Capital Retail Group today announced Body Smith, a fitness and training company serving up workouts to both avid athletes and those new to exercise, has signed a lease to move and expand its business in Logan Circle.

Washington DC (PRWEB) February 28, 2012

Body Smith owner Stuart Smith says, You will find everything you need in a clean, friendly, non-threatening, environment. We will be offering all the amenities of a large club in an inviting, service-oriented, neighborhood gym. Stuart goes on to say, We are excited about expanding our current footprint. It will benefit our potential and existing clients alike.

Robert Tack, CEO of Capital Retail Group partnered with Todd Sherbacow of McBride Real Estate in representing the tenant. Lee Engle and with Street Sense, handled lease negotiations for the landlord. Todd Sherbacow says, The building is perfectly set up for a gym with concrete floors and open space.

Even though the Logan Circle area has several gyms, most are high end with memberships costing at least $130 per month. Body Smith will offer memberships more moderately priced. Says Capital Retail Groups Robert Tack, There will always be demand for a neighborhood gym offering a strong value in the marketplace. He goes on to say, The Powell building is surrounded by an affluent professional population providing Body Smith with the density essential to their success.

About Body Smith

Bodysmith has been the leading innovator in personal fitness training in the Washington, DC area since 1998. From the beginning, we've specialized in functional training methods for our clients, taking them to previously unmatched results in their own personal fitness.

About Capital Retail Group

Capital Retail Group provides a full range of brokerage, property management and strategic advisory services to the commercial retail sector. Follow us on Twitter, Facebook, and our Blog.

###

See the rest here:
Residents of Washington DC will have a Gym They can Call Their Own

CHAMPAIGN — Christopher's Fine Jewelry Design in downtown Champaign has closed for remodeling and expects to reopen later this week in a smaller space.

Co-owner Lois Wacholtz said the store plans to keep its frontage at 124 N. Neil St., C, but lease out the back portion.

As for what customers can expect to see once remodeling is done, Wacholtz said: "The windows will stay the same. There will be more wall (display) cases and fewer floor cases, and a fair amount of new inventory when we're up and running."

When complete, the retail space will be about 900 square feet, compared with the 2,000 square feet the store had before, she said.

Wacholtz said she and co-owner Christopher Jupp had been thinking about shrinking the space for a couple years.

"There's no real need to have as much inventory on hand as there used to be," Wacholtz said. "Our focus more and more the last several years has been custom design and custom orders."

Customers love to look at jewelry, she said, "but more and more, they're taking ideas away and having them custom-produced. It just became obvious we didn't need as much display space on hand for inventory."

Wacholtz said she hopes to rent out the back of the building, perhaps for a restaurant.

"We plan to put a doorway in on the Taylor Street side, so it's accessible from that side," she said.

That entrance would be just east of the stairwell that leads down to Christopher's production studio, she added.

Wacholtz said she expects the store to reopen Friday or Saturday, but if customers need Christopher's services before then, they can call.

"We won't be completely finished, but we'll be open by the end of the week again and have out as much as we can," she said.

More here:
Remodeling will make jewelry store smaller

The shell of a 91,146-square-foot retail building is rising on former farmland at 2200 N. Eagle Road, just north of Fairview and the still-unopened Big Al’s entertainment center.

California-based CenterCal, the owner of the project, won’t name the retailers committed to the space. One store will take up about 40,000 square feet, while four split the rest.

The building is valued at $360,000, according to a Meridian building permit.

About 25 stores and restaurants that are new to Idaho are planned for CenterCal's Meridian Town Center site, said CenterCal founder and CEO Fred Bruning.

The center will include water fountains, whimsical sculptures, children's play areas, interconnected streets and walkways with mature landscaping, Bruning said.

Burning says he has commitments from tenants for about 73 percent of the space. “That’s as well as we would have done before the recession,” he said.

By 2013, the company says, the project will add 400,000 square feet of new shopping, entertainment and eateries to the Treasure Valley. It is expected to be built out by 2014.

The first building to open at the center will be Big Al’s. It's a two-story, 66,000-square-foot bowling center, sports bar and arcade. It's been under construction since August and is set to open next August. Big Al's says the center will add 180 jobs to the Treasure Valley.

