With pricing down 19% from its 2022 peak, the U.S. commercial real estate sales market is starting to come back to life, Bloomberg News reported. One reason is that lenders and owners want to cut their losses and make new investments now that the Federal Reserve’s first rate cut in four years is bringing some clarity on where valuations stand. 

“There’s going to be definitely more activity in 2025 and it’s going to be a mix of drivers that’s going to lead to significant instability for some, with some significant opportunity for others,” David Aviram, co-founder of Maverick Real Estate Partners, told Bloomberg. Struggling properties that took on too much debt at much lower rates will drive many of the transactions, he said. 

Bloomberg reported that sellers often have had to offload properties at steep discounts in recent months, notably in the office sector. Earlier this year, Empire Capital Holdings and Namdar Realty Group struck a deal to buy the office property at 321 W. 44th St. at a 67% discount from its 2018 purchase price. The former Chicago headquarters of Cboe Global Markets Inc. (pictured) sold this summer for about half its pre-pandemic value. 

“Data this year through July underscores just how tough a market it’s been,” reported Bloomberg. “Transactions were down 5% from a year earlier to $203.8 billion, according to MSCI Inc. But lately, transaction volumes are showing ‘steady’ improvements, the data provider said in a report.” 

Additionally, there are signs that more bidders are eyeing property and loan sales. Recently, Parkview Financial marketed about $300 million of loans tied to apartments and offices in New York, New Jersey, and Connecticut. Each loan received multiple offers with bids averaging about 95% of face value, CEO Paul Rahimian told Bloomberg.

The distressed property market is just beginning to unfold, with significant challenges still ahead. On October 22, hear experts from Trimont, Greystone, Transwestern and more discuss the rising tide of distressed assets, upcoming CMBS maturities, and stricter underwriting practices. Gain insights into what lies ahead as we transition into 2025 at Connect Distressed Investment & Finance at the Luxe on Sunset in LA.

New York City-based fashion brand Alex Mill has signed a lease at Rockefeller Center, slated to open holiday 2024. Alex Mill’s new location at 1 Rockefeller Plaza will be the brand’s third brick-and-mortar store, spanning approximately 1,752 square feet.

The brand was founded in 2012 by Alex Drexler, with the goal of making the perfect shirt. His father, Millard “Mickey” Drexler, is the company’s chief investor and chairman. In 2019, the brand was relaunched to now include both men’s and women’s apparel.

“Alex Mill is a prime example of the types of creative businesses Rockefeller Center is excited to bring to campus,” said EB Kelly, senior managing director, Tishman Speyer and head of Rockefeller Center. “Craftsmanship and attention to detail are in our DNA as stewards of Rockefeller Center, so this is a perfect match.”

Alex Mill’s addition to Rockefeller Center extends the Center’s ongoing success in attracting a diverse range of both local and international brands. Other recent retail additions include luxury Australian brand Aesop, piercing studio Studs and vintage soccer jersey retailer Saturdays Football.

Universal Health Services (UHS) is putting together a $20 million investment to establish a new emergency center in Washington, D.C.’s Ward 7, as part of the ongoing transformation of the Fletcher-Johnson campus. This endeavor originates from a 2018 pact between D.C. Mayor Muriel Bowser’s administration and George Washington University Hospital, a division of UHS, dedicated to rectifying healthcare disparities in underserved areas east of the Anacostia River. 

The forthcoming emergency facility on Benning Road will operate round-the-clock with an anticipated staff of 40, contributing to the broader renaissance of the former Fletcher-Johnson middle school and recreation center. Slated for completion by 2025, UHS and George Washington University are collaborating on the Cedar Hill Regional Medical Center in Ward 8, further bolstering healthcare infrastructure in the region and fostering equity in D.C.’s healthcare landscape. 

Vision Hospitality has purchased a quarter-acre lot in Raleigh’s Glenwood South in order to build a Moxy hotel. The Triangle Business Journal reports Vision paid $4.6 million for the parcel. Turnbridge Equities was the seller. Turnbridge paid $3.7 million for the piece in 2020. The parcel is part of a larger assemblage by Turnbridge, including the historic Creamery building where Turnbridge has plans to build two mixed-use towers – one rising 36 stories and one 21 stories.

Vision has filed plans to build a 9-story, 169-key hotel under the Moxy name. The brand is owned by Marriott International and is known for its boutique-style atmosphere at a competitive price.

The Moxy hotel site is currently a surface parking lot. Site plans for the Raleigh hotel show a flex meeting room, a kitchen, a bar, a food truck space, a lounge and patios.

ODA Architecture is listed as the project’s architect, and O’Kane & Associates is listed as the civil engineer.

