COMMERCIAL PROPERTY OWNERS FEEL GROOVY

Commercial property owners are pleased with the current state of the overall market (including retail, office and industrial), according to the Active International Real Estate Index. Active, which uses corporate trade to enhance customer's portfolio values, surveyed 1,652 U.S. real estate professionals. While few thought the market was “excellent” and fewer thought it was “poor,” the majority of respondents viewed the market as “good” or “very good.”

Active also asked respondents which factors (excluding interest and cap rate) would hurt the sale or retail properties in their markets. While about one-third said they were not sure, due to the specialized nature of retail marketing, those respondents with an opinion expressing great or substantial impact named price as the most negative factor, followed closely by condition, environmental issues, age and size.

VOLUME AND PRICING TRENDS: 2ND QUARTER

Sales of major retail properties set another record in the second quarter, with volume totaling $13.5 billion, according to a study by Real Capital Analytics for Sperry Van Ness. Portfolio sales accounted for nearly half of all sales for the quarter. About $3 billion of portfolios are currently reported to be in contract.

As these charts show, if the investment market is losing momentum, says Sperry Van Ness, “it has yet to impact the price of retail properties.” Cap rates are still falling and prices are rising at an even faster rate.

THE BIERI REPORT: DALLAS

Dallas ranks as the southwest's leading center for business and finance, as well as one of the top convention cities in the U.S. As a retail market, the Dallas/Fort Worth area is prosperous and rapidly growing. Although there is new development downtown by the stadium, generally downtown retailing long ago relinquished its dominant market position to suburban shopping centers. Recently, with the addition of Willow Bend Mall and Stonebriar Mall, the region became somewhat over-stored. Continued population growth and parallel retail space absorption, however, are rectifying this market imbalance.

Northpark Center, the flagship of metroplex regionals, continues ranking number one in the marketplace and is expanding. The family-owned development benefits from frequent upgrades and renovations. Nearby, open-air Highland Park Village caters to a fashion-conscious carriage trade. Along the beltway, Dallas Galleria generates high traffic and sales numbers from a luxury clientele comprised of residents and tourists alike. Addressing the market's further growth to the north, Stonebriar Center in Frisco generates good sales volumes through a broad mix of retail, restaurants and entertainment components that are especially attractive to families.

DALLAS
SHOPPING CENTER RANKING
Colin Creek Mall C+
Dallas Galleria A
Grapevine Mills B-
Highland Park Village B-
Hulen Mall B-
Irving Mall C
North East Mall B
Northpark Center A
Parks at Arlington B+
Ridgmar Mall B-
Six Flags Mall C-
Southlake Town Square B
Stonebriar Centre A
Town East Mall B
Valley View Mall C+
Vista Ridge Mall B
Willow Bend Mall B-

The information presented for traffic estimates and regional malls is gained from a variety of sources used in developing the Bieri Market Reports. These sources are public and private, and may even include the developers themselves. When traffic counts are not available, grades are determined by reviewing sales of anchor stores and specialty tenants within a subject project, and then comparing those with like projects.

GGP VS. PEERS: THE GOOD, THE BAD, THE BETTER

“Because GGP's portfolio has a sizeable small- and middle-market component, where population densities are by definition lower, its average demographic profile slightly trails that of many peers who have fewer properties and greater concentrations in large urban markets,” said Wachovia in a report. But the lower competition more than offsets the slightly lower population density, according to the report, in which Wachovia initiated coverage with an “outperform” rating. “Faster growth more than compensates for higher leverage,” Wachovia said.

AVERAGE DEMOGRAPHIC AND COMPETITIVE PROFILE WITHIN 15-MILE RADIUS
CBL Glimcher Macerich Mills PREIT Simon Taubman Peer Average GGP GGP/Peers
Population (000s) 341.3 1,007.20 1,175.20 1,539.90 772.90 952.3 1,535.30 1,046.30 986.00 -5.80%
00-'04 Growth 3.9% 4.1% 5.5% 5.8% 2.0% 4.4% 5.1% 4.4% 5.0% 13.6%
04-'09E Growth 4.4% 4.5% 5.9% 6.2% 2.2% 4.8% 5.5% 4.8% 5.3% 10.7%
Households (000s) 138.8 403.4% 428.9 577.2 306.8 367.9 568.5 398.8 378.3 -5.10%
00-'04 Growth 7.9% 8.1% 7.2% 8.9% 5.0% 7.7% 8.6% 7.6% 8.0% 4.9%
04-'09E Growth 8.5% 8.7% 7.6% 9.4% 5.5% 8.1% 9.1% 8.1% 8.5% 4.6%
Avg Household Income $55.0K $56.9K $63.9K $71.6K $55.5K $63.3K $74.2K $62.9K $61.6K -2.10%
Median Household Income $45.0K $46.8K $52.4K $59.7K $45.9K $52.3K $51.1K $52.0K $59.9K -2.1
% Household>$75K Inc. 22.7% 23.8% 28.0% 33.9% $23.2 28.1% 33.9% 27.7% 26.9% -2.7%
Aggregate Income ($B) $8.2 $26.0 $28.7 $41.9 $18.9 $25.4 $42.5 $27.4 $25.7 -6.3%
Competing Centers 6 16 22 30 25 17 26 20 18 -10.40%
Competing GLA (000s) 3,656 9,408 12,946 18,736 12,885 9,805 15,788 11,889 10,559 -11.20%
GLA Per Cap., Sq. Ft. $10.70 $9.30 11 12.2 16.7 10.3 10.3 11.4 10.7 5.80%
Agg. Inc. Per Sq Ft of GLA 1,852 2,535 2,070 2,106 $1,395 $2,393 $2,515 $2,141 $2,334 4.40%
*All centers over $250,000 square feet exclude single-tenant, free-standing retail space. Domestic assets only.
Source: Wachovia Capital Markets, geoVue Inc., National Resarch Bureau, Securities DataSource, company documents