Bruzzone Strategics

Hot Leasing Pockets: San Francisco

SAN FRANCISCO, CA -- Several reports highlight high-tech centers like San Francisco with rising rents, and major leases.  It's unclear at this point if it points to tends to come for the overall market, or anomaly in this sluggish economic recovery.

From Colliers International, Class-A rental rates across all markets averaged $48.87 per square foot, up from $44.56 in fourth-quarter 2011,in the  first-quarter office report for San Francisco; class-B rates rose from $38.18 to $40.29 during the same time period. Class-A financial-district rental rates rose from $43.56 to $49.65 during that time, while class-B rates in this submarket rose slightly from $36.03 to $36.85. Demand and rent growth are being driven largely by technology growth—specifically, social media, search engine and cloud computing companies such as Twitter, Zynga, Salesforce, Yelp, Google and LinkedIn.

Slowing Income & Spending Levels Cloud Economic Outlook

SAN FRANCISCO, CA--  I wrote a short political commentary warning about a possible spike up in unemployment last month based on a recent Gallup employment poll.  This report is a more comprehensive Picture from the CapitalSpectator.  It also makes a case on a possible slowing of the "recovery". Examples:

"The inability of new claims to continue falling is a fresh sign of trouble ahead.."or

"the year-over-year percentage changes for Personal Consumer Spending and Personal Disposable Income continue to decelerate. horizon."

via www.capitalspectator.com

Dollar General Finally Coming to California

Just a matter of time when one of the dollar giants would set its eyes on the Golden State. Should be a success especially with the glut of retail space throughout the state.  From Chain Store Age:

Goodlettsville, Tenn. -- Dollar General plans to open 625 stores and add more than 6,000 new jobs in 2012. The locations will be spread among Dollar General’s 38-state operating area, and include the new markets of California, where it will open 50 stores and a distribution center, and Massachusetts. The discounter will also open a distribution center in the Golden State this year.

via chainstoreage.com

Bed Bath & Beyond's to Open 45 Stores, Q4 profit up 25%

SAN FRANCISCO, CA ---   Bed Bath & Beyond ranks high on my top 10 U.S. retailers list,and has for some time. This big box retailer was an regular inhabitant of "power centers," then discount centers, and now thrives in the post-2008 consumer environment.  In other words, they're retail survivors  --- which is the highest accolade in today's market.

FROM Chain Store Age:

By jmosscrop

Bed Bath & Beyond reported Wednesday that profit for the fourth quarter ended Feb. 26 rose 25% to $283.5 million, compared with $226 million a year earlier.

What a difference a recession makes: Dollar store boom good for retail landlords

SAN FRANCISCO, CA --  There was a time when a dollar store was a stigma for a shopping center.  They were thought to lower the center's appeal, draw 'undesirable' consumers, and upset the other center tenants.
    Not now as this report from Chain Store Age reveals:

 

Seattle -- The combined store count of the four national dollar store (or extreme value) chains — Dollar General, Dollar Tree, Family Dollar and 99 Cents Only — has now surpassed that of the three biggest national drugstore chains (Walgreens, CVS, and Rite Aid), according to a new report  by Colliers International, the third-largest commercial real estate services company in the world. 

READ MORE...via chainstoreage.com

Cracking the new world of securitized loans - CMBS 2.0

 

SAN FRANCISCO, CA --  With $1.4 Trillion collateralized loans coming due in the next  48 
months, and 9.2% of all such loans 30 days past due, you would think that  Wall Street and lenders might be hesitant to originate new commercial mortgage-backed securities (CMBS).  Not so.

In this well written piece by Matt Hudgins for the National Real Estate Investor, you'll gain insights into what is being referred to as "CMBS 2.0".

The new generation of CMBS seeks to address investors' concerns over previous securitization practices pertaining to disclosure. New deals remove perceived conflicts of interest among the bondholders and shift authority over the special servicer away from investors in the riskiest class of bonds to those at the top of the capital stack.

The innovations seem to be working.

U.S. banks persist through foreclosures to avoid the inevitable

SAN FRANCISCO, CA --  By choosing foreclosures to short sales,  and stockpiling billions in foreclosed properties, U.S. banks are postponing the inevitable --- a necessary but painful hit to  their financial statements.

Worse, the banks' stockpiling-versus-disposing reo's has stalled the recovery of the commercial and residential real estate markets.

Decline of dollar stores..not so fast

SAN FRANCISCO, CA --  David Cottle at the Source has whacked the family of dollar stores, so popular during the Great Recession.  With near contempt, he suggests the recent decline in dollar store earnings represents that the recession is nearing an end.

Not so fast.

Strategics:  For investors-operators and re-developers, it's a fair question.  However, recall that just two days ago, Dollar General, announced they'll open 625 new stores and hire 6,000 new employees.  What American company has boldly announced major job hirings in the last six months.

Here's the point.  The consumer has been become permanently fixated on frugality.  An entire generation will never forget what happened to their homes, their 401(k)'s, and stock holdings.  The retail bliss is gone.  Smart shopping is in.  So discounters like the dollar stores are here to stay.  They're good (but stingy) tenants.  Property profiles will still boast dollar store tenants.

 

Retail megatrends: According to retail veteran Howard Davidowitz. Must view

SAN FRANCISCO, CA -- Howard Davidowitz, chairman of Davidowitz & Associates Inc., with 40 years experience as a retail expert, talks about U.S. consumers and the outlook for the retail industry. He talks with Pimm Fox on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

Some observations from Davidowitz:  How about this for a start.. we have 21 square feet of retail for every man, woman, and child in America!  Clearly an overbuilt retail real estate universe.  More:

Sam Zell's predictions for commercial real estate, including end of lenders' "extend and pretend"

SAN FRANCISCO, CA -- Sam Zell, a leading distress property investor, makes several predictions in a Reuter's report --- including the end of the lenders' "extend and pretend" when it comes to underwater loans on commercial property.  Here is the text of the report:

Zell sees little new U.S. commercial property

By Ilaina Jonas

NEW YORK, Dec 14 (Reuters) - Real estate mogul Sam Zell said he expects little U.S. commercial real estate construction over the next one to three years except for apartment buildings, a hiatus that would restrict supply and boost the value of existing properties.