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REAL ESTATE Updated May 10, 2012, 6:57 p.m. ET
Investigation Casts Shadow Over Segment of Industry Not Publicly Traded
By CRAIG KARMIN

The Securities and Exchange Commission is investigating an $11 billion real-estate company for potential violations of federal securities laws, casting a shadow over the business of real estate investment trusts that aren't traded on exchanges.

The SEC is looking at activity of Inland American Real Estate Trust to determine if the REIT committed violations related to management fees, the timing and amount of distributions paid to investors, and transactions with affiliates, according to a company filing with the SEC on Monday.

Thomas McGuinness, an Inland American executive, said the company has been "fully cooperating" with the SEC and that "Inland American does not believe it has done anything improper and it continues to execute its business plan and strategy."

With $11.2 billion in property, Inland American is the largest in an industry of about 90 nontraded REITs that has raised more than $73 billion, mostly from small investors.

The investigation comes at a time when other nontraded
REITs are drawing fresh scrutiny from regulators or reporting weaker valuations and dividend cuts. The SEC didn't respond to requests for comment.

The Financial Industry Regulatory Authority, which oversees the financial advisers that market these REITs, has proposed new guidelines on adviser disclosure of REITs. Last year, Finra also sued New York brokerage David Lerner Associates Inc., which sold a series of funds known as Apple REITs.

Finra said that Lerner targeted unsophisticated investors with products ill-suited for them. Lerner has described the Finra action, which is still pending, as "rife with falsehoods."

The SEC has previously said that it has been pressing some nontraded REITs to provide better disclosure on their share valuations. Unlike public stocks, whose values are set in the marketplace, valuations for nontraded REITs have varied. Some have relied on outside appraisers, others on their own management. Lately, some of the nontraded REITs have started to provide more up-to-date valuations, but this has occasionally resulted in sharp declines in share prices.

The SEC investigation seemed to catch some industry veterans off guard. "It was a little bit of a surprise to see this announcement because we had not seen something like this before," saId Kevin Gannon, a managing director at Robert A. Stanger & Co., a real-estate investment bank. He said he was withholding judgment at this point.

Inland American, which closed the fund in 2009, owns 964 properties, including retail, hotels, office, industrial and apartment buildings. The REIT's parent company, Inland Real Estate Group of Companies, is a 40-year-old real-estate company in Oak Brook, Ill., with $25 billion in assets. The parent was also the sponsor of a publicly traded REIT now known as Retail Properties of America, an owner of strip malls and shopping centers. Last month, the REIT sold shares publicly at a price that struck many as lower than expected. The shares valued last June at $6.95 were valued during the IPO at $3.20, before a reverse stock split.

Other nontraded REITs have disappointed investors by cutting or eliminating dividends. KBS Real Estate Investment Trust I informed shareholders in March that it was suspending the monthly payments of 5.25% and it marked its share price down 30% to $5.16.

Write to Craig Karmin at craig.karmin@wsj.com

Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved
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MOBILE, Alabama -- An out-of-town investor paid $4.25 million for the Winn-Dixie at 740 Schillinger Road N., at Zeigler Boulevard, according to Josh Burmeister and Buff Teague of SRS Real Estate Partners, who represented the California-based seller. Pierce Ledyard handled the closing transaction.
ABRC Fairhope Retirement Center paid $1.5 million for the bank-owned former Faith Baptist property at U.S. 98 and Baldwin County 32 in Fairhope, according to Allan Cameron of Grubb & Ellis/Peebles & Cameron. The 29.4-acre site includes a 30,000-square-foot gymnasium and auditorium. ABRC, or Alabama Baptist Retirement Centers, has several centers in the state.
Calcana Industries, which makes industrial space heaters, paid $445,000 for 3.5 acres and a 14,000-square-foot warehouse on Baldwin County 49, north of Interstate 10, in Loxley, according to Tim Herrington of Herrintgon Realty, who worked for the sellers. David Milstead of Milstead & Associates represented the buyer.
The Shrimp Basket owners paid $1 million for a former Mexican restaurant building on McFarland Boulevard and Interstate 20 in Tuscaloosa, and plan to remodel the restaurant and open this summer, according to co-owner Eddie Spence, who is based in Gulf Shores.
Baleu Realty Management has leased 1,400 square feet at 217 Fairhope Ave., across from The Gumbo Shack, according to broker Sean Beckham. Baleu opened a Gulf Shores office last month.
First Baldwin Insurance has expanded into 2,010 square feet in Mid Point Plaza South on Ala. 59 in Foley, according to Robert Cook of White-Spunner & Associates.
The Raven's Nook has leased an 1,100-square-foot house at 2156 Airport Blvd., at The Loop, and plans to open a clothing and jewelry boutique this month, according to Matt Cummings of Cummings & Associates.
Focus Inc., which provides counseling services, has leased 880 square feet in Daphne 98 Office Park on U.S. 98 in Daphne, according to Cummings, who represented the landlord. Joe DeBrow of Southland Capital Realty Group worked for the tenant.
Zeal Boutique, a women's clothing and accessories store, will open in June in 1,200 square feet next to Winn-Dixie in Schillinger Place Shopping Center on Schillinger and Cottage Hill roads, according to Angela McArthur of Prudential Cooper & Co. commercial division. The owners also have a Zeal Boutique in Pascagoula.

