Len Mistretta | Investcorp adds $160m into US real estate

Investcorp, a global provider and manager of alternative investment products, announced yesterday that its US-based real estate arm has invested in an industrial portfolio of properties in the Chicago and Boston metropolitan areas for a total purchase price of approximately 160m. The portfolio includes six properties with an aggregate of approximately 1.8 million square feet of warehouse and distribution space. 

Investcorp, which has operations in Qatar, focuses on generating investor and shareholder value through a disciplined investment approach in businesses like corporate investment, real estate, alternative investment solutions , together with the recently added credit management business.

Johannes Glas, Managing Director at Investcorp in Qatar, said, "We are pleased to add these six warehouse assets to the Investcorp portfolio. Being close to major cities, all of the properties are located in high demand areas with limited supply. We believe this creates very attractive market dynamics and the properties will generate solid rental income."

The Chicago portfolio, located in close proximity to downtown Chicago, is comprised of three individual cold storage industrial buildings that are used primarily for the storage and distribution of frozen food products. There is limited cold storage industrial space in Chicago and minimal new development that is able to service the city's growing consumer base as demand for fresh, organic and perishable food products continues to grow. Investcorp is partnering with Bridge Development Partners, one of the largest owner/operators of cold storage in the Chicago market.

In Boston, Investcorp has purchased a warehouse, distribution and flex portfolio totaling approximately 1.1 million square feet. These properties are located in the southern portion of the Boston metropolitan area, with convenient access to major transportation thoroughfares for easy distribution to businesses throughout the city and adjacent suburbs.

Len Mistretta | Luxury housing marks the latest trend in stadium amenities around the country

By the time it’s completed in 2019, the new stadium complex for the National Football League’s Los Angeles Rams will span almost 300 acres with free-standing concession stands encased in glass and a 50-foot-tall video board covering the length of the playing field.

Premium suites inside the 70,000-plus seat facility will include up to 20,000 club seats and loge boxes, including Lux Cabanas, a beach-themed club at field level hovering above one of the end zones.

Yet the $2.6 billion project just south of L.A. in the city of Inglewood will also include another coveted amenity for any die-hard sports fan: luxury homes.

In addition to a hotel, casino and 620,000 square feet of retail space, the new stadium complex will include Hollywood Park, a residential property development with up to 3,000 homes.

While some of the new dwellings are aimed at middle-income residents who have been increasingly squeezed by L.A.’s soaring real estate market, most will target the luxury sector with sprawling apartments overlooking the stadium outfitted with wedge hardwood flooring, sliding glass doors and soaring beamed ceilings. The project’s developers, Wilson Meany and Stockbridge Capital Group, have yet to reveal prices.

“We’re building a year-round community, not just a sports stadium,” says Gerard McCallum II, project manager for Wilson Meany who is overseeing Hollywood Park. “This will give fans and Los Angeles residents a great opportunity to be a part of the sports environment and connect with a real community.”

[High-rise luxury apartments near Nationals Park in D.C.’s Navy Yard ready for move in]

As more cities across the United States break ground on expensive new sports stadiums and arenas, some are including real estate components either directly on the complex grounds or nearby. From Atlanta to Minneapolis, Sacramento to Miami, developers are rushing to add condominiums and rental apartments to the long list of amenities available to ardent sports fans.

The move to add real estate is fueled, in part, by wanting to bolster the fan experience, but it is also an attempt to offset the soaring price tags to build new stadiums in some cities, say real estate experts.

In some cases, developers are also being pressured by city governments and local residents to add affordable housing to these massive stadium projects.

Residents have begun moving into First, a 325-unit apartment building at 1263 First St. SE in the District near Nationals Park. The mixed-use project is being developed jointly by Grosvenor Americas and McCaffery Interests and will include more than 24,000 square feet of retail space and a Residence Inn by Marriott.

Rents for the studio, one- and two-bedroom units range from $1,815 to $4,520.

The new property includes a swimming pool, a hot tub and a key selling point — stadium-style seating on the roof with views into Nationals Park.

“I can watch batting practice from my apartment. I make something to eat and go on the roof and watch the game,” said Bob Lind, 52, a software developer, who moved into First in early April.

