Stirling Announces Additional Shareholder
Stirling is pleased to announce that effective January 1, 2023, Justin Landry will become a shareholder of Stirling Properties, LLC. Landry joins Marty Mayer, President, and CEO; Townsend Underhill, President of Development; Grady Brame, Executive Vice President; Donna Smith, Executive Vice President; and Paul Mastio, Chief Financial Officer, as part of the company’s ownership team. Justin is also being promoted to Sr. Vice President of Development and Finance.
Landry joined Stirling in 2007, where his primary focus has been to oversee the economic feasibility of Developments and Acquisitions across all of Stirling’s property types. He also manages a $1.2 billion debt portfolio of over 80 real estate loans. Justin has been responsible for the placement of a multitude of real estate debt for our clients. Since 2007, Stirling has closed nearly $3 billion of interim and permanent financings with every type of lender that operates in the Gulf South. Additionally, Justin has played a vital role in Stirling’s move into multi-family real estate.
“After graduating from LSU, Justin joined Stirling and has truly learned debt and equity markets and the Commercial Real Estate industry from the ground up. His growth as a professional and a leader has been an amazing journey. We are excited for the future of Stirling and Justin playing a significant role in our evolution”, commented Townsend Underhill.
As part of the Stirling ownership, Justin will expand his role within the Company’s Development, Finance, and Acquisition functions and help lead the company in expanding its existing business plan, growth, profitability, and strong business connections.
“Justin has proven to be an exceptional leader within Stirling and our industry. And most importantly, he embodies our core values and is a role model for others, “stated Marty Mayer.
Justin is an active member of ICSC (Innovating Commerce Serving Communities), where he has served on their Scholarship Committee and Next Generation Leadership Network. Most recently, he was chosen as Marketplace Council Director for the Southeast Region. In 2020, Mr. Landry was awarded the prestigious CRE® credential by The Counselors of Real Estate®.
Stirling Properties Announces President and CEO Marty Mayer to Retire, Townsend Underhill Named Successor
Stirling Properties announces that after 36 years of service, President and CEO Marty Mayer will retire at the end of 2023. At that time, Stirling’s current President of Development and Partner, Townsend Underhill, will assume the role of President and CEO.
Since joining Stirling in 1986 and assuming the role of President in 2002 and CEO in 2006, Mayer has led Stirling through unprecedented growth, expansion, and diversification throughout the Gulf South.
“Leading Stirling Properties over the past 20 years has been one of the greatest honors and privileges of my lifetime,” Mayer stated. “I will be leaving Stirling with tremendous pride and satisfaction but also the utmost confidence in the company’s future and the great accomplishments yet to come.”
Townsend Underhill states, “Under Marty’s leadership, Stirling has grown and established a unique and outstanding culture, and it will be my top priority to ensure it continues in our organization. Marty’s legacy will live on at Stirling for many years. Our entire Organization is grateful for Marty’s visionary leadership, and we wish him the very best in this next chapter,”
“I am both humbled and honored to be asked to lead Stirling into the future by Marty and our fellow partners,” says Townsend Underhill. Since joining Stirling in 2007 and becoming a Partner in 2012, Townsend Underhill has been involved in most every facet of Stirling while overseeing the Development and Finance divisions. In Townsend’s current role as President of Development, Stirling’s product lines have diversified beyond retail and office to include healthcare, industrial, multi-family, single-family for rent, and more. “With Townsend as CEO and the extraordinary team in place, I am excited to see to what heights he leads Stirling into the next chapter,” stated Marty Mayer.
Over the next year, Mayer and Underhill, along with Stirling’s leadership team, will work together to ensure a smooth leadership transition.
Stirling Properties Announces New Tenants at Hammond Square
Stirling Properties announces the arrival of Buff City Soap, Crumbl Cookies, and Marble Slab Creamery at Hammond Square shopping center.
Buff City Soap specializes in plant-based soaps, handmade daily in each shop’s “Soap Makery”. They produce customizable bath bombs, laundry soaps, shaving bars, beard oils, body butters, handsoaps, and more. Buff City Soap was founded in 2013 and now has more than 200 stores across 31 states. Buff City Soap is planning to open in the 4th Quarter of 2022 at Hammond Square.
