If there was a word to describe Commercial Real Estate at the moment, it would be BUSY. At Shannon Waltchack we’re as busy as we’ve ever been.
The brokerage team is ahead of budget and things look strong for the second half of the year. Due to the uncertainty surrounding the future of the Section 1031 Exchange, look for a record number of investment properties to trade hands later this year. We’ve encountered some sellers who are worried about the change being retroactive. But from every expert we’ve read or spoken with, that’s not going to happen. And it is actually starting to look less likely for the elimination to even happen, at least for this cycle. But when politics are involved, you never know.
Property Management continues to grow. We seem to be onboarding new clients every week. If you own a building and would like to see how we could help you, please reach out to Jeff Chopin 205-977-9797.
Investments have had a strong start this year. We’ve established our second shopping center fund and are currently still open to additional investors.
The first two properties Fund II purchased were Merchants Walk in Homewood (the center with TCBY) and an awesome property located in a suburb of both Milwaukee and Chicago called Mount Pleasant. Last week I spent four days in Florida hunting for deals and found two opportunities which we now have under LOI.
The 11 properties in SWNC I have generated 11.37% return since inception. That portfolio is 97.5% full. We couldn’t be happier with those results.
Our Fund’s thesis is as retail continues to evolve, our small neighborhood centers will attract an ever-growing number and variety of tenants. For instance, the percentage of medical tenants across our shopping center portfolio is now 10% higher than it was in 2010. More and more medical users are leaving hospital campuses and medical office buildings to relocate in highly visible and easily accessible strip centers.
As malls die, the small shop tenants who still have viable businesses, will create new formats for neighborhood shopping centers. So far, Kay Jewelers, Sephora, Auntie Anne’s, Great American Cookies and now Victoria’s Secret are opening more non-mall stores. If you think about what the mall business was really about, the large anchors like Macy’s, Castner Knott (Shoutout to 1990’s Nashville) & Belk created the traffic for the small shops. And the small shops paid 80%-90% of the revenue for the landlord. But today, no anchors = no traffic. Contrast that with a well-located, high traffic strip center like Merchants Walk, where 40,000 customers drive past your store every single day. No anchor is needed.
If we can ever help you with any of your real estate needs, please let us know.
