long term as retailers continue to focus their expansion plans on high quality space in middle markets. We like the stability these markets offer. They tend to be less susceptible to some of the volatility larger markets can experience.

What’s unique about our company and our model from both an investor and retailer perspective is we tend to be the only game in town. In fact, eighty percent of our malls are the only enclosed mall in a submarket or market or sometimes even as far away as a hundred miles. Our malls offer retailers access to trade areas with limited competition. What makes us different as well is we are one of the few companies with the size, the established operating platform, retail relationships, and balance sheet necessary to successfully operate middle 

market malls on a national basis. With very little product being built it’s an attractive backdrop for us going forward. We are a pure play middle market enclosed mall company.

Tell me about the strategies Rouse employs to attract top retail, restaurant, and entertainment brands.
First, our efforts are driven by our leasing and marketing initiatives which promote each mall’s location, the surrounding community, and the unique characteristics of the area. Retailers have responded to our continual commitment to each asset to create a vibrant property – we’re seeing a lot of repeat business as they continue to grow with us as a partner.

The important part to understand is investing about $250 million in various cosmetic and strategic initiatives to reposition and enhance our portfolio. Our cosmetic programs accomplish everything from installing new and upgraded amenities such as Wi-Fi, soft seating, new tile flooring, and upgrading interior and exterior signage.

We’re paying attention to each asset and to the details of each asset. As an example, I believe we’re the only enclosed mall operator to have Wi-Fi from end zone to end zone throughout our entire mall portfolio. We have our strategic capital programs which target certain portions of our malls where we reconfigure excess unproductive inline and anchor areas of the mall and add a mix of high volume restaurants and entertainment brands, larger format, and everyday uses. Our malls tend to function as the downtowns of their markets so our focus – our goal is to increase the relevance and improve the offering of our properties. Through the end of 2013, we’ve already leased 260,000 square feet of high volume restaurants; we’ve already leased 200,000 square feet of entertainment tenants like premier megaplex movie theater operators. We’ve already signed leases for 720,000 of leading national larger format tenants.

Chula Vista Center before (left) and after (right)

Chula Vista Center before (left) and after (right)

I see that repositioning and renovating your malls is a key part of your business strategy. What does a typical project consist of and what is the desired outcome?
These mall-specific programs run the gamut of what we call cosmetic renovations to more complex changes we call strategic capital programs that involve reworking sections of the malls. Whatever the program entails for each asset, the end goal is really to attract better quality retailers, to increase the frequency and duration of customer visits to our malls.

In terms of the outcome, we expect these programs to continue to yield solid results, increase our cash flows, create a better sense of place for our customers, higher productivity levels for our retailers, and further strengthen our position as the dominant owner and operator of middle market regional enclosed malls.

What is your assessment of the retail environment? What are the current trends creating demand for retail space?
We see three major trends that we’re focusing on. The first is a long and growing list of retailers that are focusing their expansion efforts on middle markets. This is being driven by the increased occupancy cost of A malls, the lack of new construction, and sometimes driven by the profit margins afforded by operating in B malls versus A malls.

Second trend is a growing movement from big box or larger format retailers to expand or relocate into our malls. Our malls provide retailers with the ability to obtain the best real estate in a given market, gain competitive advantages against other competitors who may come into a market later by occupying the best located real estate in the market and benefitting from the higher traffic and sales generated by our malls.

Third, we expect to continue to benefit from a lack of new supply being built. It’s unlikely that much will be constructed across the country for the foreseeable future and in our markets. Retail development could be restrained across the board especially in secondary markets.

What is your outlook for Rouse in 2014? Where is the company headed?
We have a great business here at Rouse. We have considerable potential and we will continue to focus on executing our plans to unlock the inherent value in our portfolio. We believe we are one of the few retail REITs offering such exciting internal and external growth possibilities. With our talented team, national platform, and disciplined strategy we believe we can build on the positive momentum we have already established in 2012 and 2013.

One of the things I’d like to point out is that you’re seeing only a couple of malls being built but you’re seeing the same lack of supply being built in power center arena. Those two areas are really helpful to us because retailers looking to expand have to go somewhere. We have the ability to put them in our properties.

Regarding ICSC RECon – we’ve had a great two years, our leasing momentum continues to be strong, and the changes in our portfolio resonate with retailers as well as shoppers. We’re going to continue doing what we’re doing and we’re going to continue to looking for opportunities to grow. We’re excited about 2014 and beyond.

March 20, 2014

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Does Congress Hear You? Does It Matter?