Crumbl Cookies got its start in Utah in 2017 and has expanded to over 600 locations nationwide, making it the fastest-growing cookie company in the nation. A rotating menu of flavors are announced every week with their award-winning milk chocolate chip cookie always available. Crumbl Cookies will open its doors at Hammond Square 1st Quarter of 2023.
Founded in Houston, Texas in 1983, Marble Slab Creamery was the first ice cream treatery to use a frozen granite slab to blend mix-in toppings into its ice cream. Stores use locally-sourced cream and freshly-baked waffle cones to create a one-of-a-kind frozen dessert on demand. There are more than 1,100 stores worldwide with most locations concentrated in the southeastern US. The Marble Slab Creamery has recently signed a lease at Hammond Square but has not yet announced an opening date.
“Stirling Properties is excited to welcome these first-class retailers to Hammond Square. They are both new to the Hammond market, and we are confident they will be extremely well-received by the surrounding Tangipahoa community. They complement our existing tenant mix perfectly—even further positioning Hammond Square as a leading shopping destination in the region. In addition, our leasing team is still working to secure additional retailers and restaurant options that we hope to be able to announce very soon,” said Grady Brame, Executive Vice President with Stirling Properties.
Rhonda Sharkawy, Senior Retail Leasing & Development Advisor with Stirling Properties, handled the lease transactions on behalf of the landlord.
Hammond Square is Tangipahoa Parish’s premier shopping destination, located on approximately 100 acres at the northwest corner of Interstate 12 and US Highway 51 Business (SW Railroad Avenue) in Hammond, Louisiana. It is the 2nd largest open-air center in Louisiana encompassing over 902,000 square-feet of more than 40 national and local retailers, shops, and restaurants, including Dillard’s, Target, The Home Depot, JCPenney, Academy Sports+Outdoors and AMC Theatres. Stirling Properties redeveloped Hammond Square and currently manages and leases the center.
For more information on Hammond Square, visit www.hammondsquare.com or facebook.com/hammondsquare. For leasing and sales information, contact Rhonda Sharkawy at (504) 620-8145 or rsharkawy@stirlingprop.com.
Baton Rouge Industrial Market Insights
The industrial sector continues to be a bright spot in the Baton Rouge commercial real estate landscape, despite concerns around rising interest rates, surging inflation, and economic uncertainty. Key fundamentals are strong, including low vacancy rates, rising market rent rates, and decreasing cap rates.
Today’s sky-rocketing e-commerce sales, coupled with recent supply chain issues, have significantly increased the demand for warehouse and distribution facilities across the country. However, like most markets, the Baton Rouge area does not have an abundance of industrial space available for sale or lease. Scarcity is driving demand for these properties up, as well as transactional sale prices. Inventory is increasing, but not fast enough to meet demand. Here’s a more in-depth look at what’s happening in the Baton Rouge Industrial Market.
INDUSTRIAL MARKET DEMAND
Vacancy Rates:
- Vacancy rates for industrial space in the Baton Rouge market are typically lower than the national average and have consistently decreased since early last year.
- This low vacancy rate can be attributed to supply not keeping pace with demand. Historically, we haven’t had much speculative development in our market—any new construction is usually build-to-suit.
- In that trend, specific-use industrial properties are currently being built by national developers, and I believe this could cause an increase in vacancy over time. For instance, distribution space, which has not historically been a high-profile property type in our industrial market, has gained in popularity across the country, and we’re starting to see more distribution space come online here.
INDUSTRIAL MARKET SUPPLY
Inventory:
- The total square footage of inventory for industrial space in Baton Rouge is slowly increasing, though we are building more space relative to inventory than nationally.
- However, most of the new inventory coming online is earmarked—we do not see any speculative space for startups or new companies entering our market. So, inventory is increasing, but not fast enough to meet the demand.
Market Rent:
- Market rents per square foot for industrial space in Baton Rouge are steadily increasing, and our rental rates are rising faster than nationally. According to a recent report by the National Association of REALTORS (NAR), in the first quarter of 2022, market rent growth increased 11.7% from the previous year.
- The most significant factor driving up rental rates is the surge in construction costs. The cost of construction is, on average, 30% higher than it has been over the last couple of years, and I don’t see any sign of that coming down anytime soon.
- Moving forward, I think we will see a continued trend of rental rates increasing for a short period until the supply chain issues get resolved. Then we’ll see some stabilization.