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BIRMINGHAM, Alabama -- An investor opening five World of Beer franchise locations in Alabama said the first could appear in Birmingham by the end of August, now that a lease has been signed.
Rayford Cook, the operations manager and vice president for the company planning the Alabama locations, said a group of eight investors is planning to open three franchise locations in Birmingham and the other two in to-be-determined locations such as Huntsville, Tuscaloosa or Auburn. Along with Cook, another investor is Birmingham businessman Ward Drennen, whose family last year sold its century-old auto dealership in Hoover.
Cook will attend a Birmingham Design Review Committee meeting this morning at which drawings of the renovation plan and the bar's sign will be considered. Ralph Schuler of JVB Architect is listed as the project architect.
Cook, who moved to Birmingham in December, said the bar in Five Points South will offer around 50 beers on tap and as many as 600 bottled varieties The establishment won't serve food, but will allows patrons to carry in food from other restaurants. It will be 3,200 square feet of space, along with an outdoor patio and courtyard space.
World of Beer will be located at 1005 20th St. South and have live music three to six nights a week. The space it will occupy has been vacant for at least six years, since the former Halfshells Oyster Bar & Grill closed.
Cook said progress made by Alabama beer consumer advocacy groups such as Free the Hops, a grassroots organization that backed legislation to boost maximum beer alcohol limits, and the growing number of local craft beer brewers have helped to make the timing right for World of Beer.
"It's a great opportunity to be coming into Alabama, just because of the (beer) movement and all the change in laws that haven't been changed for many years," Cook said.
The investment group began its planning for the World of Beer location in November. Cook moved to Birmingham with aspirations of starting his own restaurant, after working as managing partner at Bonefish Grill in Frederick, Md., for eight years. Before that, the Marion native worked as a bartender at Outback Steakhouse in Birmingham and as a beverage and hospitality manager at Red Lobster in Jacksonville.
The opportunity presented by the World of Beer plan seemed right, he said.
"It's such a great opportunity in something I care about, with craft beers and music," he said. "I had to hop on board. I felt like it was fate."
As part of his training for the new venture, Cook was sent to Tampa, the headquarters of World of Beer, for a training program, where he learned about beer styles, the brewing process, history, names and ingredients. Two weeks was spent in a classroom, and the other three in a World of Beer location in Ft. Myers.
The company, founded in Tampa in 2007, has 24 locations, mostly in Florida.
The World of Beer in Five Points South will be located just blocks from The J. Clyde, a well-established bar and restaurant that boasts a large number of beers on draft and in bottles.
Cook thinks there is room for both.
"Business brings business and awareness to our movement in craft beers," he said. "I think we'll have a shared business and both will be able to do well."
Retail Specialist broker Bill Clements, the Alabama leasing agent for World of Beer, said he believes the bar is a good fit for Five Points South.

Join the conversation by clicking to comment or email Swant at mswant@bhamnews.com.
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By MAURA WEBBER SADOVI, Wall Street Journal

Foreclosure auctions on commercial real estate usually are lonely affairs.

The holder of the debt that is in default shows up and bids the amount owed. Typically there are no other bidders because the property is worth less than its debt and no one is willing to bid more than the debtholder.

But something different happened last month at one of the biggest foreclosure auctions that Minneapolis has seen in years. When the gavel came down at the City Hall foreclosure of Fifth Street Towers, a 1.1 million-square-foot downtown office property, a new owner had stepped in.

