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Retailers, retail landlords cautiously optimistic about holiday shopping season amid inflation, economic worries

(As seen in The Business Journals, By Ashley Fahey, Nov 17, 2022)

Covid-19 concerns are diminished, inflation worries are high. But consumers are ready to celebrate what’s for many the first so-called normal holiday season in three years, which experts say should keep sales relatively strong and ultimately bolster the retail real estate sector.

In fact, despite high inflation and growing concerns about a recession, consumer spending has continued to grow through the fall.

The U.S. Department of Commerce reported Wednesday U.S. retail and food services sales for October 2022 totaled $694.5 billion, up 1.3% from the previous month and 8.3% higher than October 2021. Total sales between August and October 2022 were up 8.9% from the same period a year prior.

The National Retail Federation, meanwhile, forecasted on Nov. 3 retail holiday sales will grow between 6% and 8% from 2021 levels, to between $942.6 billion and $960.4 billion.

Some retailers, though, are bracing for consumers to spend less this holiday season. Big-box retailer Target Corp. (NYSE: TGT) out of Minneapolis posted disappointing earnings results for the third quarter on Wednesday and cut its forecast for the holidays, citing continued weakness in consumer shopping habits.

Click here to read the full article.

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Real Estate Value Creation, Placemaking are Based on Integrated Systems

By: Amer Hammour, Executive Chairman, Madison Marquette
The CEO Forum, CEO Insight

I believe that the best way to produce high value for customers is to design our businesses and our projects as fully integrated systems, to directly control every component of these systems and focus on their effective integration, how they work together and build on each other. In real estate businesses and in large real estate projects, such as the Asbury Park Boardwalk in New Jersey, or The Wharf in Washington D.C., it is not individual components but the whole that creates excitement, value and success.

Our company, Madison Marquette, which I managed as CEO from 2001 to 2012, and where I am currently the Executive Chairman, invests in and manages over 350 properties, from 14 offices nationally. Our primary client is the investor who partners with us and the owner who entrusts us to manage and enhance their property. The focus of our services is to produce better returns and additional value for our clients, going beyond the returns they get from simply selecting and holding assets.

We differentiate ourselves from simple asset managers or pure service providers by offering a full array of integrated services: investment, asset management, development, construction, property management, leasing, marketing, and consulting. We create full teams with local leadership for every project, collaborating to implement a complete value-add plan to lease-up the property, to manage it more efficiently, to repurpose it and reposition it for different users, to add density, and to activate it. We believe that by having the full array of skills in house, and by forming fully integrated teams that utilize these skills, we can maximize value and produce “Alpha” returns for our clients.

A hallmark of Madison Marquette is our ability to deliver customized expertise in a variety of asset classes, including retail, office, residential and medical projects, and to integrate them within urban mixed-use environments. In recent years, across the U.S., people with disposable income have been moving back to urban areas. This trend is especially evident among empty-nesters and millennials who prefer to live in apartments and to be close to the vibe, the energy, the workplace hum and the restaurant and entertainment options of a dynamic city.

Many of our industry colleagues focus on placemaking. For us, the physical place is just a stage. It is important that we program the activity on that stage, to establish the uses that promote this activity — the food halls, the markets, the medical services, the shops, the hotels, concert halls, and restaurants. All of these bring great excitement to a residential and office area, and similarly, an active office and residential population will support these businesses. The more integrated the activities, the more feedback between them, the more exciting and valuable are the projects, and the more thriving are the cities they anchor.

When we came to Asbury Park, the historic beach town on the Jersey shore in 2008, it was still in ruins. The boardwalk area was boarded up, decrepit and deserted. With hopes of bringing the crowds back, we restored many key buildings and pavilions, but no tenants would dare lease space because of the negative reputation of the town. To prove that the city could work again, we created activity: We opened and directly operated restaurants, music clubs, after-hours venues, and we provided security.

