VOL. 110 | NO. 20 | Tuesday, January 30, 1996
01/30 Real analys
New power center embodies old pattern, new face of retail
By ED RAINS
The Daily News
Want to make a great return in a land investment? Very simple. All you need is an Italian grandfather who had the foresight to buy a truck farm a half a century or so ago in what is now the Germantown Parkway/I-40 area, according to local Realtor Marvin Palmer.
Palmer recently represented Anthony Giacosa, whose 18-acre tract was one of three owned by Giacosa family members in the 58.86-acre land assemblage now comprising The Commons, a power center project off I-40 East. Like several other Memphis Italian families whose forebears were truck farmers, the Giacosas have had the good fortune to benefit from the citys explosive growth to the northeast.
Situated in the northwest quadrant of the intersection of Germantown Parkway and I-40 and consisting of 573,000 square feet, The Commons, whose tenants plan to be open for business by Aug. 1, lies directly across the street from the 1.1-million-square-foot Wolfchase Galleria Mall which is scheduled to open in 1997.
The Commons will anticipate the opening of its larger neighbor by several months is no accident, Palmer said. Although the sale of the land was not closed until Jan. 5, Faison Atlanta Inc., the North Carolina-based developer that is building the new center, obtained a license from landowners to begin site work on its Home Depot pad in late fall of last year. Palmer pointed out that such fast-tracking is typical of successful retail developers in an era when prime retail land is anything but cheap.
"Sites of this size and nature are becoming more and more of a generational play," Palmer said. He pointed out that the old time land speculator, who would buy farmland in the path of future development and hold it, sometimes for several years, before flipping it to a developer, is now an endangered species.
"Land eats three meals a day," Palmer said, "taxes, insurance and interest. You cant buy land on credit and sit on it anymore."
Due to its relationship with a number of national creditworthy tenants, Faison already has well over 80 percent of the space in the center pre-leased, according to Mark Toro, director of retail development for the company.
Major tenants will include: Home Depot, at 103,500 square feet, plus another 27,000-square-foot garden center; Toys R Us/Kids R Us Inc., for a total of 61,000 square feet; Linens N Things, 37,500 square feet; Rhodes Furniture, 50,000 square feet; T.J. Maxx (Marshalls), 30,000 square feet; Service Merchandise, 50,000 square feet; Circuit City, 37,500 square feet; and Office Max, at 23,500 square feet.
In addition to the above mentioned in-line big-boxers, the center also will contain six outparcels, all of which have either sold or are under contract, Toro said.
Outparcel occupants will include two Brinkers chain restaurants, Chilis and On the Border, and a six-story, 128-room Amerisuites limited-service hotel. Contracts on outparcel sales to three other buyers are pending, Toro said. He declined to divulge buyers names prior to closing on the outparcel land sales, except to say that one is a national restaurant chain and the other two are national retailers. Outparcel owners will share common parking per the terms of an 80-page reciprocal easement agreement, Toro said.
Packed as it is with big-name tenants, only about 75,000 square feet of the centers total space will be left to specialty retail, said John Tennant, Faisons director of retail development. Street rents for this space will be in the mid-to-high teens, Tennant said.
At $12.45 million for the total assemblage, Faison had about $4.85 per square foot in raw land costs before the sale of the six outparcels, Palmer said. NationsBank provided financing for the deal.