A venture of Zeller Realty Corp. of Chicago and a fund formed by Invesco Ltd., of Atlanta and billionaire Wilbur Ross Jr.'s company, which is an affiliate of Invesco, bid $1 more than the debt, or $110,700,000.66. The mortgage had been held by MetLife Inc. and was in default because the building's former owner, Strategic Real Estate Advisors, or StratReal, of the U.K., didn't repay it when it matured last fall.

"No one else raised their hands and right then I knew we'd gotten it," says James Gearen, president of Zeller, a commercial real-estate investment and management firm.

Investors usually are reluctant to bid at foreclosure sales because it is often difficult to check out such properties for hidden problems in so-called due diligence periods.

Prospective buyers also had good reason to be wary of Fifth Street Towers. One third of the space in the building is vacant and the net income is so low that the venture's initial annual return on its investment will be just over 5%. That is what investors are accepting in much healthier markets, like Midtown Manhattan.

But the venture had good reason to believe the building was worth more than its mortgage. Zeller in 2007 made an unsuccessful offer of about $155 million on the property. Also, the venture paid about $100 a square foot, half of what some area buildings have recently fetched.

By grabbing the building in a foreclosure sale, the venture avoided the competition it would have faced if MetLife had foreclosed and then put it up for sale. Foreclosures are "an old-fashioned and archaic process," says Bert Crouch, director of structured investments in real estate for Invesco. "It limits the number of groups who know where the value is."

Built in the 1980s, the complex is located in the heart of downtown near the federal courts and the popular Nicollet Mall retail corridor. But StratReal, which acquired a number of U.S. properties that are managed by Carter of Atlanta, struggled to keep it occupied because the former buyers didn't have the capital to lease it up, according to people familiar with the property.

The new buyers hope to increase the building's yield on their initial investment to the 10% range by raising occupancies and rents. Currently, average rents in the building are about $25 a square foot. Their plan is to increase average rents to about $30.

To do this, they are banking on a continued upswing in the Minneapolis central business district office market, which has seen vacancies fall to 15.4% in the first quarter, from 17.2% a year earlier, though they are still above the 14.2% of 2007, according to Reis Inc., a real-estate research firm.

The region began adding jobs and its unemployment rate fell to 6.1% in March from 6.8% in the year-earlier month and below the 8.5% high hit in 2009, according to the Bureau of Labor Statistics.

Financial, health-care and tech companies have recently absorbed some of the downtown space, as well as vendors that want to be near Target Corp.'s headquarters, brokers say.

Most of the capital for the purchase of Fifth Street Towers came from Invesco Mortgage Recovery Fund, which is co-managed by Invesco and WL Ross & Co. The fund had been one of the eight money managers participating in a Treasury Department program developed to restore liquidity to the nongovernment residential and commercial-mortgage bond markets.

More recently, the fund has focused on buying other types of distressed real-estate assets.

In an interview, Mr. Ross said markets like Minneapolis are attractive in part because there is less competition for distressed assets. "We think there's greater value in the smaller cities," Mr. Ross said.

Write to Maura Webber Sadovi at maura.sadovi@wsj.com

A version of this article appeared May 9, 2012, on page C8 in some U.S. editions of The Wall Street Journal, with the headline: Venture Pays $1 Over Debt To Win Minneapolis Tower.

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Regions Bank must pay millions to SaltAire developers
Published: Saturday, May 05, 2012, 5:33 AM
By Kathy Jumper, Mobile, Alabama Press-Register