For one year, we maintained a substantial operating staff, and we still manage five different music venues, including the world-famous Stone Pony. As people came back to the Asbury shore, we then signed leases across the project. The activity we started has built on itself. We invited artists to create street art on our walls, programmed music and film festivals, built great apartments and hotels. Today, the city is thriving, edgy, gritty, authentic, artistic, and fun. The liveliest town on the Jersey shore.

For each project, we think of the greatest need that the ultimate users have, and then build the project around that need. In Washington D.C., there is very little waterfront that is not a federal park or public land. People in the D.C. area needed a place where they could gather and fully enjoy the waterfront. So, we designed The Wharf around one spine, a 60-foot-wide, mile long promenade that edges the riverfront. Four piers jut out into the channel from the promenade allowing residents and visitors to view and utilize the water, to live on it and to experience its unique beauty. The Wharf offers office buildings and apartment residences that take full advantage and celebrate the Potomac and thrive on the diverse amenities. We integrated a historic fish market and added a wide variety of restaurants, hotels and music clubs as well as a 6,000-seat concert hall. All of this now fronts an active marina with over 400 boat slips.

It is not any one element of the project that makes it successful, but the full integrated system which creates excitement and repeat visits and maximizes values for our investors, clients and end users. This approach is effective in real estate and for many other businesses as well.

Amer Hammour is Executive Chairman of Madison Marquette, and heads all real estate operations and investments for its parent company Capital Guidance in the U.S. and internationally. As founder of Madison Marquette, he is responsible for setting the company’s investment strategy and leads its growth and capital relationships. Over the past 38 years, Mr. Hammour has completed — on behalf of Madison Marquette, Capital Guidance and its subsidiaries — over 200 real estate investments in retail, office, land, and industrial projects and developments valued at over $8 billion.

Mr. Hammour holds a BS in Industrial and Systems Engineering from the Georgia Institute of Technology and an MS in Business Administration from the Sloan School of Management at MIT.

Click here to view original article.

 

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Rosen Group expands north Houston offices

By Katherine Feser (as appearing in Houston Chronicle)
Published 7:00 am CDT, Friday, March 20, 2020
The Rosen Group leased space in the Gateway I and II office buildings near Bush Intercontinental Airport.

Oprona, a subsidiary of the Rosen Group, expanded in the Gateway I & II office complex in north Houston to meet the growing demand for its business.

The company, which leased 31,804 square feet, provides automated inspection systems, flowmeters, cleaning tools, coatings and instruments to the oil and gas industry.

The location near JFK Boulevard and Bush Intercontinental Airport factored into the expansion decision, according to Michael Evans, manager of brokerage services at MHW Brokerage Services, which represented Oprona.

The company will grow from about half a floor in one of the buildings to 22,754 square feet in 3663 N. Sam Houston Parkway East (Gateway I) and an additional 9,050 square feet in 15333 JFK Blvd. (Gateway II). Rosen Group also has nearby offices at 14120 Interdrive East.

Jeff Williams and Mitchell Oxman of MHW Brokerage Services represented the tenant in the lease. Marci Phillips, Livy White, Wade Bowlin and Angelina Stone of Madison Marquette represented the landlord, Gateway Houston Partners.

The deal is a score for the North Houston/Greenspoint area, which has struggled since companies such as Exxon Mobil, Noble Energy, Southwestern Energy, FMC Technologies and Insperity departed to new office campuses elsewhere over the last decade.

The North Belt/IAH submarket has the highest office vacancy rate in the Houston region at 49.2 percent, according to Madison Marquette. That’s down from a peak of 50.2 percent at mid-year 2019.

The market seems to have turned a corner, registering three positive quarters of leasing gains after occupancy losses for six consecutive years, according to Madison Marquette.

The Oprona deal is one of nine new leases, expansions and renewals totaling 76,343 in the Gateway I & II portfolio over the past 18 months, according to Madison Marquette. Occupancy of the 268,760-square-foot complex rose to a current 60.7 percent, up from 51.6 percent 18 months ago.