INDUSTRIAL MARKET SALES TRANSACTIONS
Prices:
- Transaction sale prices per square foot for industrial space in Baton Rouge have been increasing over the past year and rising faster than the national average.
- One reason we’re seeing this record pricing—and it depends if we’re talking about vacant owner-occupied versus investment industrial properties—is the national demand for investment properties as a hedge against inflation. The other reason is simply a lack of supply.
- Also, money was cheap up until recently, so tenants became buyers. They were willing to pay more because of a lack of supply and took whatever space they could get. So, I think that’s a significant factor in why we see price increases.
- Looking ahead, I think we’ll see some stabilization in pricing. I don’t think it will continue to increase as we’ve seen. Interest rates have much to do with that, and banks’ willingness to lend money pushed prices up over the past year.
Cap Rates:
- According to NAR data, cap rates for industrial space in Baton Rouge have been inching up over the past year, and our cap rates are consistently higher than nationally.
- If you look at the data, rates have reportedly increased from 8.3% to 8.5% over the past year, so it’s a modest increase. However, in my opinion, this data does not reflect what’s really playing out in our market. If anything, we’ve seen a reduction in cap rates, not an increase.
- If you are accounting for every transaction and including every industrial property type, perhaps it might reflect an increase, but for the most part, the cap rates I’ve seen have been in the low eights or high sevens. For higher-quality industrial properties, I’ve seen cap rates from 6% to as low as 5.75%. It could simply be when this snapshot was taken that higher quality properties were not selling, or maybe the older and functionally obsolete properties that sold during this time are pulling the average market cap rate up.
- I think a bit of the exuberance of out-of-state investors will subside, and rising interest rates will affect that. But there’s still a lot of money out there, a lot of transactions going on, and a lot of people that wanted to defer doing exchanges. So, the days of the nine and ten percent cap rates are long gone.
For more information on the Baton Rouge industrial market or commercial real estate in the area, feel free to reach out to one of our experienced advisors or me.
Download the entire Baton Rouge Industrial Market Report
(Sources of data used: CoStar®, US Census Bureau, US Bureau of Labor Statistics, and US Bureau of Economic Analysis.)
Steve Legendre, CCIM
Regional Vice President
(225) 329-0295 / slegendre@stirlingprop.com
Learn more about Steve Legendre, CCIM
President’s Message: The Butterfly Effect
Sometimes amidst all the noise, turmoil, and vitriol that seemingly bombard us endlessly, it can be difficult to pause and remember what’s truly important in life. And sometimes, that reminder can come in very unexpected ways.
Recently, I have been reminded of how our individual actions, albeit small at the time, can have a ripple effect on others without us even knowing it sometimes.
Thinking about this phenomenon reminded me of a lesson my mom used to teach us called “the butterfly effect.” So it goes, “an act as small as the flutter of a butterfly’s wing can create a tsunami on the other side of the world.” (My mom always said she would come back as a butterfly—how fitting.)
The butterfly effect has become a common metaphor for how small, seemingly insignificant moments can alter history and shape destinies and how some ostensibly inconsequential acts or gestures can profoundly impact others and, therefore yourself.
Recently, this lesson was reaffirmed once again in the most unexpected way.
Inspired by my children, I penned a letter on social media questioning if one person’s voice could make a difference. The overwhelming response triggered a very unexpected series of events, new acquaintances, and unique experiences I would never have imagined. Two years later, that tsunami of events is still moving and growing and has ignited in me a passion for continuing to foster it.
This journey has led me to cross paths with and meet some incredible folks doing remarkable work. I have also had the opportunity to meet and mentor some extraordinary young people. Together, we have worked to help bridge differences and open up candid conversations among a diverse group of people, a focus that has become critical in today’s environment and extremely rewarding.
I am astonished as I sit back and think about how that one superficially small action has sparked so much positive momentum. I see the impact it has had on others and felt its effect on me.
So, if you, like me, ever sit back and wonder if you can make a difference in someone’s life, your community, industry, or workplace, you absolutely can. Every one of us has the power to impact our surroundings. Just start with one small thing, one action, or a nice gesture.
As my mom would say, go out and flap your wings! Because as the butterfly effect goes, you just may cause a tsunami of kindness, generosity, or joy in someone else’s life. You never know where that tsunami may lead.
