Retail stalwart<\/h2>\n![\"\"](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/08\/Retail-Center_Kissimmee_courtesy-JLL.jpg\")
<\/a>Retail Center Kissimmee. Image courtesy of JLL<\/p><\/div>\n
Grocery-anchored centers remain the retail category that is least impacted by online shopping. At midyear, online grocery sales accounted for 13.6 percent of the total grocery market, according to the latest Brick Meets Click\/Mercatus Grocery Shopping Survey<\/a>. That\u2019s up 1.5 percent year-over-year, a sign of gradual growth, but the modest share of online sales points to robust demand for brick-and-mortar grocery stores. <\/p>\nA principal reason is that shoppers still like seeing and touching perishable items before purchase. And grocery visits drive customer traffic at adjacent inline retailers and service businesses, such as liquor stores, dry cleaners and nail salons and similar.<\/p>\n
Such national grocery chains as Trader Joe\u2019s, Whole Foods, Aldi, Harris Teeter and Stop & Shop make particularly effective anchors, said Mitch Rosen, managing director & head of real estate for YieldStreet. \u201cThese grocers appeal to a more affluent consumer base,\u201d he said. \u201cLook at where pricing has gone in that sector; it remains very strong.\u201d<\/p>\n
Life science leaders<\/h2>\n![\"\"](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/08\/Scientist-microscope_courtesy-of-Colliers.jpg\")
<\/a>Image courtesy of Colliers<\/p><\/div>\n
Robust growth of a wide range of health-care-affiliated scientific advances, together with the aging of the population, demographic trends, favor life science<\/a> as a safe ground-up development or conversion play. Despite an 18.5 percent year-over-year decline, venture capital investment totaled $20.8 billion during the first half, according to a report<\/a> from Newmark. In the four leading hubs alone\u2014Boston, San Francisco, San Diego and Raleigh-Durham\u2014the renovation and construction pipeline totals 33.2 million square feet.<\/p>\nInvestors have multiple geographic and investment category options as the demand for space continues unabated and markets of all sizes vie to participate. Ground-up development, expansion and adaptive reuse are all on the menu for R&D and manufacturing facilities, as well as for office support space.<\/p>\n
\u201cWe are seeing tremendous interest from early and mid-stage life science companies doing small-batch manufacturing . . . that don\u2019t need enormous factories,\u201d said Aaron Jodka, Colliers<\/strong> national director of capital markets research. The three dominant hubs offer diverse opportunities and distinctive characteristics for makeovers. Greater Boston often favors conversions of older properties with good bones, while in San Diego and the San Francisco Bay Area, one-story, 1980s-vintage buildings are frequently eyed for makeovers, he added.<\/p>\nIndustrial potential<\/h2>\n![\"\"](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/08\/Port-photo_Pexels_via-Pixabay.jpg\")
<\/a>Image by Pexels via Pixabay.com<\/p><\/div>\n
Multiple indicators speak to the staying power of industrial assets, even in a downturn. At midyear, vacancy stood at 4.7 percent nationwide, a 120 basis-point year-over-year decline, according to CommercialEdge data<\/a>. Although the general conditions that have made the sector an investor magnet are well known, the factors that shape prudent industrial investment deserve a nuanced examination.<\/p>\n\u201cWe rank industrial as offering a moderate hedge against inflationary effects,\u201d said Ian Formigle, chief investment officer at CrowdStreet<\/strong>. Providing that hedge are typical lease terms of five to 10 years, and when tenants also assume operating costs like insurance, property taxes and maintenance in triple net leases, that helps insulate operators from inflation.<\/p>\nDecades of underbuilding is an often underappreciated factor in the sector\u2019s current appeal. Until the middle of the last decade, Class A urban infill industrial properties were typically 1970s-era structures, noted Aaron Appel, co-head of New York capital markets for Walker & Dunlop<\/strong>. A mismatch between project costs and rents hampered development for years. That started to change only when demand finally enabled projects to pencil out.<\/p>\n\u201cTenants said, \u2018I can pay 25 to 75 percent more than I have, and my business will benefit from a brand-new building,\u2019\u201d Appel recalled. \u201cThat building may have more bays, higher ceilings, fewer columns or allow simpler egress.\u201d The pandemic and the closely related rise of ecommerce have further advanced the trend since early 2020.<\/p>\n
Growth factors<\/h2>\n
Moreover, newly built Class A facilities provide efficiencies that permit manufacturing closer to the final distribution of goods. That trims transportation costs and reduces the risk of supply chain disruption. Chris McKee, principal and chief development officer for development firm CRG<\/strong>, identifies distinct regional factors that may offer hedges against an economic slowdown. The Sun Belt offers population growth; the Midwest<\/a> has an abundance of skilled labor, lower living costs and stable economies; and in the Northeast, the limited supply of sites and long entitlement periods generate high demand for new product.<\/p>\nAcquiring and developing infill logistics properties near population centers is a common but still-reliable strategy. Dwight Angelini, co-founder & managing partner at Longpoint Realty Partners<\/strong>, names geographically diverse locations\u2014northern New Jersey, Los Angeles, Dallas and Miami\u2014as offering the greatest imbalance between warehouse supply and demand. \u201cThe challenge and opportunity is (that) these top-tier infill markets are inherently supply-constrained due to \u2026 challenges associated with sourcing, acquiring and developing\u201d industrial product, he said.<\/p>\n