The leases at the complex account for 7 percent of the leasing activity in the North Belt/IAH submarket over the past 18 months, according to Madison Marquette. The submarket’s uptick in activity over the past 18 months consisted mostly of leases under 10,000 square feet.

[email protected]
twitter.com/kfeser

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Experts Across Property Sectors Share Best Practices on Coronavirus Safety (WEBINAR)

Within a matter of weeks, the novel coronavirus disease 2019 (COVID-19) has gone from being a public health concern in China to becoming one across the globe, including the United States. Spreading at least as rapidly as COVID-19 itself have been fear and misinformation.

With a view toward promoting the exchange of reliable information along with best practices, Connect Commercial Real Estate on Tuesday gathered experts representing each of the major property types for a 40-minute webinar on the impact of COVID-19.
Their focus: the measures each is taking to promote a safer environment within their properties, for tenants and visitors alike. Daniel Ceniceros, CEO of Connect Commercial Real Estate, moderated the discussion.

The panelists included:

  • Julianne B. Goodfellow, senior director, government affairs, National Multifamily Housing Council
  • Mark Duclos, president & co-founder, Sentry Commercial & SIOR President
  • Kiersten H. Pearce, VP, member engagement & services, American Hotel & Lodging Association
  • Anjee Solanki, national director retail services | USA, Colliers International
  • Drew Genova, chief asset services officer, Madison Marquette
  • Michael Oddo, founder & president, Metro Services Group
  • Laura Boyd, property risk program manager, Pinnacle
  • Jeff Herrera, senior general manager, Rising Realty Partners

Although common sense plays a major part in the COVID-19 strategies across these property types—for example, encouraging people to wash their hands regularly—there are also considerations unique to each sector.

A retail environment, for example, may see hundreds of shoppers coming and going on a daily basis, while multifamily properties offer community spaces such as gyms and saunas. Panelists addressed these considerations in the course of the conversation.

Also on the agenda was the business impact of COVID-19, which, of course, is evolving and varies from one sector to another. Connect Commercial Real Estate plans to reconvene the panelists in a few weeks for an update.

Meanwhile, the webinar is available for replay in the recording below.

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The 3 Must-Haves That Are Part Of The Placemaking Equation

By 2020 Shawna De La Rosa, Bisnow Seattle
Feb 5, 2020

What if we built communities around public spaces? What if we chiseled neighborhoods into the city? Each area would have its own soul, its own identity. That’s called placemaking and a panel at Bisnow’s Seattle 2020 Forecast discussed what it takes to transform a space into a place where people want to be.

The first component of placemaking is finding the right retail, because retail anchors these places, and the right mix of retailers is critical, Madison Marquette Senior Vice President Daniel Meyers said.

“Really good retail is the catalyst,” he said. “Spaces have to have good environments where people want to be.”
[Read more]

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Madison Marquette CEO: ‘For Now, We Are Playing Offense’

Vince Costantini discusses the company’s investment strategy after a busy 2019 and phase 2 of its Wharf project in Washington, D.C., which is now underway.

By Alexandra Pacurar (as appearing in Commercial Property Executive)

Vince Costantini, CEO, Madison Marquette. Image courtesy of Madison Marquette

Over the past year, Madison Marquette finalized the merger with The Roseview Group and, together with its development partners at Hoffman-Madison Waterfront, obtained the largest loans in D.C. history—an $800 million refinancing of The Wharf Phase I and $847 million for the construction of Phase II.

Following the merger, Roseview Founder Vince Costantini took on the roles of CEO and CIO of Madison Marquette. After six months in his new role, Costantini outlines for CPE the firm’s investment strategies and his overall goals.

The merger with Roseview was a milestone in Madison Marquette’s transition from development to third-party services company. What can you tell us about the company’s future as a developer?
Costantini: The company’s merger with PMRG in 2018 was actually more significant in regard to Madison Marquette’s expanded third-party management and leasing services platform than the Roseview transaction.

While Roseview brought a number of synergistic businesses to the Madison platform, including a highly successful value-added investment fund, PMRG brought real scale to the Madison services platform. This increased footprint in services and value-add investment has had the effect of diversifying our historical allocation to development.