In most towns, siting a gas station is a pretty ho-hum matter. But in the North Carolina town of Mebane, if that gas station is to be a Buc-ee’s, it’s a pretty big deal. Nearly 100 people were on hand to witness the vote, unanimously approved by the town council. Texas-based Buc-ee’s plans to build its Texas-sized travel center (gas station) on a 32-acre site where I-40 and I-85 meet.

Plans call for a 74,000-square-foot building, 120 fueling positions, approximately 650 parking stalls, 24 electric vehicle positions, and bus or RV parking. A store of the planned size will have 225 full-time workers, though with part-timers needed to fill shifts, the entire roster would be more than 400.

CSMS Management, doing business on behalf of Buc-ee’s, closed on the site, now mostly a vacant field, in October in a purchase valued at about $12 million. The seller was associated with Crow Holdings, which owns a nearby industrial project.

When Paul Nair opened the first location of his upscale neighborhood grocer, Savi Provisions, in Atlanta’s Inman Park neighborhood in 2008, he didn’t realize he was on the cutting edge of a trend that has begun to reshape retail markets from the suburbs to prime corners of Manhattan.

Savi Provisions, which serves curated wines, high-end cheeses and chef-prepared meals, should open its 25th location next year after expanding to Nashville, Savannah, Durham, Raleigh and Charlotte, Nair said, and his next concept is doubling down on the collision of convenience and craft food and beverage.

This month, Nair expects to open the first UPop, which stands for Urban Provisions Offering Petroleum, an Arco gas-served convenience store on Peachtree Road in the heart of Buckhead, Atlanta’s toniest neighborhood. Unlike QuikTrips, Wawas or 7-Elevens, UPop will still be selling Savi’s high-end product selection, replete with liquor and a cigar bar, Nair said.

“What I’m trying to do is I’m trying to elevate the convenience store experience to a higher level,” Nair said.

Courtesy of Landini & Associates/Kyle Ford

Aldi’s convenience store concept in Australia, known as Aldi Corner Store.

Nair has more competition than ever. Upscale convenience store concepts have expanded across the country, from new entrants like Foxtrot in Chicago and Washington, D.C., and The Goods Market in Los Angeles, to the largest convenience chain in the country, 7-Eleven, launching its Evolution concept in Dallas and other markets.

Consumers were already shopping at convenience stores more often before 2020 as millennials and members of Generation Z demonstrated more willingness to buy prepared meals and craft beer and wine than tobacco products and candy, said Mark Landini, a retail brand consultant out of Sydney who has done work for such retailers as Walgreens, Aldi and 7-Eleven.

Landini said the coronavirus pandemic accelerated the trend, as more affluent consumers bought their merchandise closer to home, especially from convenience stores where operators focus on curating higher-quality food and beverages.

“[Store operators] are now realizing they don’t just need to appeal to the lowest common denominator,” he said. 

Convenience store sales reached a record high of $243B last year, with beer, wine, liquor, edible and non-edible groceries leading the charge, according to Convenience Store News’ 2021 industry report. Merchandise totaled 45.6% of all sales in 2020, jumping from 36% of all sales the year before.

Edible grocery sales from convenience stores grew by nearly $12.5B between 2019 and 2020, or a 9.6% increase, according to the Convenience Store News report. During that same period, sales of beer and malt beverages jumped 14% to $24.6B and sales of liquor and wine skyrocketed 30.9% to nearly $5B.

The growth was helped by services like Grubhub and Uber Eats, which began to pick up goods from some convenience stores and deliver them to customers, typically within an hour. 

“Everyone wants convenience. Everyone wants it faster and everyone wants it easier,” National Association of Convenience Stores Vice President Jeff Lenard said. “That’s good when you’re a convenience store. That’s bad when every other retail store realizes that and now you’re competing on convenience.”

Now, convenience store operators are focusing more on luring in affluent shoppers by focusing on prepared meals and healthier food fares, experts say. That has appealed especially to millennials and Gen Z consumers who have demonstrated a willingness to pay more for organic, sustainable and gluten-free foods. 

“We’re seeing that [as] more of a focus, that convenience aspect. But the upper scale seems to be really popular right now,” said Aaron Farmer, president of the national retail consulting firm The Retail Coach. “I think that consumers have more disposable income. In a sense, it’s like room service, if you will.”

At the same time, convenience stores operations are relying less on fuel sales, a segment that took a huge hit during the pandemic. Fuel sales declined by nearly 20% in 2020, according to the CSN 2021 industry report. 

The trend is prompting operators to experiment with store locations without gas pumps in car-centric cities. In Midtown Atlanta, QT opened its first fuelless store location in 2016, surrounded by high-end apartments and condominiums. That setting helped QT forgo the need for gas, Coro Realty President Robert Fransen said.

Coro owns the property where the QT’s convenience-only store is located, as well as a locally owned convenience store in Downtown Atlanta that was recently renovated and upgraded with more of an emphasis on food and beverage.