“There’s stadium seating with a big screen,” added Lind, who also goes to the games. There’s also a “panoramic view of the city — there’s the [Washington] Monument, the [National] Cathedral, the Capitol and the Anacostia River. You see everyone partying in the bullpen — it’s pretty cool.”

After more than a decade of delays and lawsuits, a major development around Barclays Center in Brooklyn — the home of the Nets and Islanders that opened in 2012 — is finally accelerating construction of affordable housing.

[Near Nationals Park, a neighborhood of many names is emerging]

While the $1 billion arena is the centerpiece of the Pacific Park project, thousands of apartments are also being built aimed at working- and middle-class families who are shut out of a rapidly gentrifying area near downtown Brooklyn.

Nina Maluenda says being close to Barclays Center was only part of the reason she and her husband, Mehdi, moved into 461 Dean Street, one of several new towers in Brooklyn overlooking the sports complex.

Developed by Forest City Ratner Cos., the 32-story building has 363 rental units that are designated as 50 percent affordable, 50 percent market rate. “It’s nice to be so close to the sports arena, but we really liked being in the center of culture and the arts in Brooklyn,” says Maluenda, a marketing associate. “The building is right next to a lot of art and performance spaces in this part of Brooklyn, and that really appealed to us.”

But the push in Brooklyn to build affordable housing as part of a sports complex is largely an exception rather than the rule.

“Some developers see a real financial upside to adding middle- and upper-income housing to these projects,” says Selma Hepp, chief economist at San Francisco-based Pacific Union. “They are creating communities that they think will deliver financial reward in the long term.”

In Sacramento, the new state-of-the-art home of the National Basketball Association’s Kings cost nearly $600 million to build. The 17,608-seat arena opened last fall and includes 82 luxury suites and year-round access for its owners. An in-arena app also allows fans to help control the temperature in their section.

But developers of the Golden 1 Center are also set to open a 16-story mixed-use office tower including a 250-room hotel in the summer and residence on the complex grounds later this fall. The Sawyer overlooks the new arena and includes 45 condominiums with some of the highest prices in the city.

The Atlanta Braves moved into their new $672 million ballpark this season. Yet beyond the 4,000 premium seats and 18,000-square-foot hospitality club, the project at SunTrust Park also includes Home at the Battery Atlanta, three new residential communities under construction on the complex grounds.

Totaling 531 units, the three rental properties will feature one-, two- and three-bedroom apartments with amenities ranging from exclusive clubhouse access to rooftop bars and lounges with wraparound balconies with ballpark views. Developer Pollack Shores says one of the three communities, Residences, was ready Opening Day on April 14 when the Braves hosted the San Diego Padres. The other two communities, Parkside and Flats, will open in May and July, respectively. Rental prices range from $1,225 to $4,505.

“We’ve created this unique opportunity to not only tailgate from your patio but also to enjoy other qualities residents look for like walking and biking trails and easy access to major highways,” says Steven Shores, president and co-founder of Pollack Shores.

The new residential developments arrive amid another boom in stadium and arena construction around the United States. At least a dozen new professional sports complexes are under some form of development, with twice as many in the planning stages, according to the CoStar Group, an online marketplace for commercial real estate. This is on top of the dozens of professional ballparks and stadiums erected during the late 1990s and early 2000s.

Despite putting up with the noise, crowds and traffic (to say nothing of losing seasons), adding residential property near or on a sports complex can add value to a home, housing data indicates.

According to real estate website Trulia, the areas around major league baseball stadiums saw home values rise 15 percent higher than the greater metropolitan areas in which they were located. While those values vary widely based on stadium location, Trulia data showed that the areas around 18 of the 29 stadiums had higher median home values compared with the cities in which they are located. Rents in those 18 neighborhoods were either higher or equal to those in the surrounding towns, Trulia says.

Homes around newer baseball stadiums — which tend to be in pricier neighborhoods — fared better, Trulia notes. Of the 14 stadiums built since 1999, only two neighborhoods — around Marlins Park in Miami and Miller Park in Milwaukee — had home values lower than the metros in which they were located.

Opened in 2008, Nationals Park in Washington is perhaps a prime example of a ballpark fueling residential development and lifting home values. Once home to one of the District’s grittier neighborhoods, the area around the ballpark is today booming with new construction, including upscale apartments, restaurants and bars.