SLS Infographic, draft 5.jpgIt’s less than a week out from ICSC’s Strategic Leadership Summit (SLS) Will you be there? Wait, you’re not even sure what it is? As part of ICSC’s efforts to make sure that our industry is represented before elected officials, each year we organize an opportunity for our members travel to Washington, DC and meet with members of Congress. This year SLS is March 25-26. Now you may think that politics isn’t “your thing” or maybe you have an interest but haven’t really engaged before. This infographic helps explain why it matters. ICSC’s Office of Global Public Policy is here to make sure that you have a voice with elected officials and to teach you how to use it.

The first thing you can do is participate in SLS next week. Just because you won’t be in DC doesn’t mean you can’t be involved. Doing something as simple as calling, emailing or tweeting a Congressional office will help amplify efforts to promote legislative issues that are important to the industry-such as efairness, tax reform and environmental regulation. And, if you take a moment to do it next week, you will be adding to the hundreds of voices that will be talking with members of Congress about these issues. Simply visit http://www.icsc.org/global-public-policy/strategic-leadership-summit and you will learn more about our priority legislative concerns and how you can get engaged from your desk.

Keep on the lookout for more tips on how you can get more involved in the political process to help your business and the shopping center industry.

March 19, 2014

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RECon Latin America Speaker Brook Scott Q&A

Brook Scott
Tell us about yourself…
As CBRE’s recent Interim Head of Research and Head of Occupier Research for the Americas, I closely follow the economic and demographic factors and megatrends impacting the retail sector as well as the other major property types. I work with other members of CBRE’s Global Research and Consulting team, a network of over 430 researchers who are focused on providing the latest insights into economic and property market trends impacting all types of commercial and multifamily residential around the globe.

Where do you see the industry in five years?
The retail sector is going through a tremendous shift at the moment, moving from a brick-and-mortar service delivery system to an omni-channel business model that is putting enormous pressure on multi-market and multi-national retailers to adapt and change. At the same time, huge demographic shifts are underway due to the aging of the Baby Boomer generation and the associated rise of the Echo Boomer generation in the United States and the overall graying of the population in many of the developed economies, like Japan. Meanwhile, the emerging economies of Latin America (for example, Brazil) and Asia-Pacific (for example, Vietnam) are seeing a big shift in the landscape with the increase in income levels through the huge megatrend of global urbanization and the rising middle class.

Over the next five years, we see continued growth in the retail industry, particularly as retailers continue their expansion across borders to access a new and growing base of consumers. We also see e-commerce becoming a much bigger share of overall retail sales in the developed economies, where internet infrastructure is already well developed. This will continue to drive changes in the way retail space is configured to meet the needs of the changing marketplace. The rise of the middle class in emerging markets in Latin America and Asia-Pacific create opportunities for retailers to expand their brands within those markets but also call on retailers to develop innovative solutions to meet consumer demand in an increasingly mobile world.

Why are you excited for the future of the industry?\The retail industry is at an exciting point in time in its evolution in reaching a wider audience on a truly global scale. This presents opportunities for growth that were unheard of just a few years ago. Retailers that are innovative in their brand expansion plans and in using omni-channel solutions to meet demand will see unprecedented success. Those retailers that do not come up with innovative solutions will risk being eclipsed by more nimble competitors.

Meanwhile, as the demand for institutional-quality real estate continues to grow and global sources of capital continue to expand, the retail sector will benefit as an appealing asset class for diversification purposes. In the U.S., significant opportunity exists for continued improvement in the neighborhood and community center retail sector over the next few years as the overhang of space is absorbed and the overall market reaches equilibrium again in 2017. This creates an opportunity for significant upside for the retail sector as retail real estate fundamentals continue to improve.

Globally, demand for high street retail is still very strong and high street retail is undersupplied in many markets, forcing growth to spread to secondary locations or surrounding submarkets. Development opportunities will continue to arise as demand for prime retail continues.

Tell us about your session at the conference?
In my session, I will provide an overview of the key economic, demographic and industry trends that are impacting retail around the globe. I will reveal where economic growth is concentrated and how that is impacting retail sales by region. We will look at the recent fate of the U.S. consumer and how that is impacting the demand for retail goods. We will also examine trends in e-commerce and how that is impacting the demand for retail space. I will also present our view on how economic, demographic and retail rent growth in Latin America compares with the growth we are seeing in the other regions of EMEA and APAC.

How can people reach out to you online?
The best way to access the expertise of our Global Research team is through our website at http://www.cbre.com. Use the drop down menu to visit our Global Research Gateway for all of our research reports and insights.

