Retail REITs focusing on urban, infill and mixed-use development

Construction

Publish Date: May 11, 2017

Retail REITs are still building in locations that demand densification, developers said on earnings calls.

“We are taking a strict and cautious approach and believe that urban core, in-fill retail projects with multifamily or other vertical development opportunities are the future,” said Ross Cooper, Kimco Realty Corp.’s president and chief investment officer. The firm’s Lincoln Square development, in Center City, Philadelphia, a joint venture with multifamily developer Alterra Property Group, is such a project, he said.

At the end of the first quarter, Simon had some $1.1 billion worth of redevelopment and expansion projects under way at 25 properties. Construction continues at the company’s Allen (Texas) Premium Outlets; The Galleria, in Houston; La Plaza Mall, in McAllen, Texas; and Woodbury Common Premium Outlets, in Central Valley, N.Y. The firm is also building The Neiman Marcus–anchored Shops at Clearfork, near Fort Worth, Texas. Neiman Marcus opened recently, and the mall itself will open in the fall. Simon is also working on a new outlet center in Norfolk, Va.

Federal Realty Investment Trust, meanwhile, has $600 million of construction in progress. The Rockville, Md.–based REIT is also in the market for land. In recent weeks the firm has purchased 17 acres on the western edge of Lincoln Park, in Chicago. “It’s the first acquisition we’ve made in Chicago in over 20 years; it’s right down the middle of the plate for the type of stuff we look for. It’s very in-fill, it’s very unattractive as it currently sits — on a big piece of land that’s subdividable,” said Donald Wood, the firm’s president and CEO.

Weingarten Realty Investors is moving dirt too. The firm is making progress at the $181 million Gateway Alexandria (Va.), a mixed-use center that will contain 282 multifamily units and 100,000 square feet of retail anchored by a 62,000-square-foot Harris Teeter grocery store. “The land was purchased in late 2016, development is under way, and we expect to be complete in 2020,” said Drew Alexander, Weingarten’s president and CEO. The company has also purchased land for another mixed-use property: Arlington, Va.’s $135 million Columbia Pike Village Center, which will contain 365 multifamily units and a 72,000-square-foot retail project anchored by a 50,000-square-foot Harris Teeter. The company says it expects to buy the land and begin development this quarter, with an expected completion date in 2020. Alexander says Weingarten’s current redevelopment program has 16 properties for an investment of $225 million.