Immediately to the east of the CenterCal project, Meridian's $25 million Julius M. Kleiner Park is under construction, too. Designed to offer a peaceful urban retreat, the park will feature a plaza, band shell, amphitheater, arboretum and rose garden, ponds, public art, recreation complex, picnic areas, paths and open space.

A 14,000-square-foot senior center inside the park is nearing completion. It's scheduled to open this spring.

The park was once a dairy farm owned and operated by Julius Kleiner, who died in 1972.

Sandra Forester: 377-6464

Read more here:
Retail building goes up at Meridian Town Center

A plan to build 2 million square feet of office and retail space in Mission Bay as a headquarters for tech giant Salesforce has been suspended, a company spokesman said Monday.

Rapid growth within the company was said to be the main reason for the delay.

Salesforce, a cloud computing company, said in a statement it added 500 more employees in the past year, far exceeding expectations.

The company also said plans to continue hiring locally and globally. An estimated 3,000 employees are based in The City, and Salesforce expects that to grow to 5,000 in the next few years.

That growth, the company said, is one reason Salesforce signed an 18-year, $339 million lease for 400,000 square feet of space at 50 Fremont St. in downtown. But now the company said it likely needs more space as it continues to grow.

“It is clear to us that our original Mission Bay strategy may not provide enough space and flexibility for our needs,” the company said. “This means we are suspending development on our Mission Bay campus and instead focusing on further expansion of our downtown San Francisco campus.”

The Mission Bay campus, which was approved in January, called for construction on 14 acres within the Mission Bay redevelopment zone. Residential housing in Mission Bay is still slated to continue, and UC San Francisco’s hospital complex is progressing toward its 2014 completion date.

Though Salesforce would have been a major component of Mission Bay, Mayor Ed Lee’s office -- which has been a big supporter of luring tech companies to San Francisco -- said it’s committed to working with the company.

“They’re a rapidly expanding high-tech company,” mayoral spokeswoman Christine Falvey said. “They’re a company people look at when others try to figure out where to headquarter. The mayor is committed to working with them in downtown and in Mission Bay.”

akoskey@sfexaminer.com

View post:
Salesforce backs out of Mission Bay campus

By  Tim Feran

The Columbus Dispatch Sunday February 26, 2012 9:54 AM

FILE PHOTO

Circuit City closed 567 stores when the consumer-electronics chain was liquidated in 2009. Other retailers have moved into those vacant stores to improve their markets.

 The number of vacant stores in Columbus could reach a five-year low in 2012, but the reasons don’t exactly add up to good news.

 The prediction is included in a report, by Marcus & Millichap Real Estate Investment Services, which attributes the shrinking vacancies to several factors. Tops among them: Retailers are still slowly filling up space that was built before the recession.

At the same time, the report says, construction of new retail space is expected to remain well below the historical average.

Right now, real-estate companies are focused on filling spaces vacated by other retailers, said Erin Patton, director of the national retail group for Marcus & Millichap.

 “That’s really a trend you’ll see nationwide,” Patton said. “It’s not necessarily a bad thing, because of the market we’re coming out of. We lost a lot of different stores, a lot of concepts, that couldn’t keep up with their rent. It’s a very good thing to stabilize the retail real-estate market.”

The expectation of below-average new construction doesn’t surprise one commercial real-estate veteran.

“Columbus is actually kind of over-retailed,” said Rob Click, senior managing director of CBRE Brokerage Services. “We have a very significant amount of retail space for our population. The number of bodies can just support only so much retail.”

Many of the large retailers that recently signed leases in central Ohio have chosen areas with healthy population growth and relatively high household incomes, including Polaris, Easton and Westerville.

Last week, for example, the outdoor retailer Cabela’s announced that it will open an 80,000-square-foot store — its first in Ohio — in the Polaris area.

“The biggest impact is going to be the Cabela’s deal recently announced,” Click said. “That’s probably the single biggest retail addition that’s going to happen this year.”

Grocer Earth Fare’s move into a 30,000-square-foot space at the Gemini Place Towne Center in Polaris will be another confirmation that the neighborhood is one of the top retail areas in Columbus, Patton said.