There you will also find CBRE Global Research’s recently released retail study “How Active are Retailers Globally?” which looks at retailers’ expansion plans across the globe.

http://www.cbre.com/EN/Research
You can also follow us on Twitter at @CBREGR

March 18, 2014

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ICSC Interview with Timothy J. Bruce, Executive Vice President of Leasing Redevelopment, Brixmor Property Group Inc.

Bruce_Timothy.jpgInterview conducted and condensed by Michael Lagazo

Brixmor Property Group Inc. (NYSE: BRX) owns and operates the nation’s largest wholly-owned portfolio of grocery-anchored community and neighborhood shopping centers, with 522 properties aggregating approximately 87 million square feet of gross leasable area located primarily across the top 50 U.S. metro markets. On November 4, 2013, Brixmor announced that it has completed its initial public offering resulting in gross proceeds of $948.8 million.

Mr. Timothy J. Bruce is the Executive President of Leasing & Redevelopment at Brixmor. Mr. Bruce reported occupancy had improved to 92.4% percent at September 30, 2013 – the 11th consecutive quarter year-over-year improvement in occupancy. Mr. Bruce added that this was the 26th month of consecutive rent growth.

What role are urgent care centers, medical and dental offices playing in leasing?

In 2013, 59 leases for healthcare tenants were signed in the portfolio. Increases are anticipated in 2014 consistently across all regions.

What types of operators are you targeting?
Regional healthcare providers, hospitals in the area, healthcare providers looking for premium retail space, outparcels. With 30 million more people required to have insurance through the Affordable Care Act, we anticipate greater leasing.

Brixmor Kroger New Chastain Corners Marietta GA.JPGWhat categories of tenants are you doing the most leasing with?
Large formats in the 10,000 – 20,000 square foot range. Retailers like ULTA, Dick’s Sporting Goods, Ross (Dress for Less), TJMaxx, Hobby Lobby, and Wal-Mart Neighborhood Market.

In the 5,000 – 10,000 square foot arena, operators like Five Below, Panera Bread, Lumber Liquidators, and Unleashed by Petco – small pet formats are successful.

In small shop leasing, multiple deals are being signed. Great Clips, Menchie’s Frozen Yogurt, GNC, and Subway.

Besides the growth in base rent, are there other lease terms that you are seeing swinging towards the landlords’ favor, whether they are annual bumps, or tenant rights, or other things along those lines?
Consistent annual increases in shop space with better co-tenancy clauses, favorable exclusivity, tighter rent commencement dates, we are able to negotiate less control of the common area.

How is demand in for the junior and mid-box segments? Which retailers are the most active in these spaces?
Wal-Mart Neighborhood Market, Ross (Dress for Less), TJMaxx, Homegoods, Marshalls, Dick’s Sporting Goods, and L.A. Fitness.

Brixmor Fresh Easy Rose Pavilion Pleasanton CA.JPGOn small shop leasing, who are you generally leasing to?  Is it more franchises and national / regional vs. local tenants?
With capital not readily available for small business, we are focusing on national / regional and franchisors with good credit. Multiple deals are being signed with franchise operations such as Great Clips, Subway, Jimmy John’s, and UPS.

Are you confident that momentum in small shop leasing will continue for Brixor and what gives you confidence that it will accelerate?
Past performance indicates that small shop has occupancy increased and will continue to do so.

Besides project repositioning, is new construction a part of Brixmor’s strategy in achieving NOI goals? In the Q4 2013 National Retail Trends report, Reis Reports indicates that construction during the fourth quarter of 2.1 million square feet was the highest since the fourth quarter of 2007 in the retail sector.
We do not do new developments. Rather, we are focused on value-creating anchor space repositioning / redevelopment opportunities. We completed 26 redevelopment and/or anchor space repositioning projects in 2013. We currently have 19 redevelopment and/or anchor space repositioning projects in process.
Brixmor Target Victory Square Savannah GA.JPGWhat about ICSC RECon in May 2014 are you looking forward to?
At ICSC RECon, we are bringing 60 or more deal makers, and have a 7,000 sq. ft. booth. As you know this year’s event is starting at 12pm on Sunday so we are busy making appointments. Appointments have already been booked with national accounts, coordinate leasing office with the field to cast a very comprehensive net over retail community and to use time efficiently.

Reis Reports further states that the “national vacancy rate for neighborhood and community shopping centers declined by 10 basis points during the fourth quarter to 10.4%. This was a slight improvement versus last quarter when vacancy was unchanged, but more or less in line with the pace of vacancy compression since the market began to recover two years ago. Mall owners…have sought to reposition their malls when possible to capitalize on this.”

Credits:
Data and Q4 2013 National Retail Trends analysis provided by Reis Reports, https://www.reisreports.com/
Images provided by Brixmor Property Group Inc., http://brixmor.com/