Anyway, as we talked about surplus/excess space, it dawned on me that three companies, Wal*Mart, Excess Space Disposition and now DJM Asset Management with the Kmarts, "control" about 75 million sq.ft. of vacancies. They have more space "available" than the top three or four landlords own combined. The good news for Excess Space and DJM is that they make money off of vacancies, Wal*Mart just has it as a liability, but that’s the case for almost every major retailer in America. If it’s a chain, it has surplus real estate. If these three companies are marketing 75 million sq.ft. of retail space, what is the true number of surplus space available in the country? It has to be astronomical. Add conventional vacancies and it really gets out of hand. Here’s a great opportunity for someone who can "think outside the box."

Ranting on, leasing wise, nothing exciting is happening in our industry. No new concepts (thank god, most of ‘em have failed miserably and the few "new" concepts that have survived have limited growth potential. The design of a strip center anchored by a supermarket and discounter or home improvement store may be boring but it works), no new retailers expanding like crazy with everyone feeling they HAVE to have in them in their center (remember the "Phar-mor" days, and let’s not leave out Old Navy). And while the southwest and southeast are still the fastest growing retail markets in the country, rapid expansion for 90% of the national retailers into these or any market is limited since they are already "there." There are few "virgin" markets for retailers to expand rapidly into where there’s little competition. Most retailers that decided to expand into secondary markets found that the markets weren’t profitable and have either closed these stores or are attempting to figure out how to make this concept work and have stopped expansion into "county seats" for now. Downtowns, while having some minor degree of renaissance, in most cases are still struggling to attract retailers. Even if the recession is over and we go back to a growth mode, downtowns and middle markets will continue to struggle in their desire to bring national retailers into their communities (another opportunity in the making?).

When it comes to acquisitions, little has changed. Everyone wants to buy, but not at the prices being quoted. While there’s still lots of cash available for acquisitions, until interest rates go up, sales of centers won’t. The current owners are better off refinancing. The only strong activity is in JV’s with REITs that can’t make their underperforming centers work and the demalling of antiquated regional malls (which there are lots of).

Even the Internet and technology is complacent. Yes, the Net has finally been accepted by all but the most adamant old-timers as a useful tool. Most companies now have their own Web site and domain name, and use the Internet as easily as they do the fax, but there are few new Web sites coming online that are making "us" more productive and little new technology to increase our dealmaking. The good news, whether it be REALM, Storetrax, LoopNet or dealmakers.net, these "old timers" are becoming more accepted everyday (some might even be profitable in the near future) and have forced the retail real estate industry into the 21st century. However, even with the lack of excitement in the industry, a slowdown in expansion and an increase in bankruptcy, our industry is still doing well. We might not be setting any records, but overall sales, leasing and business for the last few years have been decent. If there really is an improving economy around the corner, we’re in good shape.

Changing the subject, and I don’t want to broker bash, but at the moment I hate brokers (and I’m one). We’ve been working on a big-box deal for four months with another broker who supposedly has the exclusive for the retailer. Unfortunately, I trusted the broker, which I should have known better since last year we tried to do another deal together, went through the LOI bull, spent four months and thousands of dollars on architects before being told the deal was dead. Now that’s not uncommon, but what frustrated me was in a conversation with the retailer a few weeks after we were told the deal was dead by the broker, I was told the deal was killed months earlier. The broker never bothered to tell me. We continued to negotiate even though the retailer had turned down the site. OK, I should have learned, but I didn’t. Anyway, he came to us with another tenant and negotiations began. We went back and forth, spent money on drawings, etc. and then by accident I found out he was no longer involved representing the retailer in that area. When I asked why he didn’t tell us, he replied, "I forgot." Yeah, right. Anyway, we’re now dealing with the tenant direct and the deal is going smoother than when the broker was involved. I’m not stupid enough to say I’ll never deal with this idiot again, but from now we deal with him and the tenant directly or we don’t deal.

Ann has mentioned that in the past year the amount of brokers claiming an exclusive for a retailer that they really don’t have has increased substantially. I don’t know why (well, I do, they want the commission, it’s the out and out lie that annoys me) but I highly recommend that you check first hand any broker’s claim on having an exclusive before getting too deep into the deal.

Oh, don’t forget to drop by our booth at 667 Sixth Avenue on Monday, May 20th from 4:30 p.m. on for the RD Management __ TKO/The Dealmakers 4th annual Wino Party. We used to call it a Beer Blast but Maryann Saverese of RD complained "Beer Blast" doesn’t sound as sophisticated as a Wine Party. Anyway, whether it’s a beer blast or wino party, drop by for a beer, wine, hotdog and a good time. And after the show, why not Email me at ted@dealmakers.net with your thoughts on how it went.