Commercial Real Estate Outlook: Optimism Amidst Uncertainty
ICSC Las Vegas returned this spring—with a new format and brand—after a three-year hiatus due to the COVID-19 pandemic. Attendees and exhibitors rebounded, with higher than anticipated crowds; reported attendance was over 22,000.
Optimism was abuzz, and the pure excitement of being back to in-person events. However, uncertainty still lingered on the minds of many due to ongoing pandemic effects and economic and social unrest. We caught up with a few Stirling Properties team members who made the show to get insight into what’s happening in the retail industry.
Sky-rocketing construction costs vs. rents: One of the most significant issues we’re facing is the cost of deals for the landlord vs. what retailers are willing to pay for the space. “Retailers are expanding, but high labor and material costs remain challenging. Retailers are unwilling to pay more rent than they have historically; however, their box costs 50%+ more to build,” said Darryl Bonner, Senior Advisor. Right now, in many cases, rents don’t justify the cost of construction to make deals work. The imbalance is causing frustration on both sides and a pause in dealmaking. Still, many industry professionals believe this will work itself out with further correction of supply chain issues and compromises in building requirements/needs from retailers.
Inflation: The increased cost of goods and services undoubtedly affects how and what consumers buy. But so far, overall retail sales have not slowed much, coming off record sales numbers in 2021. As the pandemic began to wane and government subsidies trickled in, we saw a massive sales spike—what some call ‘revenge spending.’ But will this continue long term, with gas and grocery prices steadily ticking up?
People are still spending; they’re just spending differently. According to Rhonda Sharkawy, Senior Retail Leasing & Development Advisor, “There was so much movement around the pandemic; I think we are still seeing the settling effect. I believe sales reports will soften within the next year, and we will see where and how consumers are spending,” said Sharkawy.
Most retail brands remain optimistic. Even though their profits are eroded because of increased costs, they remain bullish on top-line revenue growth. Many believe this is a short-term economic issue that should not incite knee-jerk reactions. Chris Abadie, VP and Manager of Commercial Brokerage, noted, “Despite concerns about inflation and rising interest rates, risk tolerance seems higher than before.”
Retail shifts: Consumer demands have evolved over the last couple of years. But one thing holds—consumers want it all, and they want it now. As a result, convenience, speed, and multiple buy-and-collect options are paramount to the success of today’s retailers.
“The overall sentiment is that retailers are confident; they are stronger than ever, and they are investing in brick-and-mortar stores. Although consumers want options, they still want a physical store where they can see and touch the product and enjoy social interaction. Online sales are surging, but for many retailers, ecommerce is serving as another touch point or means for increasing store sales,” said Sharkawy. Moving forward, retailers will continue to invest in the shopping experience. We expect more experimentation with store layouts, formats, and product inventory.
The function of the retail center itself is also shifting. Bonner noted, “Most retail deals are now a mix of uses, with retail usually the second or third tier. Multifamily has become the new retail anchor, with medical not far behind.” In addition, we’re seeing more nontraditional tenants and service concepts filling shopping centers.
Technology: “Technology is finally having its moment in our industry,” said Abadie. For years, retailers have been pumping money into technology, targeting their customers and their specific wants and needs. Now, the commercial real estate industry can too.
From a retail/asset management perspective, technology integration helps with staffing, inventory, purchasing, and fulfillment. It is also emerging in building systems, using big data to help with environmental, social, and governance (ESG) efforts, and lowering the carbon footprint of commercial real estate.
Promising tech companies such as Placer.ai, Crexi, and Buildout are becoming industry standards. As CRE practitioners, new technology is helping us analyze the health of retailers and shopping centers. It’s also assisting us to better understand a store’s value through foot traffic vs. online sales vs. physical sales and how people are utilizing the store. However, the real game-changer is emerging tech that can use data and algorithms to identify new locations and market gaps and even project retail sales for future retailers. Emerging technologies will continue to develop and have drastic impacts on our industry moving forward.
Numerous headwinds affect consumer sentiment and spending, but it’s still a glass-half-full outlook. Those retailers that were successful and survived COVID are bullish on the future. The overall attitude coming out of ICSC Las Vegas this year was our industry has faced insurmountable challenges, and we are now better prepared to handle more adversity—so, how do we move forward? We’re all looking forward to continued momentum and more face-to-face interactions.
We are thrilled to announce that Beth Cristina, ALC / […]