MOBILE, Alabama -- Regions Bank must pay some $6.8 million to the developers of SaltAire subdivision on Mobile Bay’s western shoreline after two rulings by an arbitration panel this week.
Mobile Bay Investments, whose managing partner is Logan Gewin, sued Regions in March 2010, claiming the bank reneged on an $18.2 million loan, effectively derailing the 500-acre project in October 2008.
Arbiters awarded the bank $8.23 million in connection with a loan taken by Mobile Bay Investments to start the project.
The three-judge panel also awarded $15 million to Mobile Bay Investments in connection with its 2010 lawsuit, records show.
Arbitration attorney fees of more than $69,871 and the arbitration firm’s $28,800 fee were assessed against the bank.
Ultimately, the developers received $6.83 million, including some repayment of fees, according to local attorney Richard Taylor of Taylor-Martino, who represented Gewin.
"The verdict clearly established that Regions Bank broke its written promise to loan SaltAire the money it needed to complete the final phase of the SaltAire project," Taylor said. "We believe very strongly that if Regions Bank had honored its written commitment in 2008, SaltAire would be a viable and successful real estate development today.
"Perhaps the verdict will let Regions Bank, and other banks, know that there is accountability." 
Regions declined to comment, according to Evelyn Mitchell of the bank’s corporate office in Birmingham. 
The week-long arbitration was heard by an American Arbitration Association panel consisting of attorneys from New Jersey, Louisiana and Texas. 
The bank has 30 days to appeal the award, but the grounds for such appeals are very limited under federal law, according to Taylor. 
Mobile Bay Investments’ attorneys cited a May 30, 2008, letter from Regions to Gewin that they contend confirms an $18.2 million loan. The bank wrote that it would provide $14 million and arrange for another participant to hold the remaining $4.2 million, court records show. Gewin and his business partners relied on Regions’ promises and written agreements to finance the project, according to Taylor.
The verdict "will allow everybody to be made whole in some acceptable form or fashion," Gewin said. "I’m now going to be able to work my way out of this. My mission is not over. I’ve still got work to do."
Millions in liens were filed against the project by contractors, road builders, landscapers and other vendors after the project lost its funding four years ago.
Between $12 million and $15 million has been invested in SaltAire, which was to be a community like Seaside in the Florida Panhandle, with up to 1,250 homes surrounded by a fitness center, two stocked lakes, parks, shops, restaurants and other amenities.
Today, about a dozen upscale homes have been sold and are occupied in the subdivision that has 2,000 front feet on Mobile Bay.
Bay Mortgage Investors, which had an estimated $9 million first mortgage on the property, foreclosed on 250 acres on the north side of SaltAire in January 2010. Gewin retained the 250 acres to the south with plans to turn it into a nonprofit nature preserve.
Bay Mortgage Investors and Burton Investment Group, which have about $10 million in the project, have filed a lawsuit against Regions. That case is expected to go to trial in October.

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Commercial Real Estate Data Provider Required to Sell LoopNet's Interest in Xceligent and to Refrain from Conduct Hindering Other Providers
The Federal Trade Commission will require CoStar Group, the largest provider of commercial real estate information services in the United States, to sell LoopNet's ownership interest in Xceligent, under a proposed order settling charges that CoStar's $860 million acquisition of LoopNet would be anticompetitive.

The proposed FTC order requires the combined firm to sell LoopNet's interest in Xceligent, a significant provider of U.S. commercial real estate information. CoStar's, LoopNet's, and Xceligent's listings databases and information services are used by brokers, lenders, investors, appraisers, developers, and others in the commercial real estate industry.

The FTC also will require conduct relief that is unusual in a merger settlement. In order to allow for others, including Xceligent, to expand or enter into the space, CoStar will lift non-compete provisions and allow customers in longer-term contracts to terminate them early. CoStar also will refrain from bundling its products together in ways that could impede its competitors.

"The listings databases and information services provided by these companies are critical to their customers in the commercial real estate industry," said Richard Feinstein, Director of the agency's Bureau of Competition. "By maintaining Xceligent as an independent competitor and ensuring Xceligent's ability to grow and expand, the FTC's settlement order will foster continued competition in these markets."

CoStar actively tracks and aggregates commercial real estate listings and property-specific information nationwide and provides subscription-based access to its comprehensive database. LoopNet operates the most heavily trafficked commercial real estate listings database in the United States and offers some commercial real estate information services. Xceligent, like CoStar, actively tracks and aggregates commercial real estate listings and property-specific information and maintains a detailed and comprehensive database.

The FTC's complaint alleges the proposed acquisition would be anticompetitive and would violate the FTC and Clayton Acts by reducing competition in the markets for these listings databases and information services. Listings databases allow parties to publicize and to search for commercial real estate properties for sale or lease. Information services compile the in-depth data necessary to evaluate commercial real estate assets and opportunities. For example, parties use commercial real estate information services to make better-informed decisions about both asking price, and whether to execute sales or lease agreements.