The Marcus & Millichap report says that the home-improvement retailer

Menard’s move into a 240,000-square-foot space at the site of the former Northland Mall last year should help revitalize the Morse Road corridor. It also notes that a WalMart opening in Westerville by midyear should increase traffic in that area, too. Both moves should attract smaller tenants to vacant spaces nearby.

The large number of vacancies that arose as Circuit City, Linens ’n Things and other chains closed stores led other retailers, including discounters, to move up to better locations, the report says, adding that . that trend should continue, albeit at a slower pace.

“It was a very opportunistic time for Big Lots or

Ollie’s, among others, to gain market share,” Patton said. “There are still opportunities out there for players who want to do it. The vacancy rate is still fairly high.”

tferan@dispatch.com

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Regional retailing vacancies fill slowly

Last Updated: February 27, 2012 12:05pm ET

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Only about 300,000 square feet
of retail space will come online
in Charlotte in 2012.

CHARLOTTE—Slowly recovering, that’s the word on the retail front in Charlotte, according to the Marcus & Millichap’s 2012 Market Outlook.

Limited construction and large lease signings will allow the Charlotte metro to post positive absorption in 2012, M&M predicts. Meanwhile, the firm expects multi-tenant velocity to pick up thanks to out-of-state sellers handing off stabilized shopping centers and risk-averse buyers targeting single-tenant properties.

“With little movement on the development front, smart owners of existing centers are utilizing capital to retain signature tenants and attract new retail concepts,” Susan McGuire, principal at CNL Crosland, tells GlobeSt.com. “They are making their asset stronger and working with tenants to ‘right-size’ their space.”

Indeed, only about 300,000 square feet of retail space will come online in Charlotte in 2012, expanding the inventory by a meager 0.3 percent, M&M reports. Vacancy rates will dip 60 basis points to 8.4% in 2012 while rents climb 1.6% to $17.56 per square foot.

M&M predicts institutional operators looking to reposition assets will list performing shopping centers with a national anchor and solid tenant roster at cap rates near 7.5% while REITs and private buyers seeking higher cash-on cash returns will finance these investment-grade products to expand their portfolios.

Finally, as conditions tighten, owners will invest in minor upgrades to facilitate higher rents over the next five years, according to Marcus & Millichap’s report. At the same time, the firm expects 1031-exchange buyers to disperse their equity into single-tenant buildings near major transit corridors as a hedge against inflation.

For more thought leadership from Marcus & Millichap Real Estate Investment Services, check out "StreetSmart," a blog by Hessam Nadji, the firm's managing director of research and advisory services. The blog provides Thought Leadership positions on a variety of commercial real estate-related issues. Click here to watch Nadji on CNBC's "Realty Check" program talking about multifamily and the housing crash. For more information on the Thought Leadership program, contact Scott Thompson at sthompson@alm.com.

Categories: Southeast, Retail, Acquisitions/Dispositions, Development, Leasing, Marcus & Millichap, Analysis, Charlotte

Go here to see the original:
Charlotte Retail Sector Continues Slow Recovery

SALT LAKE CITY — Next month Salt Lake City is expected to finally celebrate the grand opening of the state's most highly anticipated retail project in more than a decade. City Creek Center is scheduled to open its doors March 22.

During an exclusive tour for the Deseret News and KSL on Thursday, work crews clad in orange and green vests with hard hats stood on ladders and wielded tools — the sound of saws, drills and hammers echoing throughout the property. The workers could be seen moving in and out of the area as they bring in interiors for the retail stores now under construction.

While the vast majority of the construction work is complete, crews are still busy building out the individual retail spaces and putting the final touches on the remaining unfinished public areas from early in the morning to late at night.

Retailers who have taken out improvement permits with Salt Lake City

Stores:

1. ???77kids

2. ???Abercrombie & Fitch

3. ???Aldo Shoes

4. ???Allen Edmonds

5. ???American Eagle

6. ???Ann Taylor

7. ???AT&T

8. ???Banana Republic

9. ???Bauers Fashion Eyewear

10. BCBG

11. Bebe

12. Bose

13. Brighton Collectibles

14. Brooks Brothers

15. Cache

16. Chico's

17. Claires

18. Clark's Shoes

19. Coach

20. Cotton On

21. Disney

22. Express

23. Fanzz

24. Footlocker

25. Forever 21

26. Gap

27. GNC

28. Godiva

29. Gymboree

30. H&M

31. J. Crew

32. J.Jill

33. Kay Jewelers

34. L'Occitane

35. Lenscrafters

36. Lids

37. Loft

38. Love Cultures

39. Lush

40. Macy's

41. Michael Kors

42. Microsoft Retail

43. Mr. Mac

44. N3L

45. Nordstrom

46. OC Tanner Rolex

47. Pandora Jewelry

48. Papyrus

49. Porsche

50. Restoration Hardware

51. Rocky Mountain Chocolate

52. Salomon

53. Steve Madden

54. Sunglass Hut

55. Swarovski

56. The Gym

57. The Limited

58. Tiffany

59. Tricked Out

60. True Religion Jeans

61. Tumi

62. Vans

63. White Box Space

64. White House Black Market

65. Yankee Candle

66. Zaggs

Restaurants:

1. ???Big Sal's

2. ???Blue Lemon

3. ???Cheesecake Factory

4. ???Chick-Fil-A

5. ???Kneaders

6. ???Sbarros

7. ???Suki Hana

8. ???Teavana

9. ???Texas De Brazil

City Creek general manager Linda Wardell said that despite the long hours, there is a great deal of enthusiasm and anticipation from staff and workers about the impending grand opening.

"We've been working on this project for a long time and to know that it is just ... days away from opening," she said. "We're just so excited!"

The architectural details in the public areas show an artistic design that incorporates the unique natural beauty that signifies Utah — use of large red rock to create a comforting desert landscape where visitors will enjoy scenic sky-lit views whether the retractable roof is open or closed.

In the coming weeks, the various fountains will be tested, including one that will have a fire feature as well. Wardell said the center's giant granite fireplace is also ready.

She said the feature, set just inside the South Temple entrance, was designed to serve as one of the major meeting areas of the center. People will say, "Lets meet by the fireplace," Wardell predicted.

As for the retail space, shopping center officals said leasing for the downtown mall is now 92 percent complete. Taubman Inc., the company that manages the retail portion of the project, said it will  release the names of the approximately 80 stores that will be in the shopping center on March 1, in anticipation of a month-long marketing campaign marking the center's opening.

But 66 stores and 9 restaurants are publicly listed with Salt Lake City seeking building improvement permits at the City Creek site.

High profile retailers such as Coach, Brooks Brothers, and Tiffany & Co will join well-known chain eateries like Cheesecake Factory and Texas de Brazil Brazilian steakhouse at the estimated $1.5 billion, 700,000-square-foot shopping and entertainment center.

Other companies listed with the city are Abercrombie & Fitch, American Eagle, Ann Taylor, Banana Republic and BCBG — clothing companies bookended by anchor retailers Macy's and Nordstrom.

Disney will be there, and J.Crew, Express and Fanzz. Footlocker and Aldo will offer footwear; Forever 21 will appeal to — those who are forever 21. Restoration Hardware is moving from Trolley Square, and  Rocky Mountain Chocolate has taken out a permit. Employees of Mr. Mac were moving merchandise from its store on South Temple to its new location in City Creek.

Taubman showed the first signs of its marketing campaign last week as it unveiled billboards and building wraps on display in and around the downtown area. It's a strategy designed to "generate the most buzz" about the historic project, Linda Wardell, City Creek Center general manager, said.

City Creek Center has drawn the attention of retail analysts nationally and internationally as one of the only major retail projects going online in the U.S. in 2012.

Even with the global eye of the retail world watching, Wardell said she does not feel burdened by pressure. She said she is buoyed by the support offered by staff as well as the project's development partner, City Creek Reserve — the for-profit development arm of The Church of Jesus Christ of Latter-day Saints.

"I'm confident that we can deliver a world class (center) to Salt Lake City," she said. "There are hundreds of people working on the start-up for the center. And that will continue for the next 30 days."

Although a number of retailers are leaving The Gateway for City Creek Center, Wardell believes both shopping centers will be able to coexist.

"I think it's natural that some retailers are attracted to this project and are going to want to move here from other locations," Wardell said. "What makes Salt Lake City such an attractive place to shop is that there are two downtown locations where people can choose to shop and dine. And we've said all along that there are some things that Gateway is going to have some things that City Creek Center won't offer."

