Trends in Real Estate 2003

1
Trends in Real Estate 2003

• Presented by LSU Real Estate Institute and
  Commercial Investment Division of the Greater
  Baton Rouge Association of Realtors
• Dottie Tarleton, CCIM
• Vice President
• Stirling Properties

The Baton Rouge Retail Market
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Typical Shopping Center
3
Center in the Eyes of the Developer
4
Major Tenant Concept
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City Fathers Concept
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REINVENTING RETAIL 1973 2003A TOUR OF SOME
OF THE MOST PROMINENT CENTERS IN BATON ROUGE
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Esplanade Mall
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Esplanade Mall

• The first enclosed mall built in Baton Rouge
• Built in 1973- anchored by Rubensteins
  Department Store.
• Reinvented itself into an Entertainment Mall as
  hotels and offices users crowded the landscape
  after the extension of Corporate Blvd. in the
  late 80s.

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Cortana Mall
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Cortana Mall

• Built in 1974
• Slowly evolved as the retail climate changed
• Fashion Park
• Cortana Square
• Freestanding retailers-Lowes, Just for Feet, Old
  Navy

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Cortana Mall
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Cortana Mall

• Wal-Mart Super Center
• Bed, Bath and Beyond
• Shoe Carnival

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Oak Villa Extension
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Mall of Louisiana
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Mall of Louisiana

• Mall was built in 1997
• Bluebonnet Parc was built in 2002
• Separate ownership
• The retail mix between the two centers compliment
  each other

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STRIP CENTERS
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Concord Park
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Concord Park

• Built in 1972- Anchored by Kmart and National
  Grocery Store.
• Tenants have changed but the center is still
  discount oriented.
• Good design

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Village Square
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Village Square

• Built in three phases with construction starting
  in 1976.
• Anchored by Kroger, Service Merchandise, and K
  B Drugs.
• Precursor to the power center.
• Design is functionally obsolete in todays
  market.

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COMING SOON!YOUR FRIENDLY NEIGHBORHOOD
WAL-MART SUPERCENTER
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Village Square
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Siegen Village
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Siegen Village
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Siegen Village

• Built in 1985 but later expanded.
• United Artist and Kmart were the original
  tenants.
• Newest Discount StoreBig lots

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THE POWER CENTER
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Hammond Aire Plaza
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Hammond Aire Plaza

• Built in 1985
• First Power Center in Baton Rouge
• Value Oriented
• Category Killer StoresShoe Station, Michaels,
  Home Depot
• Neighborhood ComponentJr. Department Stores
• Stein Mart, Burlington Coat Factory, Marshalls

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The Mixed Use Concept
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Citi Place
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Citi Place

• Built in 1995
• First mixed use project in Baton Rouge
• Combines office, entertainment, restaurants, and
  retail all in one project

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Siegen Lane Regional Shopping District 2003
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Siegen Lane Regional Shopping District 2003

• Zero to 1.2 million square feet of discount and
  off price retail in 20 years
• And so the point is that the mall is no longer
  the king of regional retail!!!!
• Marketplace at Siegen Lane 700,000 sq. ft.
• Target Plaza 353,000 sq. ft.
• Siegen Village 174,378 sq. ft.
• TOTAL 1,227,378 sq. ft.

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The State of Wal-Mart

• 240 Billion in sales annually
• 3 Million Associates
• Most respected company on Fortune 500 List
• Biggest employer in 21 States
• Worlds biggest grocer, driving down prices an
  average of 13 in the markets they enter.
• One of the contributing factors for low inflation
  Everyday Low Prices

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The State of Wal-Mart (cont.)

• Two daily non-stop flights from LaGuardia Airport
  to Bentonville daily. Zero non-stop flights to
  any other cities in Arkansas from LaGuardia
• Baton Rouge MSA-New Super-centers to begin
  construction in 2003
• Location
• Baker 186,000 Sq. Ft.
• Cortana 223,000 Sq. Ft.
• College Dr. 188,000 Sq. Ft.
• Prairieville 207,000 Sq. Ft.
• TOTAL NEW SQ. FT. 2003 804,000 Sq. Ft.

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The State of Wal-Mart (cont.)

• Small Marts Neighborhood Grocery Store

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The State of Wal-Mart (cont.)

• Newest Wal-Mart concept
• 40,000 sq. ft. grocery store with drive thru
  pharmacy.
• Gas pumps in some locations where space permits.
• Scouting sites in Baton Rouge now.

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The New Kid on the BlockLife Style Centers

• Caters to the needs and lifestyle of their
  customers.
• Are usually upscale projects located near
  affluent neighborhoods.
• Size is usually 150,000 500,000 sq. ft.
• Centers are usually open air and include at least
  50,000 sq. ft. devoted to national upscale chain
  specialty stores offering apparel, home goods,
  books and music.

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The New Kid on the BlockLife Style Centers
(cont.)

• Typical tenants may include Ann Taylor, Banana
  Republic, Barnes and Noble, Bath and Body Works,
  Gap Concepts, Pottery Barn, Talbots, William
  Sonoma, Chicos and a mixture of local successful
  mom and pop operators.
• Specialty grocery stores such as Whole Foods may
  also be found in lifestyle centers.

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Town Center at Cedar Lodge

• Proposed new development to be built on the
  Witter Tract at Corporate Blvd. and Jefferson Hwy.

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Town Center at Cedar Lodge (cont.)

