Midland Atlantic buys Oshkosh center
Cincinnati-based Midland Atlantic Properties has acquired Oskosh Center II for $10.25 million.
The 107,456 sq. ft. property is headlined by Office Max and Pick ‘n Save and shadows a nearby Target location on 20th Avenue and Koeller Street in Oshkosh, Wis.
The center fit Midland Atlantic’s investment criteria, which favor grocery- and shadow-anchored centers in the Midwest, Mid-Atlantic, and Southeast selling for between $3 and $30 million. The company manages a 50-property portfolio.
The seller, Marlin Properties, was represented by Mid-America Real Estate’s Rick Drogosz, Dan Rosenfeld, and Carly Gallagher in the transaction.
JLL: Co-working spaces in malls on the rise
A new, flexible tenant is setting up shop in the nation’s shopping centers, as well as in urban downtowns.
With some 43% of employed Americans now saying they spend at least some time working remotely, flexible spaces are on the rise and seeking new, unconventional locations to root their operations. And malls are in the mix.
To understand if co-working spaces can backfill empty retail space successfully and profitably, JLL conducted its first-ever study that examined 75 co-working spaces that take up more than one million square feet of retail space. The highest concentration of co-working spaces in retail is either in malls (21.3%) or urban locations (20%), where available space needs to be revitalized with novel, unique offerings.
“The current retail market is pushing landlords to find new ways to invigorate their space with alternative tenants, including co-working spaces,” said Holly Rome, director of Retail Leasing, JLL. “Setting up a co-working space in a retail property provides workers a fun, yet functional space with great accessibility, ample parking, and value-add amenities like personal services, shopping, and food options. On the flip-side these tenants bring in daily traffic and have a stable master lease that’s typically five to 10 years.”
Since 2010, the flexible space sector has grown at an average annual rate of 23%, compared to just 1% average annual occupancy growth of the broader U.S. office market. JLL is forecasting a dramatic shift in office space during the next decade as tenant demand for more flexible space options forces building owners to adapt.
“We expect this to drive a convergence of office, retail, and hospitality uses into one seamless, integrated tenant experience,” said Scott Homa, director of U.S. office research for JLL.
James Cook, director of retail research for JLL, noted that the wide range of needs has created four distinct co-working spaces that JLL thinks will increase in retail, each tailored with different amenities. These include:
1. Retail Launchpads
The costliest co-working space at $404 on average per person per month is Retail Launchpads, which is where nascent brands and innovative tech companies can gain access to target shoppers. It’s not just a place to work – it’s a place to play, too.
Cowork at the Mall, a new retail incubator opening in Chicago’s Water Tower Place will be a mashup of customized pop-ups, showcasing, co-working and events. What makes this model so unique is its ability to infuse the retail space with makers, innovators, and high-tech brands interacting with consumers and offering interactive experiences. These launchpads draw crowds and wallets, making the mall a destination, according to JLL.
2. Business Boosters
These co-working spaces are growth vehicles for entrepreneurs and freelancers, coming in at $255 on average per person, per month. The perks include offering special business development tools including capital, consulting services, creative support, specialty equipment, classes, and mentors. They are typically located in higher income areas, and are a good choice to backfill vacant space in mid-level neighborhood centers.
CTRL Collective in California targets innovators at every stage of their business lifecycle and prioritizes collaboration between its members. Their workspace environments are designed to suit the needs of teams of 1-100.
3. Creative Coalitions
These spaces offer community and workspaces for artists, makers, and creatives, drawing in millennials by combining community events and retail in their space. More than 75% of these spaces are in urban locations with walkable neighborhoods.
Spaceus in Boston’s Roslindale Station combines co-working and showrooming with its workspace, exhibits and events. The pop-up will be in the space through September and then move to a new location.
4. Telework Hubs
Telework hubs are the most common, comprehensive co-working location. They are a mix of office workers, entrepreneurs, and creatives, and represent nearly 80% of the spaces that JLL studied. This kind of co-working format will likely backfill vacant space in mid-level retail centers, taking on average 30,000+ square feet.
Union Cowork in La Jolla, Calif., is a neighborhood centric co-working company that is committed to incorporating local or new retail in its space. Weather it’s a coffee house or showroom for a furniture store – these co-working spaces double as storefronts.
Hot markets: Miami
It’s hot in Miami, really hot. Job growth in the city has been on an uptrend for 10 years. In-migration trends fuel a growing population hungry for retail; the retail vacancy rate has dropped steadily over the past two years. Big projects abound. Swire’s billion-dollar Brickell City Centre — which turned an industrial downtown district into a luxury neighborhood — opened two years ago. Now under construction is Miami Worldcenter, a 10-block mixed-use project that will add 450,000 sq. ft. of retail adjacent to the central business district.
“Miami has always been under-retailed for the population,” said Drew Kristol, senior director of Marcus & Millichap’s national retail group. “Whether downtown or in recently up-zoned high street districts like Wynwood, there’s a lot of density.”
Retail vacancies, he said, have always been sparser in Dade County versus other Florida counties, even after the 2008 economic downturn. Affluent residents continue to stream into the city, gentrifying nabes like Wynwood, the Design District, and the Latin Quarter on U.S. 1. An already low vacancy rate of about 5.6% in 2016, as a result, has slid to 4.1% this year.
There’s no dearth of retailers vying for the available space. Target, Walmart, and Dick’s Sporting Goods have all been expanding in Miami. The state’s largest grocer, Publix, has been active in providing sustenance to nascent neighborhoods with new stores.
Miami promises to be an expansion destination for many other retail chains in the near future. Some 2 million sq. ft. of retail GLA is under construction, led by the Worldcenter retail complex, which is being developed by The Forbes Company and Taubman.
“Worldcenter will create an entirely new venue,” Kristol observed. “Downtown Miami has never been renovated. It’s reminiscent of the Garment District in New York City, a lot of little electronics and luggage stores.”
At first it was edgy retailers and new restaurant concepts that took advantage of opportunities in the developing pockets of Miami, but now national chains are taking notice of America’s southernmost big city and more are likely to come on stream.
Triple Five, the owner-operator of Mall of America, will soon liven up the retail conversation. In May, Miami-Dade County commissioners approved its biggest project ever: a $4 billion-dollar, 6 million-sq.-ft. American Dream Miami retail theme park.
Miami by the numbers
2 million sq. ft.
retail GLA to be completed in 2018
average asking rent
increase in asking, down from 5.3% in 2017
population increase from 2013-2017