Whose Pay Grew the Most in the Industry?
Public REITs still are paying top dollar for top talent, even if interest rates have slowed hiring overall and caused workforce reductions, according to S&P Global Market Intelligence. Its 2023 Executive Compensation Review for Real Estate Companies tracked proxy filings for all U.S. equity REITs.
REIT executive compensation rose by an average of 8.1% in 2022. The highest raises went to executives who supervised the acquisition and development of new properties.
REIT Executive Compensation Growth in 2022
- top acquisition officer: 17.7%
- top development executive: 17.1%
- chief marketing officer: 15.7%
- top construction executive: 12.1%
- top asset management executive: 10.2%
Meanwhile, C-suite compensation growth generally fell below the 8.1% average. COOs’ grew 7.1%, CFOs’ 6.3%, chief investment officers’ 6.3%, chief general counsels’ 5.8% and CEOs’ 2.7%.
The report also found that compensation and talent management programs will remain a priority for real estate companies for years.
All Kinds of Investors Are Buying All Kinds of Malls
Waterbury, Connecticut: The owners of an Ashley furniture franchise purchased the empty former Macy’s at Brass Mill Center from Kohan Retail Investment Group for $3.3 million. The new owners plan to convert the store into smaller units and possibly freestanding buildings, including an Ashley store.
Kingston, Massachusetts: Second Horizon Capital bought the 473,000-square-foot Kingston Collection, once called Independence Mall, from Pyramid Management Group. The former Sears is now a 282-unit, high-end apartment complex. Second Horizon plans to revitalize the center by bringing in new tenants.
Blaine, Minnesota: 4th Dimension Properties purchased Northtown Mall from WPG for $31 million. Becker Furniture, Burlington and Hobby Lobby are among the 645,000-square-foot property’s tenants. 4th Dimension plans to bring new uses to the 78% leased mall.
Newington, New Hampshire: Torrington Properties acquired the 250,000-square-foot Mall at Fox Run from Morgan Stanley. The buyer had paid $11.5 million for a vacant Sears there in October 2022. Torrington plans to transform the mall into a mixed-use development.
Columbia, South Carolina: Word of God Church & Ministries International said it has contracted to buy the city’s first enclosed mall, the 500,000-square-foot Dutch Square Center, from Nassimi Realty. Tenants include Burlington, Office Depot and Planet Fitness. “With the addition of Dutch Square Mall to its portfolio, WOGCMI aims to revitalize this space, breathing new life into it and transforming it into a place of inspiration, unity and prosperity for the local community and region at large,” the organization’s website says.
Barbie Buzz at Marketplaces
Barbie has topped $1 billion in box office sales, becoming one of only 53 films to do so and becoming the highest-grossing film by a woman director in terms of U.S. box office. This success provides an opportunity to marketplaces to get in on the traffic.
On the movie’s opening weekend, foot traffic at Alpharetta, Georgia’s 135-acre, mixed-use Halcyon grew 10% year over year. And receipts at the property’s CMX CinéBistro climbed 110%, according to Halcyon.
Halcyon promoted its tenants via visits from Barbie. Click on the image above to watch on Instagram.
Restaurant Never Enough Thyme was among the Halcyon tenants that cross-promoted with the movie.
A Barbie-based family at the CMX Stone Sports Bar Halcyon
And the promotions will continue through the holiday season. Throughout December, Barbie parent Mattel is sending a Barbie Dreamhouse pop-up truck stocked with branded merchandise to marketplaces and other venues around the country. More than 100 shoppers lined up at the truck during its stop at Fairlane Town Center in Dearborn, Michigan, on Sunday. And Mall of America will host a Barbie pop-up Malibu Barbie Cafe with operator Bucket Listers starting in September.
Hot Consumer Spending Streak Continued in July
U.S. retail and food services sales rose 0.7% from June to July and 3.2% year over year, according to the U.S. Census Bureau. Both figures are higher than the market expectations of a 0.4% jump from June and a 1.5% year-over-year increase. It’s the fourth straight month Americans have increased their retail spending.
This hotter-than-anticipated growth might lead the Fed to keep interest rates higher for longer, but the resilient consumer spending bodes well for the Marketplaces Industry, according to ICSC research manager Matthew Panfel.
Summer promotions from the likes of Amazon and Target goosed sales, as did some early back-to-school shopping. Apparel retailers, for example, saw the largest month-on-month gain in six months, he said.
Consumers’ summer activities favored some merchandise categories over others, he said. “The busy summer travel season likely helped boost spending at restaurants that saw a large year-on-year gain, while sales at furniture stores continued their slump, as consumers continue to shift their spending from goods to services.”
5 Retailers Making Headlines: Aldi, Home Depot, Miss A, Radio Flyer and Tapestry
Discount grocery chain Aldi has agreed to acquire the Winn-Dixie and Harveys Supermarket chains from Southeastern Grocers. The deal would expand Aldi’s presence in the Southeast by adding approximately 400 stores across Alabama, Florida, Georgia, Louisiana and Mississippi. Some of the stores would convert to the Aldi banner. The acquisition is part of Aldi’s aggressive expansion plans to add 120 new stores nationwide this year, bringing its total to more than 2,400 units by year-end. Southeastern Grocers will dissolve and put its 28-store Fresco y Más chain into an LLC called Fresco Retail Group. Meanwhile, Kroger’s planned acquisition of Albertsons is undergoing an antitrust review by the Federal Trade Commission.
Home Depot expects its annual sales to decline for the first time since 2009, when the housing bubble burst. The retailer expects total sales to decline by between 2% and 5% in 2023, as consumers focus on smaller home improvement projects, avoid major renovations and have a harder time finding new homes to move into.
Direct-to-consumer cosmetics brand Miss A wants to drive growth with new physical stores. The company, which has 26 stores in the Southwest, wants to operate 100 by 2025. Miss A plans to open 20 to 30 stores each year until 2025, in markets like Georgia and Florida.
Even a century-old brand finds the need to open physical stores to stay in touch with today’s consumers. Radio Flyer — the maker of iconic red wagons, trikes and bikes — will open its first store in November — at Woodfield Mall in Schaumburg, Illinois —in part to show off its new line of e-bikes.
Luxury conglomerate Tapestry — which owns Coach, Kate Spade and Stuart Weitzman — will expand its portfolio of brands by acquiring Capri Holdings — parent of Versace, Jimmy Choo and Michael Kors — for $8.5 billion. The combined companies would operate 2,700 stores.
Supermarket-Anchored Properties Still Top Buyers’ Shopping Lists
Investors traded $19 billion worth of U.S. retail property in the second quarter of 2023, excluding sales of entire real estate companies, according to JLL research. That’s a 57% year-over-year decline and a 33% decline from the second quarter of 2019. Angst over regional bank failures helped stymie the market early in the year, but transaction volume picked up after reports of strong consumer confidence boosted faith in the sector, according to the report. Supermarket-anchored properties were the most heavily transacted multitenant retail subtype by volume; $3.6 billion worth trading hands at an average cap rate of 6.7%. Unanchored strip centers were also popular; $2.6 billion worth traded at an average cap rate of 7.1%. The Southeast was the most active market with $4.6 billion in sales, followed by the West Coast with $4.4 billion and the Northeast with $3 billion.
By Brannon Boswell
Executive Editor, Commerce + Communities Today