The complaint states that CoStar and LoopNet are the only two providers of commercial real estate listings databases with nationwide coverage. The complaint also states that CoStar is the largest provider of actively researched listings databases and comprehensive information services. CoStar's most similar competitor for information services is Xceligent, which currently provides comprehensive commercial real estate information covering 33 metropolitan areas. CoStar's proposed acquisition of LoopNet would eliminate the direct and substantial competition between the two companies and may reduce competition between CoStar and Xceligent, due to LoopNet's ownership stake in Xceligent.

Under the proposed settlement order, CoStar will sell LoopNet's stake in Xceligent to DMG Information, Inc. (DMGI), a U.S.-based subsidiary of British media and data conglomerate Daily Mail & General Trust, PLC. The order also requires the combined CoStar-LoopNet to take certain steps that will ensure that Xceligent is able to continue to compete and expand aggressively in the U.S. market for commercial real estate listings databases and information services.

The proposed order maintains Xceligent's competitive position and is designed so that the acquiring firm, DMGI, will be able to rapidly grow Xceligent into a more complete, national listings database and information services alternative to the merged CoStar-LoopNet. DMGI specializes in information services and has significant experience in the commercial real estate information industry. DMGI's industry-specific expertise, coupled with its substantial long-term investments in other commercial real estate information firms, will enable DMGI and Xceligent to be an effective competitor to the combined CoStar-LoopNet, according to the FTC.

In addition, under the terms of the proposed order, CoStar and LoopNet will sell the URL "commercialsearch.com" to DMGI, and transfer to DMGI information that will assist Xceligent in expanding coverage to additional metropolitan areas.

Importantly, the proposed settlement order includes provisions that, for five years, will protect Xceligent while it expands its services. Specifically, the order:

prohibits CoStar and LoopNet from restricting customers' ability to support Xceligent;
requires CoStar and LoopNet to allow customers to terminate their existing contracts, without penalty, with one year's prior notice. This provision is designed to prevent long-term CoStar subscription commitments from hindering competition;
bars the merged CoStar and LoopNet from requiring customers to buy any of its products as a condition for receiving other products, and from requiring customers to subscribe to multiple geographic coverage areas to gain access to a single area in which they are interested; and
requires CoStar and LoopNet to continue to offer their customers certain core products on a stand-alone basis for three years after the acquisition.
The proposed order also requires the combined CoStar-LoopNet to notify the FTC in advance before acquiring any firm that gathers, markets, or sells commercial real estate information in the United States in the next 10 years.

The Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 4-0-1, with Commissioner Maureen K. Ohlhausen not participating. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, through May 29, 2012, after which the Commission will decide whether to make the proposed consent order final.

Interested parties can submit written comments electronically or in paper form by following the instructions in the "Invitation To Comment" part of the "Supplementary Information" section. Comments can be submitted electronically. Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission by the respondent that the law has been violated. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The FTC's Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook and follow us on Twitter.

MEDIA CONTACT:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
STAFF CONTACT:
Justin A. Stewart-Teitelbaum,
Bureau of Competition
202-326-3597

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Published: Saturday, April 28, 2012, 4:16 PM
By Steve Doyle, The Huntsville Times

This five-story office building visible from Interstate 565 is the first of 52 planned office buildings at the billion-dollar Redstone Gateway office park. The City of Huntsville has spent $28 million to date grading the site, building roads and adding water, sewer and electric services under an agreement with the developers. (The Huntsville Times/Michael Mercier)
HUNTSVILLE, Alabama -- The City of Huntsville has now spent about $28 million laying the groundwork for a massive, Department of Defense-oriented office park near Gate 9 of Redstone Arsenal.
At its meeting Thursday night, the City Council approved two more infrastructure contacts for Phase I of the Redstone Gateway project, which includes about 200 acres immediately south of the junction of Interstate 565 and Rideout Road.
Christopher Professional Enterprises of Athens won a $535,815 contract to run electric, phone, fiberoptic and other communication lines along Market Street, the park's planned retail area.
Christopher was also awarded a $254,288 contract to install the water lines serving Market Street.
The four-lane, divided boulevard will eventually be home to 150,000 square feet of hotels, retail and service businesses, said Shane Davis, the city's director of urban planning.
Reed Contracting Services is being paid $5.3 million to build Market Street, as well as a four-lane loop road serving 22 large office buildings in the park's first phase. Reed is also relocating a portion of Overlook Road.
Davis said the city has only two major contracts left to award in the first phase: demolition of a former Huntsville Utilities substation, and final grading for a five-acre lake.