She said the Gateway would still draw consumers for the Clark Planetarium, IMAX theater, Discovery Gateway children's museum and its proximity to Energy Solutions Area.

"Certainly, City Creek Center and Gateway are synergistic." she said.

Opened in Nov. 2001, the $375 million Gateway project, built by Salt Lake-based The Boyer Co., included 400,000 square feet of office space, 675,000 of retail and entertainment space, along with high-end condominiums and apartments.

At the time, critics argued that the new open air shopping center would pull business away from the independent "Main Street" shops, putting even more pressure on the already struggling central city shopping district. Now, the roles are reversed.

A spokesperson for The Gateway said despite some of the recent turnover, the development has successfully positioned itself as the premier shopping and dining destination in the Salt Lake region.

"We will continue to be an active lifestyle center serving the public seven days a week,' said director of marketing Heather Nash. "New retailers that will be opening soon include Bettie Page, Francesca's Collections and Epic Board Shop, and our leasing team continues to meet with local and national retailers and we will make announcements as these deals are finalized."

As for the progress of City Creek Center, Wardell said the project is on schedule for its expected March 22 opening date.

"It's sort of like waiting for Christmas to come when you're a child," she said. "We can hardly wait to get there."

Email:jlee@ksl.com,Email:hschwarz@desnews.com

Here is the original post:
City Creek retail spaces nearly filled, construction wrapping up

At a glance
Forest City Ratner Cos. is one of New York?s most successful ? and controversial ? developers, with a string of high-profile residential and commercial projects. Among them:
Atlantic Yards: The $4.9 billion, 22-acre residential and retail development in downtown Brooklyn is expected to be completed in September. It includes the Barclays Center, which will be the new home of the New Jersey Nets, 6 million square feet of residential space, 247,000 square feet of retail space and 336,000 square feet of office space.
Ridge Hill: An $842 million retail and outdoor shopping center in Yonkers. The 81-acre center so far has lured residents and 17 retail tenants and, when fully built, is expected to add 3,900 jobs and generate $22.6 million in sales-tax revenue for the city and Westchester County.
Echo Bay: A proposed development in New Rochelle that would include 250 residential units, retail space, parks and waterfront access.
MetroTech Center: A $1 billion, 3.7-million-square-foot office and academic complex in downtown Brooklyn. Buildings on the campus house the New York Fire Department?s headquarters and corporate offices for several financial companies.
New York by Gehry: Also known as Beekman Tower, the $680 million, 76-story high-rise development in lower Manhattan houses 903 apartments, a 100,000-square foot public school and other features.

Follow this link:
Forest City known for tough political skills around region

WASHINGTON, DC--(Marketwire -02/24/12)- According to the National Association of Realtors® quarterly commercial real estate forecast, all of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord's market commanding bigger rent increases. These trends also are confirmed in NAR's recent quarterly Commercial Real Estate Market Survey.

Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. "Sustained job creation is benefiting commercial real estate sectors by increasing demand for space," he said. "Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest."

NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.

"Household formation appears to be rising from pent-up demand," Yun said. "The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term."

The Society of Industrial and Office Realtors® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.(1)

The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.

Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market -- an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.

Office and industrial space remains a tenant's market -- 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.

Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers' market for development acquisitions; prices are below construction costs in 78 percent of markets.

Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.

NAR's latest Commercial Real Estate Outlook(2) offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc.,(3) a source of commercial real estate performance information.

Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.

The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.

After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.

Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.

Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.

Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.

Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.

Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.

Multifamily Markets
The apartment rental market -- multifamily housing -- is likely to see vacancy rates drop from 4.7 percent in the first quarter to 4.5 percent in the first quarter of 2013; multifamily vacancy rates below 5 percent generally are considered a landlord's market with demand justifying higher rents.

Areas with the lowest multifamily vacancy rates currently are New York City, 1.8 percent; Minneapolis and Portland, Ore., each at 2.5 percent; and San Jose, Calif., at 2.7 percent.

After rising 2.2 percent last year, average apartment rent is expected to increase 3.8 percent in 2012 and another 4.0 percent next year. Multifamily net absorption is forecast at 209,900 units this year and 223,600 in 2013.

The Commercial Real Estate Outlook is published by the NAR Research Division for the commercial community. NAR's Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.