Since 2012, more than 2,300 residential units have been added to the area around Nationals Park, and 3,727 are in the pipeline, according to RealPage, a maker of property management software. The influx of development makes the area the fifth-busiest submarket in the United States for apartment construction, RealPage says.

And the area is getting more property development. Construction is expected to begin soon in the nearby Buzzard Point neighborhood on a new D.C. United soccer stadium and two apartment projects with a combined 869 rentals and condos.

“The Nationals’ stadium has been an absolute property boon to that area,” says Michael Rankin, managing partner of TTR Sotheby’s International Realty in the District. “The city hasn’t seen anything like it in decades.”

The Baltimore Orioles helped usher in the stadium-building boom in 1992 when they opened Camden Yards. But Trulia found that home values around that ballpark were 16 percent lower than the greater metro area: $211,724 near the stadium vs. $251,724 for the city.

But Seema Iyer, an assistant professor of real estate at the University of Baltimore, says the Trulia data doesn’t consider the longer view of housing around Camden Yards.

“If you look at what home prices were like in that area of Baltimore before the park was built and compare that to today, you’ll see fairly sharp housing appreciation,” Iyer says. “Camden Yards was a pretty depressed area before the park arrived, but since then it’s seen a tremendous level of commercial and retail activity, so the park literally created a housing community that didn’t exist before.”

Len Mistretta | Desperate Malls Turn to Concerts and Food Trucks

Malls are fighting for shoppers with one thing their web rivals can’t offer: parking lots.

With customer traffic sagging, U.S. retail landlords are using their sprawling concrete lots to host events such as carnivals, concerts and food-truck festivals. They’re aiming to lure visitors with experiences that can’t be replicated online -- and then get them inside the properties to spend some money.

“Events draw people to come to the shopping center,” said Keith Herkimer, whose company, KevaWorks Inc., is working with big landlords including GGP Inc. and Simon Property Group Inc. to produce outdoor events. “They generate revenue for the owner and offer a chance for cross-promotion, so they can try and drive more customers into the stores.”

Mall owners across the country are grappling with record store closings and declining rents. Retail property values are down 3 percent in past six months, as all other types of commercial real estate showed gains, according to the Moody’s/Real Capital Analytics indexes. A Bloomberg gauge of publicly traded mall landlords has tumbled 15 percent in the past year, the worst performance among U.S. real estate investment trusts.

Amazon.com Inc. and other internet retailers continue to grow, while department stores including Sears Holdings Corp. and Macy’s Inc. have been closing hundreds of locations. Payless Inc., the discount shoe seller, is among the latest to announce a massive shuttering -- of 400 stores -- as part of a bankruptcy plan.

“We expect to see a trend of more closings,” said Carol Kemple, an analyst at Hilliard Lyons. “Most retailers, if they’re still standing in September, will probably try to make it through the holiday season.”

Creating Experiences
Retail landlords have already made a push toward experience-driven offerings by adding restaurants, movie theaters and activity centers for children. Many malls are also adding rotating stores around for only a short time -- known as pop-up shops -- that are meant to attract young customers who see shopping as an event.

Now, events are reaching beyond the malls themselves. Herkimer’s task is to bring crowds to parking lots with events that generate as much as $60,000 a week for mall owners from the largest outdoor events.

The idea is gaining traction. Next month, Simon Property is having the first carnival in its Round Rock Premium Outlets parking lot, about 20 miles (32 kilometers) north of Austin, Texas. Similar events are being held for the first time at locations such as Central Mall in Port Arthur, Texas, managed by Jones Lang LaSalle Inc., and a Cheyenne, Wyoming, mall owned by CBL & Associates Properties Inc. In July, Simon Property’s Orland Square Mall, southwest of Chicago, will be holding its first parking-lot food-truck festival, with plans for live music performances, Herkimer said.
Movie Nights

Lisa Harper, senior director of specialty leasing for Chattanooga, Tennessee-based CBL, said the company has expanded its carnival business at many of its 87 properties over the last couple years. She and Herkimer have discussed the possibility of pumpkin patches in the fall months and adding movie nights to some properties. CBL’s Triangle Town Center, in Raleigh, North Carolina, is about to start its second mini concert and food-truck series, called Creekside Wind Down, Harper said.