Courtesy of Air Guitar

Air Guitar co-founders Craig and Kris DeMarco and Elissa and Eric Seitz

“It used to be a place you go get a beer and cigarettes. Now it’s where you go for fresh, prepared foods,” Fransen said. “I wouldn’t do my grocery shopping at a QT. But if I lived in a condo and I wanted to grab a couple of beers and a pizza … No one is going to confuse it with Whole Foods, but it’s certainly nicer than your typical 7-Eleven with the Keno machines.”

Matthew Fernandez, a retail broker at New York City-based Okada & Co., said the overall growth of convenience stores has bigger chains leasing prime retail corners in New York City as they chase the business once dominated by mom-and-pop bodegas.

“The higher-quality, better operator is the one getting the expansion opportunity, for sure,” Fernandez said. “You’re seeing more convenience stores taking untouchable corner property.”

Amazon began its cashierless Go format in a 1,900 SF storefront in Seattle in 2016. Today it has stores in Chicago, New York and San Francisco, and it is increasingly expanding into grocery beyond its Whole Foods subsidiary. But it isn’t the only digital native attempting to stake out a corner in the convenience store space.

DoorDash, the online delivery platform, began rolling out a DashMart convenience store concept in a host of U.S. cities last year. The firm just filed permits to open its first store in Atlanta in Midtown, the epicenter of the city’s tech boom.

“The No. 1 e-commerce platform or store, Amazon, is getting into the convenience store game,” Farmer said. “If your No. 1 e-commerce retailer is getting into brick-and-mortar, they see something as well.”

The majority of convenience stores are in rural areas, Lenard said, but convenience store presence in the cities is growing. Of the more than 150,000 convenience stores across the U.S., 15% of those are in urban locations, and another 30% are in suburban areas, according to NACS.

“With the perception that fuel will be less important and food will be more important, you see stores looking to locate where walk-up traffic is as sufficient as drive-up traffic,” Lenard said.

“It’s taken 30 years for the perception of convenience store food to change, and it’s taken a lot of work by a lot of really good retailers, where convenience stores are considered a destination, versus desperation,” he added. “Now the model is, ‘Now I really go there because I want something to eat or drink, and, oh by the way, I need gas.’”

Eric Seitz’s family has run a chain of Chevron convenience stores for 60 years, but Seitz senses the key change in the market and is responding. He launched a new convenience store concept, Air Guitar, that offers sandwiches, curated wines, high-end coffees, drinks like kombucha and even an ice cream parlor — but not gasoline. 

Air Guitar has been open for more than a month in Gilbert, Arizona, and has been doing well enough that Seitz is looking to expand the concept into 20 locations in the Phoenix metropolitan market and eventually to the West Coast.

“We just wanted to try something different. Fuel is difficult and who knows what the future holds in the next 20 years. It is very commodity-based, and I was trying to get away from that a little bit,” he said. “I’m more destination. We tried to create more destination than commodity-based.”

Paint giant Sherwin-Williams is not moving its corporate headquarters to Dallas-Fort Worth. 

The company confirmed Thursday it will remain in Ohio and construct a new headquarters in Downtown Cleveland. 

Bisnow/Vanessa Infanzon

The paint manufacturer also intends to develop a major research and development facility in the nearby suburb of Brecksville. 

Sherwin-Williams made this decision after a long search process that reportedly had both Dallas-Fort Worth and Atlanta on its list of possibilities. 

“Our plans to continue investing in Cleveland and Northeast Ohio build on our 154-year legacy as one of the region’s top employers and drivers of economic activity,” Sherwin-Williams Chairman and CEO John Morikis said in a press release. 

Sherwin-Williams would have been a major boon for DFW, with the company planning to pour $600M into its new Cleveland-area facilities. 

Sherwin-Williams is not the first major headquarters to shop DFW and then turn away in recent memory.

Amazon chose Virginia over North Texas for a second headquarters at the end of 2018, while retailer Lowe’s chose Charlotte over DFW in the middle of last year when prowling the nation for a 2,000-person tech hub. 

DFW, of course, maintained its share of corporate relocation victories with the PGA moving its headquarters to Frisco and several San Fransisco mega-firms — including Uber — choosing to either create office hubs in DFW or outright move their headquarters to the area. 

Market analysts warned in mid-2019 that DFW could lose some of its edge when it comes to corporate relocation activity. 

Analysts at the time feared rising wages, rising property taxes and a lower unemployment rate, which leads to less worker availability and market cannibalization. 

RSM U.S. LLP Chief Economist Joe Brusuelas said at the time that all of the above would continue to create hurdles for relocating companies. 

“I think some of the internal issues in the state, especially around property taxes and a lack of labor, which drives up wages, suggest that things have slowed somewhat and at least for this year, it has fallen from the top perch in the CNBC study,” Brusuelas said last year, when discussing Texas’ fall from first place in CNBC’s best places to do business survey.