​🚦The Hard Corner 

Presented by Marhilus Ventures 

Happy Thursday!

We’re your go-to source for the latest news in the retail and finance sector of commercial real estate. Every other week, we’ll provide you with a concise and insightful roundup of the key stories shaping our markets.

This edition covers critical shifts and strategies in real estate and retail. Fast-casual brands Chipotle, Wingstop, and Shake Shack have announced plans to open over 700 new locations in 2024, capitalizing on strong Q3 performance and steady consumer demand. This rapid expansion stands in contrast to casual dining chains like Denny’s and TGI Fridays, which are closing underperforming units. While these closures highlight struggles across parts of the restaurant industry, fast-casual brands are thriving and expanding, widening the performance gap in commercial real estate as prime retail spaces shift toward high-growth sectors.

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📉 Market Spotlight

*Data from 11/14/2024

 📰 Featured News

 🚦 The Hard Corner Picks

• Facing High Vacancy Rates, Property Owners Weigh Costly Tax Implications of Returning Keys to Lenders: As Class B and C office vacancies rise, owners consider foreclosure and deed-in-lieu options but must navigate complex tax liabilities from phantom gains and debt cancellation income.

• Tech Mergers Shrink Choices: How CRE Companies Can Navigate Vendor Consolidation: As CoStar acquires Visual Lease, customers face potential shifts in software function, cost, and control. Here’s how to prepare for vendor changes and maintain flexibility in an evolving tech landscape.

• Positive Leverage Marks a New Era for CRE Recovery in Retail and Hotel Sectors: With yields surpassing debt costs, CRE sees a shift to positive leverage, signaling renewed investor confidence and stabilization in capital markets.

• Surge in Private Sector Hiring Defines Expectations with 233,000 Jobs Added in October: Despite hurricanes and labor strikes, U.S. job market shows resilience with robust growth across multiple sectors, signaling economic strength ahead of key Fed meeting.

• Rate Cut Sparks Optimism in CRE as Sectors Stabilize and Vacancy Trends Show Mixed Results: FOMC’s September rate cut boosts confidence in CRE recovery, with multifamily and industrial sectors seeing steady demand, while office and retail markets grapple with changing dynamics.

• Revised Data Shows Stronger U.S. Labor Costs, Raising Inflation Concerns: Unexpected growth in unit labor costs and productivity gains highlights inflation risks, prompting Federal Reserve caution.

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🛒 The Retail Corridor

• Denny’s to close 150 Locations by 2025 as It Navigates Economic Challenges and Industry Shifts: Facing rising costs and intensifying competition, ‘America’s Diner’ restructures its portfolio, plans remodels, and targets strategic closures to optimize long-term growth.

• Retail Real Estate Thrives as Demand Surges and National Tenants Edge Out Smaller Chains: With rental growth returning and limited Class A space, landlords favor high-credit tenants, but local retailers remain crucial for community engagement and anchor success.

• Big Lots Auctioning 255 Store Leases Amid Chapter 11 Restructuring, Bringing Total Closures to Over 500 Locations: As Big Lots streamlines its retail footprint for a potential acquisition by Nexus Capital, its leases attract interest from expanding brands like Ollie’s and Burlington, presenting new opportunities in over 40 states.

• TGI Fridays Files for Bankruptcy Citing Rising Costs and Shifting Consumer Trends: Iconic American restaurant chain to restructure after closing 50 more locations, joining peers like Red Lobster and Rubio’s struggling amid economic pressures and evolving dining habits.

• Retail Closures Accelerate: Over 2,000 Stores Shuttered as Econoomic Pressures Mount: Pandemic aftermath, inflation, e-commerce growth, and over-saturation contribute to a wave of store closures, reshaping the U.S. retail landscape.

• TGI Fridays Exits 78 Leases Amid Chapter 11, Seeks Financial Restructuring: Bankruptcy plan to cut costs, maintain franchise support, and position brand for potential sale.

Editor’s Note

We dedicate significant effort into crafting a newsletter that balances information with engagement, but let’s be honest – newsletters aren’t our day job. Marhilus Ventures is a diversified investment firm, involved in real estate, finance, and business investments. Our niche? Retail assets, hence “The Hard Corner.” Specializing in middle-market value-add properties, both single and multi-tenant, we strategically invest capital through direct equity, joint venture equity, and debt structures across the United States.

Go Check out our investment criteria, if you have anything that may be of interest, shoot it over. We appreciate it!