Retailers rent the outdoor space in a structure that resembles their indoor leases, Harper said. While each deal varies, the agreements involve a base rent fee for the use of the space and a percentage payment after the event reaches a certain threshold. Department stores, which sometimes own or control their parking lots, are seeing more value in renting the space after many years of restricting their use, she said.
‘Stick Around’

“Events brings that additional traffic and also encourage people to stick around longer,” Harper said.

There’s no guarantee, of course, that people will go inside, said Tracey Hatley, director of specialty leasing for JLL Retail. But the events offer opportunities for cross-promotion. Customers receive fliers advertising stores or restaurants inside the mall or coupon books to help draw them in.

That works well for properties like the Santa Rosa Mall in Mary Esther, Florida, Hatley said.

“They are a property that’s struggling with occupancy, struggling with driving traffic to the center, so they love doing parking-lot events,” she said. “You can see it from the road and it gets people on the property.”

Simon Property representatives didn’t respond to requests for comment.
Groceries, Doctors

Some malls are doing fine even without renting out their outdoor space, especially higher quality properties with upscale stores. They have been drawing visitors with grocery stores, medical offices and high-end restaurants -- all businesses that face less risk from e-commerce competition than traditional tenants. Some retail REITs are adding office space or apartments to their portfolios to diversify.

Sandeep Mathrani, chief executive officer of GGP, said at a conference this month that the perfect mall now would include one department store, a supermarket, an Apple store, a Tesla store and businesses that started out online, like Warby Parker, the purveyor of prescription eyeglasses and sunglasses. Clothing stores now represent about 50 percent of the average shopping center, down from about 70 percent, he said.

“Landlords are trying to give people reasons to come to the mall, whether it’s a Tesla charging station or getting local car clubs to host events in their parking lots,” said Alexander Goldfarb, an analyst at Sandler O’Neill & Partners LP. “It’s not a fun time to be either a retailer or landlord, but it doesn’t mean every single mall or shopping center is going to close. Far from it.”

And for some retailer landlords with better-performing properties, the industry’s turmoil could mean more opportunity.Len Mistretta
‘Enormous Opportunity’

“This very painful process will surely take more than five years,” Steven Roth, Vornado Realty Trust’s chief executive officer, said in a letter to shareholders this month. “It will also create enormous opportunity for those with the capital and management platforms to feed on the carnage.”

Urban Edge Properties, a Vornado spinoff, is one landlord adding to its holdings. The company is under contract to buy seven retail properties, with 1.5 million square feet (140,000 square meters) of gross leasable space, mostly in the New York City area.

Until malls can figure out how to bring in steady crowds, expect to see corn dogs and carousels in their parking lots, Herkimer said.

“If retail turned around and vacancy rates dropped again, and all the sudden these malls and shopping centers are full of tenants, I think there’d be a circle in the other direction,” he said. “They’d say, ‘We need the parking space for customers.’” Len Mistretta

Len Mistretta | Latest 'Furious' film opens strongly, especially outside of the US

LOS ANGELES (AFP) - Universal's action thriller The Fate of the Furious hit the ground in super-high gear this weekend, taking in US$100.2 million ($140 million) on North American screens while roaring to record global revenues of more than a half-billion dollars, industry analysts estimated.

Exhibitor Relations said the latest chapter in Universal Studio's "Fast and Furious" series accounted for nearly two-thirds of North American revenues over the three-day Easter weekend, leaving previous frontrunner The Boss Baby in its dust with just US$15.5 million in sales. That Fox/DreamWorks Animation film has now grossed US$116.3 million domestically.

While the latest "Fast" opened strongly, the manic muscle-car-filled film - with megastars Vin Diesel and Dwayne "The Rock" Johnson - made nearly a third less in its first weekend than the previous "Fast and Furious" chapter, which scored US$147.2 million.

But the new film had an exceptionally strong performance in the rest of the world, led by China, bringing in US$432.3 million. With North American sales added in, the estimated US$532.5 million global debut would break the record of US$529 million held by Star Wars: The Force Awakens, website BoxOfficeMojo.com reported.

