Full steam ahead for retail space in 2016 - Things continue to be busy throughout New England - by Chris McMahon

Chris McMahon, Summit
Realty Partners

With the New Year upon us, all signs tell me that New England’s retail real estate industry is in a great place and that the year is off to an excellent start.  Mayor Marty Walsh is reporting from Symphony Hall that Boston “is as strong as it has ever been”, with the lowest unemployment rate in 14 years. With the recent announcement of General Electric moving its headquarters to Boston, and the various major development projects across the region, it appears that we have plenty to look forward to in 2016. Boston continues to be a major economic driver for New England. In terms of weather, the lack of snow so far this year is troubling for ski areas and skiers but a major relief for landlords, property managers, tenants with NNN leases, and retailers / restaurants in general.

We expect 2016 to be a big year for the retail real estate industry in New England with significant investment sale and retail leasing activity. Property owners whom our company represent just recently closed on a retail center in Maine and two other shopping centers, one in New Hampshire and another in Maine, are scheduled to close within the next month. From a leasing standpoint, we expect retailers, service businesses, and restaurants to continue with a steady pace of expansion this year. There are a couple of large mergers pending that will undoubtedly have an effect on the retail industry here in New England. First is the Stop & Shop and Hannaford merger valued over $10 billion. Second is the Walgreens acquisition of Rite Aid valued over $17 billion. Both of these large transactions seem to be driven by cost saving measures, through buying power and cost reduction, to give the combined companies more flexibility to compete in a highly competitive retail environment.

There are several significant development projects throughout the region that include retail components. Perhaps the most noteworthy are MGM’s $950 million casino development in Springfield, Mass. where plans envision a high-energy dining, retail and entertainment district and Wynn’s $1 billion casino development in Everett, Mass. A close second to the casinos is the overall development boom of Boston’s newest neighborhood, the Seaport District, which is mostly being led by WS Development and Tishman Speyer as the two companies pour hundreds of millions of dollars into the district which includes several ground level retail, restaurant and entertainment establishments. Even the northern most parts of New England are seeing a benefit from these good times as Les Otten pushes forward with a $143 million investment in the Balsams Resort located in Dixville, N.H. to create the largest ski resort in New England. This development will inevitably have a profound impact on local businesses, retailers and restaurants throughout that region.

Things continue to be busy throughout our New England shopping center portfolio. At Rivers Edge Plaza in Haverhill, Mass., we executed a lease with Dollar Tree and signed a long-term lease extension and expansion with Aubuchon Hardware. We just recently signed a lease with Petco at Heritage Park Plaza in East Longmeadow, Mass. to take over a space vacated by Party City. In Concord, N.H. we executed a lease with a national fast food franchisee which should kick off the re-development of the former Entertainment Cinema’s and Movie Gallery site. We are also seeing significant activity with tenants and buyers that we represent. Bach to Rock, a high end music school, has signed a lease and opened at Federal Realty’s Linden Sq. in Wellesley, Mass. We completed a sale transaction on behalf of the Dental Place when they purchased a former bank building in Millis, Mass.

We are excited to be working with Zoup!, a national franchise restaurant with over 70 locations looking in Massachusetts to open a second 2,200 s/f  fast casual restaurant serving soups, sandwiches and salads.  We are also seeking sites for Orange Theory Fitness, a national franchise fitness concept, throughout New Hampshire and Maine, to open up several 3,000 s/f locations. Crush Pizza, a locally owned fast casual pizza concept is also looking for 2,000 s/f for their second Boston location.

If you are looking to take advantage of the great retail shopping center experiences that have been created over the past couple years and potentially find inspiration for a shopping center you are working on, here are few that I recommend you check out. First is a visit to Cranston, R.I. for a stop at Chapel View followed by a stroll through Garden City. Second is Assembly Row in Somerville, Mass. for outlet shopping and unique dining experiences. Third is University Station in Westwood, Mass. for a visit to virtually every major national retailer and some new dining experiences. Last is MarketStreet in Lynnfield, Mass. which continue to expand with high quality retailers and restaurants.

Best wishes to you all this winter. Stay warm and stay focused!

Chris McMahon is a partner and the director of brokerage at Summit Realty Partners, Lexington, Mass.