Shopping center investors have been pulling back in the wake of the Wall Street crisis and credit crunch, but a recent $50 million deal in Kannapolis indicates the Charlotte area is still attractive.
CB Richard Ellis Realty Trust acquired 296,388 square feet in the 470,288-square-foot Afton Ridge Shopping Center as part of a joint venture with Childress Klein Properties.
Childress Klein, the developer, will retain ownership of 10 percent of the space, and the trust will own 90 percent, officials said.
The owners expect retail sales growth to moderate in the Charlotte market after five robust years, but they believe it will outpace the national average over the next five years, said Jeffrey Torto, senior director of acquisitions for CBRE Investors.
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PricewaterhouseCoopers' third-quarter Korpacz Real Estate Investor Survey said that big-box and discount retailers continued to outperform traditional retailers in sales growth and same-store sales.
The survey cited Charlotte as one of the best markets for power centers – projects dominated by big-box stores and discount retailers – based on the region's population growth.
Afton Ridge, at Interstate 85 Exit 54 and Kannapolis Parkway, is in one of the fast-growing residential and commercial areas of Kannapolis.
Stores in the portion acquired through the venture include Best Buy, Marshalls, PetSmart, Stein Mart, Dick's Sporting Goods, Ashley Furniture, Lane Bryant and Hallmark.
The shopping center, which includes a 174,000-square-foot SuperTarget store that wasn't part of the deal, is 94 percent leased.
Afton Ridge is a planned $160 million mixed-use development anticipated to grow eventually to 2.5 million square feet by combining retail with office and industrial space.
Region-wide, the retail vacancy rate has been inching upward over the past 18 months as small shop owners are squeezed out by the faltering economy and chain stores put expansion plans on hold.
That's an indicator that retail growth is slowing.
In the Charlotte area, the retail vacancy rate rose 0.7 percent of a point to 6.4 percent during the first half of 2008, according to Karnes Research Co.
For the rate to hold steady, said Karnes analyst Andrew Jenkins, developers would have to pre-lease most of the 3 million square feet under construction.
Another 10 million square feet of retail space is proposed, he said, but “it's inconceivable they will build that much right now.”
That's because retail expansion is “purely driven by the housing numbers, and people are stalling those projects,” Jenkins said.
Even so, he said, there's less risk to opening stores in Charlotte than in other parts of the country where the housing crisis has been much worse.
Doug Smith's Notebook
Businessweek.com chose 15 urban neighborhoods where artists and adventurous homeowners are willing to take a risk for big returns later.
Guess what? No Charlotte neighborhood made the cut. Not NoDa, not Plaza Midwood. But downtown Durham did make the list.
PCL Construction Services Inc., a general contractor, construction manager and design builder, has opened a new office at Three Parkway Plaza in southwest Charlotte to better serve the mid-Atlantic region.
The nation's eighth-largest contracting organization said it plans to hire 50 salaried staffers as well as numerous hourly workers as it expands here over the next three years.
The PCL family of companies is headquartered in Edmonton, Canada, with a U.S. head office in Denver.
George Mennen Jr., John Gioffre, Jade Paunovich and Beth Cashion have joined NAI Southern Real Estate's Jerry Furr in the Charlotte company's Mooresville office.
The commercial brokers moved from The George Mennen Group at Lake Norman Realty in Cornelius.