The $1 billion office park will eventually include 52 buildings for Army employees and defense contractors, two hotels, restaurants, stores and an academic campus surrounding Gate 9.
Maryland-based Corporate Office Properties Trust is developing the office space; Jim Wilson & Associates of Montgomery is handling the retail area.
Huntsville Finance Director Randy Taylor estimates Redstone Gateway will generate $275 million in new property and sales taxes for the city over the 35-year life of the development agreement.
Davis said Jim Wilson & Associates has had "tremendous response" from retailers and hotel chains.
"They're getting very close to getting some deals going and selecting the first hotel tenant," he said Thursday.
According to the park's website, redstonegateway.us, the first office building -- a five-story glass structure visible from the interstate -- is now ready for occupancy. Corporate Office Properties Trust recently hired Graham & Co. as the leasing agent and property manager for Redstone Gateway.
Follow me on Twitter: @swdoyle

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By KRIS HUDSON
The rebounding economy is providing a slight boost to U.S. malls and shopping centers, which in the first quarter registered their first declines in vacancy in years. But analysts aren't yet ready to declare a turnaround.

"I think we're on the precipice of a recovery, but it's a little too soon to call it that," said Ryan Severino, a senior economist at real-estate research company Reis Inc. "We're gathering steam. The data on a quarter-by-quarter basis is more heartening than we've seen in a long time."

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Arbor Place Mall in Douglasville, Ga., has added new tenants.
Vacancies at shopping malls declined to 9% in the first quarter from 9.2% in the fourth quarter of 2011, marking the first quarterly decline for malls in more than a year, according to Reis, which tracks the top 80 U.S. markets. Still, the vacancy rate remains close to the 10-year high for malls of 9.4% set in last year's third quarter. Meanwhile, average lease rates at malls increased 0.2% in the first quarter to $39 per square foot per year, marking a third consecutive increase, according to Reis.

Vacancy rates at strip malls and other neighborhood shopping centers, which have been the hardest-hit sector of the retail real-estate industry, declined for the first time since 2005, falling to 10.9% in the first quarter from 11% in the fourth quarter of last year, according to Reis. As with malls, the strip-center vacancy rate remains close to its all-time high of 11.1% set in 1990. Rates at strip centers increased slightly for the second consecutive quarter, rising by 0.1% to $16.57.

CBL & Associates Properties Inc., CBL +1.29%which owns or manages 87 U.S. malls, noted sales gains in the first quarter by retailers of home goods, shoes, apparel and jewelry. Among the stores CBL is adding this year is a Forever 21 Inc. in a former Borders Group Inc. location at the Arbor Place Mall in Douglasville, Ga., and an American Girl store replacing a large restaurant at Chesterfield Mall near St. Louis.

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Spring Fever Draws Shoppers
"There has been virtually no new (retail) development for three years," said Stephen Lebovitz, CBL's president and chief executive. "With no new space to accommodate (retailers' expansion), that plays into the hands of existing property owners."

That is a sharp departure from the past few years, when declining consumer spending prompted retailers to reduce space, close stores and consolidate operations, leading to higher store vacancies. But now that consumer spending is picking up, the outlook for retail landlords is improving. The 20 national retail chains tracked by research company Retail Metrics Inc. posted an average gain in March of 3.9% in sales at stores open for at least a year, up from a 3.2% gain in March 2011.

Still, some analysts and landlords say optimism should remain tempered. Online shopping, although still a fraction of sales at brick-and-mortar stores, continues to grow dramatically faster than traditional, in-person shopping. And more fallout may come from additional store closures by struggling retail stalwarts such as Sears Holdings Corp. SHLD +0.70%and Best Buy Co. BBY +1.68%
Furthermore, the recent gains by the retail-property industry likely are as attributable to the lack of new competition as they are to retailers opening more stores. New construction of malls and shopping centers has remained near historically low levels since the recession, meaning that few new centers are opening half empty and siphoning stores away from existing centers.

Absent that influence, retailers moved into more strip-center space than they forfeited for the third consecutive quarter, adding a net of nearly three million square feet last quarter. Reis forecasts that strip-center vacancies will continue to decline slowly this year. "But demand for goods and space remains fragile despite recent hopeful signs," Mr. Severino said. "Until the economy and labor market are on more solid footing and (retail expansion) begins to return to more healthy levels, we remain guarded in our outlook for shopping centers."