<\/a>Retail Center Kissimmee. Image courtesy of JLL<\/p><\/div>\n
Grocery-anchored centers remain the retail category that is least impacted by online shopping. At midyear, online grocery sales accounted for 13.6 percent of the total grocery market, according to the latest Brick Meets Click\/Mercatus Grocery Shopping Survey<\/a>. That\u2019s up 1.5 percent year-over-year, a sign of gradual growth, but the modest share of online sales points to robust demand for brick-and-mortar grocery stores. <\/p>\n A principal reason is that shoppers still like seeing and touching perishable items before purchase. And grocery visits drive customer traffic at adjacent inline retailers and service businesses, such as liquor stores, dry cleaners and nail salons and similar.<\/p>\n Such national grocery chains as Trader Joe\u2019s, Whole Foods, Aldi, Harris Teeter and Stop & Shop make particularly effective anchors, said Mitch Rosen, managing director & head of real estate for YieldStreet. \u201cThese grocers appeal to a more affluent consumer base,\u201d he said. \u201cLook at where pricing has gone in that sector; it remains very strong.\u201d<\/p>\n Image courtesy of Colliers<\/p><\/div>\n Robust growth of a wide range of health-care-affiliated scientific advances, together with the aging of the population, demographic trends, favor life science<\/a> as a safe ground-up development or conversion play. Despite an 18.5 percent year-over-year decline, venture capital investment totaled $20.8 billion during the first half, according to a report<\/a> from Newmark. In the four leading hubs alone\u2014Boston, San Francisco, San Diego and Raleigh-Durham\u2014the renovation and construction pipeline totals 33.2 million square feet.<\/p>\n Investors have multiple geographic and investment category options as the demand for space continues unabated and markets of all sizes vie to participate. Ground-up development, expansion and adaptive reuse are all on the menu for R&D and manufacturing facilities, as well as for office support space.<\/p>\n \u201cWe are seeing tremendous interest from early and mid-stage life science companies doing small-batch manufacturing . . . that don\u2019t need enormous factories,\u201d said Aaron Jodka, Colliers<\/strong> national director of capital markets research. The three dominant hubs offer diverse opportunities and distinctive characteristics for makeovers. Greater Boston often favors conversions of older properties with good bones, while in San Diego and the San Francisco Bay Area, one-story, 1980s-vintage buildings are frequently eyed for makeovers, he added.<\/p>\n Image by Pexels via Pixabay.com<\/p><\/div>\n Multiple indicators speak to the staying power of industrial assets, even in a downturn. At midyear, vacancy stood at 4.7 percent nationwide, a 120 basis-point year-over-year decline, according to CommercialEdge data<\/a>. Although the general conditions that have made the sector an investor magnet are well known, the factors that shape prudent industrial investment deserve a nuanced examination.<\/p>\n \u201cWe rank industrial as offering a moderate hedge against inflationary effects,\u201d said Ian Formigle, chief investment officer at CrowdStreet<\/strong>. Providing that hedge are typical lease terms of five to 10 years, and when tenants also assume operating costs like insurance, property taxes and maintenance in triple net leases, that helps insulate operators from inflation.<\/p>\n Decades of underbuilding is an often underappreciated factor in the sector\u2019s current appeal. Until the middle of the last decade, Class A urban infill industrial properties were typically 1970s-era structures, noted Aaron Appel, co-head of New York capital markets for Walker & Dunlop<\/strong>. A mismatch between project costs and rents hampered development for years. That started to change only when demand finally enabled projects to pencil out.<\/p>\n \u201cTenants said, \u2018I can pay 25 to 75 percent more than I have, and my business will benefit from a brand-new building,\u2019\u201d Appel recalled. \u201cThat building may have more bays, higher ceilings, fewer columns or allow simpler egress.\u201d The pandemic and the closely related rise of ecommerce have further advanced the trend since early 2020.<\/p>\n Moreover, newly built Class A facilities provide efficiencies that permit manufacturing closer to the final distribution of goods. That trims transportation costs and reduces the risk of supply chain disruption. Chris McKee, principal and chief development officer for development firm CRG<\/strong>, identifies distinct regional factors that may offer hedges against an economic slowdown. The Sun Belt offers population growth; the Midwest<\/a> has an abundance of skilled labor, lower living costs and stable economies; and in the Northeast, the limited supply of sites and long entitlement periods generate high demand for new product.<\/p>\n Acquiring and developing infill logistics properties near population centers is a common but still-reliable strategy. Dwight Angelini, co-founder & managing partner at Longpoint Realty Partners<\/strong>, names geographically diverse locations\u2014northern New Jersey, Los Angeles, Dallas and Miami\u2014as offering the greatest imbalance between warehouse supply and demand. \u201cThe challenge and opportunity is (that) these top-tier infill markets are inherently supply-constrained due to \u2026 challenges associated with sourcing, acquiring and developing\u201d industrial product, he said.<\/p>\nLife science leaders<\/h2>\n
<\/a>Industrial potential<\/h2>\n
<\/a>Growth factors<\/h2>\n
![\"\"](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/08\/Publix-shopping-center_Warner-Robins-Ga_courtesy-JLL.jpg\")
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