Higher than anticipated sales on Black Friday have mall owners hoping that the coming holiday season will cure some of the persistent retail vacancy, the Wall Street Journal reported. Last week’s Black Friday sales totaled $52.2 billion, a record, according to research from the National Retail Federation. Meanwhile in the third quarter malls overall had a 9.4 percent vacancy rate — the highest since numbers began being recorded — according to Reis, a real estate analytics firm. While mall operators do not rely hugely on holiday sales, the period is a useful bellwether for retail tenants and landlords about what outlets are ready to expand and when and if rents can go up, according to Jay Leupp, a portfolio manager at Lazard Asset Management, an investment manager for institutional clients. “It’s a better sign and predictor of what retail tenant renewal and expansion activity is going to be going forward, particularly if retail sales are meaningfully stronger than expected,” Leupp said. [more]

Things aren’t as bad in commercial real estate as recent press reports have made them seem, according to Jay Leupp, senior portfolio manager with Grubb & Ellis’ Realty Income Fund. Leupp, along with Paul Curbo, a portfolio manager at Invesco AIM Global Real Estate Fund, talked to CNBC yesterday about where they believe investors stand to make the most handsome profits in real estate today. Leupp’s pick: Ashford Hospitality, the Marriott and Embassy Suites parent company, which owns 120 hotels nationwide. Curbo said he’d go with Digital Realty Trust, which owns data center spaces and has seen growth even as the rest of the commercial real estate industry has faltered.

Despite the negative outlook for the real estate market, there are
still options for investors interested in real estate, according to
Fortune Magazine. Bank stocks are not a good bet because major banks
still have significant amounts of money in real estate loans and
commercial mortgage-backed securities. But the ProShares UltraShort
Real Estate exchange traded fund hit a closing high of $259.36 in
November. Several real estate investment trusts, such as Alexandria
Real Estate Equities, are also on the verge of bouncing back, said Jay
Leupp, senior portfolio manager of the Grubb & Ellis AGA Realty
Income Fund. [more]

Following major commercial real estate troubles, including a recent
loan default at the St. Regis in Dana Point, California, and 25 percent
decreases in revenue per room for Sunstone Group, the alarms are
sounding for commercial real estate. Companies are finding themselves
mired in debt, unable to refinance, Marcus & Millichap CEO Harvey
Green told CNBC. Not all companies are experiencing hardships, though.
CB Richard Ellis recently sold $100 million in stocks to hedge fund
millionaire John Paulson at ten dollars per share. Jay Leupp of Grubb
& Ellis also expressed some optimism for commercial real estate,
especially in the public sector. Public real estate investment trusts
have risen 18 billion dollars since November, Leupp said. “The first
turnaround will occur in healthcare and specialty sectors that have
been more recession-resilient with lodging, industrial, retail and
finally office space following,” he said. 1 Comment

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