• 440,000 mixed use development
• Office
• Retail
• Restaurants
• Zoning has been approved

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Sales Tax Collections East Baton Rouge Parish
1999-2000
Year to date 2003 Sales Tax (Jan.-Feb.) is up 4.7
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Rents and Vacancies

• Overall rents are up and vacancy is down.
• Overall 2002 rents are up 18 over 2001.
• Overall vacancy has fallen 4.74 over 2001.
• Neighborhood centers experienced a decrease in
  vacancy from 26.57 to 16.62. Rents increased
  from 10.43 psf to 11.99 psf.

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Rents and Vacancies (cont.)

• Community Centers experienced an increase in
  vacancy from 16.63 to 18.37. Rents increased
  from 9.07 psf to 11.13 psf.
• Regional centers experienced a decrease in
  vacancy from 6.79 to 1.56 with an increase in
  rent from 20.85 psf to 29.72 psf. Market
  place a Siegen Lane was added to the survey which
  contributed to the decline in the vacancy rate.

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Rents by Shopping Center Type
Community
Overall
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Vacancies by Shopping Center Type
Community
Overall
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Total Retail Building Permits
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New Big Box Construction 2001
Petsmart Siegen 19,250 sq. ft. Wal-Mart
Central 184,435 sq.ft. Kirschmans
Furniture Siegen 55,000 sq. ft. Rack Room
Shoes Siegen 8,000 sq.
ft. TOTAL 266,685 sq. ft.
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New Box Construction 2002
Best Buy Bluebonnet 45,416 sq. ft. Linens N
Things Bluebonnet 32,380 sq. ft. Books A
Million Siegen 12,540 sq. ft. Cost
Plus Bluebonnet 18,349 sq. ft. Davids
Bridal Bluebonnet 9,867 sq. ft. Lifeway
Christian Books Bluebonnet 10,000 sq. ft. Rave
Movie Theatre O Neal Lane 73,292 sq.
ft. TOTAL 201,844
Sq. Ft.
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Big Box Space Proposed and Under Construction
Year To Date 2003
Ross Dress For Less Siegen 30,187 Sq.
Ft. Petco Siegen 13,500 Sq. Ft. Co-Op Book
Store Burbank Dr. 26,124 Sq. Ft. Stomas
Furniture Addition Perkins Rd. 10,000 Sq.
Ft. Walgreens Perkins Rd. 14,490 Sq.
Ft. Wal-Mart Cortana 223,000 Sq.
Ft. Wal-Mart Baker 186,000 Sq.
Ft. Wal-Mart College Dr.
188,000 Sq. Ft. Wal-Mart Prairieville
209,000 Sq. Ft. Academy Siegen
75,000 Sq. Ft. Bed, Bath and
Beyond Cortana 20,000 Sq. Ft. Shoe
Carnival Cortana 10,000 Sq. Ft. TOTAL
1,005,301 Sq. Ft.
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Small Strip Centers 2001-2002
Floorscapes Center Coursey at Cedarcrest
24,000 sq. ft. 2001 Coursey Plaza Coursey at
American Way 18,000 sq. ft. 2001 Sherwood
Square Sherwood at Florida 26,000 sq. ft.
2001 University View Burbank Dr. at LSU
20,000 sq. ft. 2001 Albertsons Plaza Airline
at Highland 32,000 sq. ft. 2002 Central
Plaza Wax at Sullivan 49,000 sq. ft.
2002 TOTAL
169,000 sq. ft.
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Proposed Strip Centers 2003
Pearson's 7949 Jefferson Hwy. 29,500 sq.
ft. Marblegate Phase II George ONeal at Jones
Creek 70,000 sq. ft. Wal-Mart Strip Wax
Rd. 13,850 sq. ft. Coursey Plaza III Coursey
at Sherwood 46,333 sq. ft. Southgate
Retail Burbank 15,260 sq. ft. Highland
Greens Highland at CCLA 15,444 sq.
ft. TOTAL 190,387
sq. ft.
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Large Tract Land Sales
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Small Tract Land Sales
TOP OF THE MARKET PRICES
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Conclusions

• Overall rental rates on existing space increased
  across the board in 2002.
• Vacancy rates decreased across the board as
  building permits dropped during 2001 and 2002.
• The greatest vacancies are found in centers
  anchored by grocery stores built before 1980.
  Twelve centers fall into the category, followed
  by three centers built between 80-84 and two
  centers built between 85-94.
• Florida Blvd. has the greatest number of
  vacancies, which can be attributed to changes in
  traffic pattern and growth along I-10 and I-12.

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Conclusions (cont.)

• Discount and value retailing dominate retail
  growth. Department stores are carrying more and
  more private label items as consumers continue to
  look for value.
• Hugh influx of new retail construction is
  dominated by new Wal-Mart Super centers.
• The Baton Rouge MSA will continue to lead the
  rest of the state in growth with a projected
  population increase of over 33,000 people during
  the next five years.

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Why?

• The growth is most predominate in Livingston and
  Ascension Parishes which are the two fastest
  growth Parishes in the State.
• As a comparison, the Lafayette and New Orleans
  metro areas will both see projected increases of
  roughly 18,000 people, about half of the Baton
  Rouge growth.
• Baton Rouge also has the highest average
  household income (53,000/-) and the most
  educated work force in the state with 16 of the
  population having attained a Bachelor degrees and
  8.8 having graduate degrees.
• These demographic influences should help fuel
  continued retail growth in our market.

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Trends in Real Estate 2003

• Presented by LSU Real Estate Institute and
  Commercial Investment Division of the Greater
  Baton Rouge Association of Realtors
• Dottie Tarleton, CCIM
• Vice President
• Stirling Properties

The Baton Rouge Retail Market