Philip Montgomery, president of Dallas-based PO'B Montgomery & Co., which owns seven shopping centers in four states, said he saw "a noticeable pickup in leasing" in the first quarter. He signed up Sports Authority Inc. last quarter to move into a 25,000-square-foot, former Borders location in the Broadmoor Towne Center in Colorado Springs, Colo., at a slight increase to Borders' lease rate, he said.

Even so, Mr. Montgomery said many retailers are pushing to reduce the size of their stores. And he noted that some landlords are facing a decline in rents because leases now expiring were signed during the boom years, when lease rates were higher. Many retailers no longer are willing to pay those rates.

Write to Kris Hudson at kris.hudson@wsj.com

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NEW YORK (CNNMoney) -- As manufacturing picks up across the United States, Alabama has become an unexpected beneficiary.
The state -- best known for agriculture and textiles production -- is enjoying the best pickup in industrial manufacturing in five years as U.S. and foreign companies flock there.

The credit goes to the state's low taxes, top-grade trade schools, a statute that curbs union power, and other incentives spurring many manufacturers to move to or expand in the state, experts said.
"2011 is the best year we've had in terms of manufacturing jobs and activity since 2007," said Greg Canfield, Alabama's secretary of commerce.
Companies that are set to open new plants in the state include German conglomerate ThyssenKrupp and a Chinese manufacturing giant, Golden Dragon Precise Copper of China.
Meanwhile Hyundai, Honda (HMC), Boeing (BA, Fortune 500) and truck manufacturer Navistar (NAV, Fortune 500) are expanding there.
One U.S. company that recently came to the state is Wyomissing, Pa.-based Carpenter Technology Corp. (CRS), which broke ground last week in the state's Limestone County to build a new 400,000-square-foot plant.
Carpenter Technology is one of 70 domestic manufacturers that announced plans last year to set up a factory in Alabama. They're expected to create 4,879 jobs and $1.6 billion in capital investment over the next two to three years.
Manufacturing is my future
In the same year, an additional 313 manufacturers, already in the state, announced expansion plans that would create another 12,369 new jobs and pour $2.5 billion in capital investment.
"In [the previous] five years, the percentage of our workforce in manufacturing has jumped to 12% from 5%," said Canfield.
State officials are pleased with the increased activity, but are looking to raise Alabama's profile even more as a top-notch destination for industrial and high-tech manufacturing.

In January, they unveiled "Accelerate Alabama," a plan to aggressively court manufacturers in 11 business sectors over the next five years. The 11 sectors include automotive, aerospace agricultural products, information technology and bioscience.
"We're focusing on where we expect manufacturing to thrive in the future," said Steve Sewel, executive vice president of the Economic Development Partnership of Alabama.
The program highlights the benefits manufacturers can get by bringing their business there. One advantage is Alabama's right-to-work statute, which puts a damper on union activity.
The law says workers can't be forced to join, or abstain from joining, a union as a condition of employment. "Manufacturers are more at ease making large investments knowing this fact," said Canfield.
Other advantages include relatively low labor wages and living costs, as well as state incentives that include free workers' training and recruiting programs.
State officials are also going so far as to pitch company executives with Alabama's world class golf courses, hotel resorts, bass fishing and hunting trails.
Nine months in trade school. Job guaranteed.
"Whether it's our golf courses or bass trails, which are very popular with Japanese executives, or NASCAR, [these intangibles] give Alabama a leg up on the competition," said Canfield.
The state developed its famous Robert Trent Jones golf trail in the 1980s with the specific intention of drawing company executives to the state.
Raymond Cheng, whose company SoZo was hired by Golden Dragon Precise Copper of China to scout U.S. locations in 2011, said: "It was also important for our clients to choose a place with a good quality of life for executives and staff," he said.
Alabama has a lot going for it, such as its golf courses, but Chinese restaurants are few and far between, he quipped.
Meanwhile, Carpenter Technology's $518 million plant is scheduled for completion by 2014. It will produce about 27,000 tons of premium alloy products for the aerospace and energy industries annually, said Bernie Mara, the company's vice president of global advanced engineering.
The company chose Alabama out of 250 worldwide locations, said Mara.
"At the end of the day, the incentive package that Alabama offered us, in terms of tax abatements, labor training programs and infrastructure grants were very compelling," he said.

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