"Beauty and the Beast" continued to draw viewers, earning $13.6 million in its fifth week out. The Disney blockbuster, starring Emma Watson and Dan Stevens, has taken in $454.7 million domestically while pushing past $1 billion

The animated Smurfs: The Lost Village from Sony came in next at US$6.5 million. That was half its opening take from a week earlier.

Holding fifth spot on North American screens was Going in Style. The Warner Bros. comedy, starring Morgan Freeman, Alan Arkin and Michael Caine as aging bank robbers, had weekend sales of US$6.3 million.

Rounding out the top 10 are: Gifted (US$3.0 million) Get Out (US$2.9 million) Power Rangers (US$2.9 million) The Case for Christ (US$2.7 million) Kong: Skull Island (US$2.7 million)

Len Mistretta | The big debate: Is 2017 the best time to be a marketer?

From creative programmatic and targeted content to emerging technologies like virtual reality and artificial intelligence, the sheer variety of ways to communicate with consumers makes 2017 an exciting time to be in marketing.

Unilever chief marketing and communications officer Keith Weed, however, would go a step further. Speaking at Advertising Week Europe last month, Weed argued that the rapid pace of innovation, coupled with the plethora of methods available to engage with consumers makes 2017 not only exciting, but actually the best time to be a marketer.

“I genuinely believe this is the best time to be in marketing and advertising, because so much is changing and it’s so exciting. I’ve never done a job this long before, but I’m not doing the same job as I was doing seven years ago. It’s radically changed,” he explained.

“To me the exciting thing is there have never been so many ways to engage with people in a two-way conversation. Making sure you’re on top of innovation and working out what’s going on is tremendous. I can’t believe there is anything more exciting just now.”

Exciting yes, challenging definitely. This is the era of fake news, ad fraud and dubious metrics. So far in 2017 high profile advertisers from McDonald’s to L’Oreal have pulled spend from Google and YouTube in fear their adverts might appear next to extremist content.

Consumers are also more engaged with brand messaging then ever. This proved to be the downfall of Pepsi’s latest campaign, which was pulled after a matter of days following a savage social media backlash accusing the drinks giant of co-opting the Black Lives Matter global protest movement.

The “always on” nature of the digital age has given consumers the tools to make their voices heard and have more control over content, notes Sulinna Ong, vice president of artist marketing at music streaming site Deezer.

She believes in 2017 any marketer worth their salt must understand how to utilise all the digital tools at their disposal to create meaningful engagement, which then gives them the opportunity push innovation and creativity up the agenda.

“New technology and the continued rise of social media have dramatically increased demand for authentic and exciting conceptual work, producing creative 360-degree campaigns that may otherwise have been flagged as “too risky” in the past. Now – more than ever before – the appetite for experimentation drives innovation,” says Ong.

This opinion is shared by Creative England marketing manager Rachel Graye, who believes the digital age has broadened marketers’ ability to build relationships with consumers.

“Digital advancements definitely make marketing more exciting. I see it as an advantage to have even more tools at our disposal to get closer to the consumer. Social and influencer marketing, for example, allows us to connect with people in a more meaningful way,” she explains.

READ MORE: Is digital an effective mass market medium?

“It also allows marketing teams to work more closely as different expertise needs to come together for it to work as a whole. Content marketing forces us to be more creative, which is a challenge and an opportunity to create something new and re-write the rule book – what’s more exciting than that?”
Increasing accountability

Marketing effectiveness is under the microscope like never before, putting teams under increasing pressure to deliver tightly defined KPIs that directly impact the bottom line.

It is for this reason 2017 brings with it more complexity and accountability, says Dixons Carphone commercial marketing director Jonathan Earle. He argues short-term thinking in the boardroom means marketers are not even given enough time to hold their nerve if the numbers are not coming in.

“It’s got to be immediate response rates and that can also add pressure, because campaigns could be launching new products or services, and it takes time to drive into people’s psyches what you’re doing. Sometimes the ROI has got to be immediate otherwise it’s a failure.”

That being said, Earle believes making marketers accountable for driving real business growth can only be a good thing, as it shows marketing is being seen as a revenue generator not a cost centre.