The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations -- CCIM Institute, Institute of Real Estate Management, Realtors® Land Institute, Society of Industrial and Office Realtors®, and Counselors of Real Estate.

Approximately 78,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 232,000 members offer commercial real estate services as a secondary business.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

(1) The SIOR Commercial Real Estate Index, conducted by SIOR and analyzed by NAR Research, is a diffusion index based on market conditions as viewed by local SIOR experts. For more information contact Richard Hollander, SIOR, at 202/449-8200.

(2)Additional analyses will be posted under Economists' Outlook in the Research blog section of Realtor.org in coming days at: http://economistsoutlook.blogs.realtor.org/.

(3)Beginning in the third quarter of 2011, NAR forecasts have been generated based on historical data provided by REIS, Inc., and do not correspond with prior historical information from previous forecasts. This source permits coverage of additional metro areas than previously reported.

The next commercial real estate forecast and quarterly market report will be released on May 24.

Information about NAR is available at http://www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, charts and surveys also may be found by clicking on Research.

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Commercial Real Estate Vacancy Rates Improving, Rents Firming

Click photo to enlarge

Santana Row in San Jose Friday Nov. 12, 2010. Several years after it first opened, many residents of the development say they love living there. (Photo by Patrick Tehan/Mercury News)

San Jose's Santana Row is preparing a fresh expansion of its residential, office and retail space, bolstered by brisk activity such as a recent deal for H&M to take over the old Borders bookstore site.

The South Bay's robust economy has prompted Federal Realty Investment Trust, the principal developer of the upscale commercial and residential complex, to lay the groundwork for new construction on the property.

"Silicon Valley clearly has led us out of recession," Don Wood, CEO of Federal Realty, said in a recent conference call with analysts. "The first bits of strength that we saw and continue to see come out of Silicon Valley."

First up is construction of 212 rental homes in what's described as a

resort-style community near Pasta Pomodoro restaurant. Once these homes are completed in the second half of 2013, Santana Row will have 834 homes, of which 615 would be rentals.

Next, the developers plan a large new office complex at the southeast corner of Winchester Boulevard and Olsen Drive.

Meanwhile, clothing retailer H&M has leased the entire 27,000-square-foot, two-story building that once was occupied by a flagship Borders store.

The deal represents a big expansion for H&M, which will triple its space at Santana Row, where it currently occupies 8,000 square feet.

"Santana Row is doing quite well," said James Chung, a partner with Terranomics, a commercial realty brokerage. "And the H&M deal is a

great sign for the retail market."

Construction on the new residences, designed to evoke a Mediterranean feel, began earlier this month.

"The demand to live on The Row is high and we believe the time is right to increase our residential offerings," said Jan Sweetnam, chief operating officer for Federal Realty's West Coast markets.

Federal Realty executives said a South Bay economy that during 2011 produced 26,000 jobs -- more than half of the 46,000 jobs created in the entire Bay Area -- is the big driver in the development efforts.

"It's why we have now moved forward very quickly on the second residential piece," Wood said. "It's why we got some great traction going on right now" in the retail and office elements.

Santana Row's 645,000 square feet of retail is 94 percent leased, its 100,000 square feet of office space is 100 percent leased and its existing 627 residences are 95 percent occupied.

"If this market continues the way it's going, in the next four or five years we should be built out," Wood said.

Santana Row could add another 200,000 square feet of retail and office space. And beyond the 212 residences now under construction, the project could add 348 more homes, for a potential grand total of nearly 1,200 residential units.

"With so many high-end retailers, you would have thought Santana Row would have struggled. But it's actually been the opposite," said Jake Randolph, a realty broker with Cornish & Carey Commercial. "Like everyone else during the downturn, Santana Row had some turnover. But they have been able to fill their key spaces."

And much as the South Bay has been an island of economic strength amid weakness elsewhere in the state and nation, Santana Row and the adjacent Valley Fair mall appear to have dodged the worst of the sour times.

"Santana Row is a regional draw," Chung said. "The restaurants are always full. You see people shopping. If you looked at Santana Row and Valley Fair, you wouldn't have been able to tell that the rest of the world was falling apart."

Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.

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Expansion under way at San Jose's Santana Row