Hoffman-Madison Waterfront received what is said to be the largest private construction loan in the history of D.C. What can you tell us about this deal and the second phase of The Wharf, which is now underway?
Costantini: The Wharf Phase 1 was one of the most complex public-private development projects in the United States—encompassing $2.5 billion in new office space, condos , apartments and retail as well as state-of-the-art music halls, parks, four new piers, a new yacht club, a boardwalk along the Washington Channel and hundreds of new boat slips. The Wharf’s Phase 1 was structured to minimize risk, such as proceeding with the trophy office building at 1000 Maine only with sufficient pre-leasing. This approach was attractive to investor partners and built confidence with Congress and City officials.
In addition to the private financing we secured, the District invested some $200 million on infrastructure, including sewers, roads and cobblestone promenades. Phase II has the advantage of following on Phase I, which has had such a strong track record of success and has created substantial acceleration of demand for the project. The Phase II construction loan, the largest in the history of the city, reflects continued investor confidence in The Wharf’s place-making appeal, significant pre-leasing success and overall ROI credibility.

What are the main trends and challenges when it comes to financing large multifamily projects or mixed-use developments with a large residential component? 
Costantini: I think it is fair to say that Class A residential is overbuilt in many locations across the country, so we are late in the cycle. Also, we have seen significant increases in construction costs over the past several years, so we believe now it’s prudent to be cautious when considering opportunities to build large multifamily projects or mixed-use developments with a large residential component.

Also, while financing is still available for well-structured and well-located opportunities, it is exceptionally difficult to finance large residential projects that are not fully entitled as the added risk when combined with the issues raised above are real impediments to securing financing.

That said, we are seeing opportunities in select markets—markets that enjoy low unemployment numbers, effective public transportation and attractive environments for a live-work-play demographic.

Tell us about the company’s upcoming projects. What makes them stand out?
Costantini: Madison has been the beneficiary of a number of new opportunities over the last several months. We closed or are in the process of closing on three value-added investments: two in multifamily and one in office. We also have begun to work with our local partner on the Armed Forces Retirement Home project in D.C. that we were awarded in October. We are about to begin a large project for the Veteran’s Administration in Montana. We have also been selected as a finalist by a large pension fund to redevelop and densify a large retail center in Florida and are set to begin a new senior living development also in Florida. We have a lot on our plate at present.

What are, in your opinion, the best markets for investment in 2020? Do you have any markets in mind for expansion in the years ahead?
Costantini: We invest in the “smile” of the U.S.—from Seattle down through California, Texas, Florida and up the eastern seaboard to Boston. We like these markets—and have teams on the ground providing great insight and visibility around opportunities that fit our services or investment parameters.

Madison Marquette has a significant retail portfolio, a segment that has been particularly challenged lately. What can you tell us about the retail market?
Costantini: Retail is changing, but it is not going away and rumors in the press about its demise are overly exaggerated, at least in our view. While there are clearly retail-centric real estate assets that will never come back—from anchor department stores and traditional big box venues—there are very interesting opportunities to update and rethink otherwise well-located infill lifestyle and related centers that will yield investors strong risk-adjusted returns.

Essentially, the asset class is out of favor by both debt and equity providers, so for firms that have the experience and ability to separate what can be repositioned from opportunities that will never make sense, there is significant opportunity to create alpha.

What are your goals as Madison Marquette CEO and what is the company’s strategy for 2020? 
Costantini: We’ve been blessed with the combination of new partners with capabilities that are far deeper than what each of the three firms had in the past. We need to be selective in our focus and decide where we can help our clients and partners create the greatest opportunity for the least risk. It is an exciting time for our company.

Do you see a market slowdown ahead? What are your predictions for 2020?
Costantini: We haven’t really seen a slowdown in the markets where we are most active. Unemployment is low, the consumer is healthy, and the lending community is fairly conservative across all product types. We all face the continued risk of rising construction costs, but for now we are still playing offense.

