Reprinted from National Real Estate Investor

(Bloomberg)—Covington, Ky., a city of 40,000 across the Ohio River from Cincinnati, seems like an odd place for a high-end hotel. For Mario Tricoci, that’s a selling point.

Last year, the Chicago developer hooked up with a local real estate investor on a $22 million retrofit of a century-old, seven-story, defunct Covington department store that locals say was the first skyscraper in Kentucky made of reinforced concrete.

Tricoci, chief executive officer of Aparium Hotel Group, is in the middle of a small-market spree that started with the conversions of a Milwaukee warehouse in 2013 and a La Crosse, Wisc., chocolate factory in 2015. Aparium has hotels taking shape in a former warehouse for tractors and other farm equipment in Minneapolis, an old fire department headquarters in Detroit, and an obsolete bottling plant for Pabst Brewing in Kansas City. By the time he’s done, Tricoci said, the company could be operating 20 hotels, or more, with a focus on small cities that are nonetheless big enough to have a pro sports team.

The idea is to grab hold of two dovetailing trends: consumers shying away from branded offerings and investors putting money into smaller U.S. cities, encouraged by local economic development types and a diverse set of national cheerleaders. They include AOL co-founder Steve Case, who has been banging the drum for technology startups in minor markets, and commercial real estate firms touting “18-hour cities” on the theory that traditional markets such as New York and San Francisco have become too expensive.

“Coming out of the recession, it felt like a safer environment to play in,” said Tricoci, 44, whose previous company built the Elysian Hotel in Chicago, a five-star offering that opened in 2009 and was later rebranded as a Waldorf Astoria.

While the room rates are cheaper—Tricoci estimates that a $200 suite at his Charmant Hotel in La Crosse would go for $700 a night in New York—the dearth of competition has helped keep Aparium’s early properties busy.

“Every one of these markets has wealthy people who eat and drink and spend money,” he said. “They have major businesses with spending accounts and stipends.”

Aparium isn’t the first hotel operator lured to the rehab business by the prospect of cheap buildings with good bones. The Ritz-Carlton Philadelphia sits in a domed Beaux Arts building that was put up as a bank headquarters. The Renaissance Pittsburgh Hotel, a Marriott property, occupies a 1906 building commissioned by Henry Phipps, a partner in Carnegie Steel. Kimpton Hotels has a line, called Hotel Monaco, dedicated to the adaptive reuse of historic buildings. Drury Hotels has put beds in an old fur-trading building in St. Louis and a former education department building in Cleveland.

Read the full story at here.

 

 

Reprinted from Battle Creek Enquirer- Part of the USA Today Network

Years after the closure and ultimate demolition of Wilson Academy, a Chicago-based startup’s idea could put the vacant property back to use.

Fresh Coast Capital’s plan is to plant more than two acres at the site of the former school with rows of hybrid poplar trees. Part of the property is owned by the city of Battle Creek, which entered in a management agreement with the company after the City Commission unanimously approved it Dec. 15.

The rest is owned by Battle Creek Public Schools. Fresh Coast Capital has spoken with district officials, who will present the project to the Board of Education this month for a potential vote.

“We have a large land mass in our geographic area,” Battle Creek Planning Manager Christine Zuzga said last month. “We’re going to be faced with challenges in trying to reuse other types of property. There’s a lot of investments in demolitions of blighted properties, but then we want to be able to find a reuse of those.”

Five years after the trees are planted, half of them will be harvested and used for biofuel, according to a city staff memo. The rest will be cut down to sell about 10 years later, when they reach up to 60 feet in height. Both are ways Fresh Coast Capital makes a return on its investment.

Then, the trees can be regrown and kept as a permanent green space, or the property can be used in another way.

But it’s more than a farm, with the trees growing in a park-like setting and without a fenced-in area so it can be enjoyed by the community. It’s also a project that provides health benefits and environmental perks, said April Mendez, Fresh Coast Capital’s co-founder and director of community partnerships.

Read the full story here http://www.battlecreekenquirer.com/story/news/local/2016/01/04/tree-project-could-restore-old-wilson-school-site/77413128/?from=global&sessionKey=&autologin

Reprinted from www.gordonbrothers.com

Today’s retailers face unprecedented challenges in the marketplace as they confront the evolution of not only customer shopping patterns, but also how retail is defined. Historically, top tier retailers thrived because they had the best locations and offered desirable merchandise at a great value proposition. Add to that efficient merchandising controls and tight field operations, and it equaled success.

That model has shifted significantly due to the maturation of e-commerce and the effect it has had on brick-and-mortar efficiency in the omnichannel environment. A recent slew of store closures affecting specialty retail demonstrates the impact of this new reality for the retail industry.

Given this trend, retailers are reviewing lease portfolios with a careful eye on the future and their ever declining sales per square foot ratios. Successful management teams are proactively identifying locations that, while today may be marginally profitable or break even, will turn into negative contributors, given this irreversible trend. Historically, the decision to renew or extend leases was based primarily on store contribution and the key demographics of individual locations. Stores with marginal contribution were identified and decisions were made on whether to renegotiate under more favorable terms or close locations.

In the current environment, retailers are now factoring in the real e-commerce effect (in most cases, double-digit increases) and its impact on future store performance, and making real-time decisions on store profitability. As part of this growing trend, retailers are facing more store closings than ever and are accepting them as part of the changing retail landscape. Understanding that closing stores is not indicative of failure, but rather of an inevitable shift toward an omnichannel marketplace, is important to the success of any retailer. While it’s unlikely that brick-and-mortar stores will ever be displaced entirely by e-commerce, management teams must understand the balance between the two and develop a strategy going forward.

When reviewing lease portfolios in today’s environment, management teams must consider several key factors aside from store profitability: adjacencies to other store locations and e-commerce migration.

Given the sophistication of today’s customers and merchants’ ability to track their shopping patterns, either through loyalty programs or mobile devices, retailers can analyze individual markets to determine how much transference would likely occur should they close a location. With this information, retailers can project an appropriate number of stores in each market and identify potential closures. The ability to close a store and effectively transfer customers to an adjacent location and track buying behavior going forward is crucial to success.

While transferring customers from a closing store to an adjacent store is critical, a second and equally important step is transitioning shoppers to the e-commerce platform. In some cases, retailers may be exiting a market entirely for a variety of reasons, but the ability to retain a core percentage of the customer base online is a primary vehicle for growth in today’s marketplace. In virtually every instance, a retailer’s key initiatives are to increase its online presence and protect the brand.

Read more at http://www.gordonbrothers.com/expertise/byline-articles/Sustainable-Footprint#GBALINK=JCR_Retail_Article

Reprinted from http://www.courierpostonline.com/

CAMDEN – What happens when you restore rundown buildings that contribute to violence?

Camden is about to find out.

The Michigan Youth Violence Prevention Center has received $6 million from the Centers for Disease Control and Prevention to continue its studies on how improving vacant properties affects violence, property crimes and intentional injuries among youth.

The Michigan center, based at the University of Michigan School of Public Heath, will focus on the effects of engaging residents, particularly youth, in caring for properties in their neighborhoods.

The study will be done in Camden, Flint, Michigan, and Youngstown, Ohio over the span of five years.

Marc Zimmerman, professor of health behavior and health education at University of Michigan, says the study will test a “greening” hypothesis — becoming more active in protecting the environment — and “busy streets theory” — which suggests that by taking care of abandoned, empty lots within inner cities, safer streets will be created.

Read more at http://www.courierpostonline.com/story/news/local/south-jersey/2015/10/29/grant-funds-youth-violence-prevention-work-camden/74730382/