Developer Behind DC’s $2.5 Billion Wharf Aims to Build Something Bigger

Amer Hammour Talks About His Plans to Grow Madison Marquette

Westside Stories: January 2020

There’s more than enough to explore on the Eastside, but you might consider crossing Lake Washington

By  | January 2, 2020 (as appearing in 425 Magazine)

PACIFIC PLACE UNVEILS MAJOR MILESTONE IN MULTI-MILLION-DOLLAR REDEVELOPMENT

Pacific Place has announced the opening of its new South Lake Union-facing grand entrance at Seventh Avenue and Olive Way. The Gensler-designed grand entrance will connect to the atrium and the existing Pine Street entry, which will become a two-story, street-level entrance with a new glass façade.  

Heywood Chan, Ye-H Photography

“The vision throughout the development has been to open up the center to the street,” stated Daniel Meyers, senior vice president, project management at Madison Marquette, who is spearheading the project for the developer. “The opening of the new entrance, which will ultimately allow for a full intersection of the city block and welcome Seattle to linger, dine, and shop, is a major milestone in actualizing this mission.”

The Northwest contemporary design weaves the quintessential natural elements of the Pacific Northwest in an abstract manner. Elements such as the Cascade Mountains were an inspiration for the design of the glass corner entrances. Modern lighting and interior design, including a grand curved wood wall, take influence from the rain, forest, and the Puget Sound. The new entrance also welcomes guests with a 24-foot-tall LED screen depicting images of the Northwest and representations from local artists.   

As the redevelopment tracks toward a completion in early 2020, the leasing team has been busy filling the new spaces with a dynamic mix of tenants. Lululemon Athletica will open a new retail store in January, located on level one, leading to the new entrance at Seventh Avenue and Olive Way. The shopping center will also continue its pop-up store program, including Bezel & Kiln, Simply Seattle, and Wishes Toys & Games. And Seattle’s 8,408-square-foot HaiDiLao location will open early spring 2020 on the third floor of Pacific Place, adjacent to the skybridge to the Nordstrom flagship store. New tenants are anticipated to be announced once leases are signed.

[Read more.]

Luminary at One Light cited among Baltimore’s luxury living residences

Year in Review 2019: Luxury apartment expansion keeps rolling on

Baltimore’s luxury residential boom continued last year as large, multi-family projects continued to open up downtown.

Photo: Carley Milligan

Nearly 800 new units started leasing this year in high-profile, luxury developments at The Luminary at One Light, Liberty Harbor East and Bainbridge Federal Hill in Locust Point. Eleven luxury penthouse apartments opened in the spring at 414 Light St., months after 383 apartment units there opened for leasing.

The units lease at rates between $1,200 a month for a one-bedroom to over $8,000 a month for a penthouse.

[Read more.]

2019 Best of Design Awards winners for Commercial — Office

By  • December 6, 2019 (as appearing in The Architect’s Newspaper)

The centerpiece of The Wharf, Washington, D.C.’s new waterfront district, 1000 Maine is the development’s first signature office space.

Commercial-Office: 1000 Main Avenue (Jeff Goldberg and Esto)

Commissioned by PN Hoffman (now Hoffman & Associates) and Madison Marquette, the building channels the energy of its pedestrian-centric surroundings. Working with local firm FOX Architects, KPF designed 1000 Maine to host “next-generation” workspaces. Shaped by the contour of the Potomac River, the ten-story building comprises two split bars that create light-filled spaces and an inviting grand entry, where a feature staircase and expansive glass create views to the water’s edge. Ten-foot-tall finished ceilings—a rare height for the region—produce a loftlike experience, while terraces and roof gardens provide outdoor access and panoramic views of the river and nearby landmarks.

Client: PN HoffmanMadison Marquette
Structural Engineer: Thornton Tomasetti
MEP Engineer: GHT Limited
Landscape Architect: Landscape Architecture Bureau
Exterior Wall: Curtainwall Design Consulting

[Read full article with expanded photo gallery]

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