The Enclave Shops Case Solution
Stiles is a Fort Lauderdale, Florida-based real estate company that has investments in various projects through Fort Lauderdale. It was established in 1951. Since then thecompany has been recognized for developing more than 43 square feet of quality office, residential projects, industrial, retail, and mixed-use throughout Florida.
However, the Stiles has played a vital role in the development of South Florida’s rise and inspiring the iconic shape of the city.However, the company hasa long-standing commitment to excellence beyond lifestyle services,whether it be commercial or residential,it is unmatched throughout the industry. Meanwhile, thecompany has strategic relationships that enable thecompany to play avital role in the real estate business.
Similarly, The Company has good relations with major U.S lenders such as Bank of America Corporation, Well Fargo & Company, BBVA Compass Bank, and JP Morgan Chase and company. Consequently,company’s long-standing and strategic relationship with the financial institutions has enabled thecompany to bring unmatched projects in the city.
Furthermore, the company has acquired $11 million inloans to build the Fort Lauderdale retail market at the 3800 NorthFederal Highway.The name of the project is “The Enclave Shops at Coral Ridge” and has acomplete area of the27,300-square-feet retail shopping center that is located at the entrance of Coral Ridge. See Figure 1 and 2.
The name of theretail shopping center is The Fresh Market, whereas the net lettable area to the shopping center is 21,000 square feet that would include the inline retail shops and also a bank outparcel. Furthermore, the property is located at 3800 North Federal Highway near to the Public supermarket.
The investment is in the retail market. Meanwhile, The Fresh Market is located at the prime locations that havesurrounded the residential homes, banks, and the most important thing is that there is MandurianPark behind the market.
This park is very famous in that area, and mostly every resident of that areavisits that park twice each day, oncein the morning and once at night.From amarketing point of view, the location is prime and customers have easy access to the market which is located at a walking-distance from their houses. Similarly, along with The Fresh Market, there are also other businesses like gymnasiums. See Figure 1, it shows the complete map of the area near TheFreshMarket.
Indeed the market is at theentrance of the park behind its building, which makes it prime around the area.Similarly, if we take a look at the rentals around the North Federal Highway area, the rental fees for an office with 2000 square feet is $6,000 monthly. Meanwhile, another office with anarea of 1,700 square feet has amonthly rent of $2,600.See Table 1
Similarly, in that area,the rental of the retail space differs from place to place and area to area. Meanwhile, the retail space in North Federal Highway with square feet of 1,013 has amonthlyrent of $1,700. On the other hand, in the same area, retail space is also on lease with anarea of 518 square feet that has amonthly rent of $1500. That is nearly double rent than the former retail space. So, it can be determined that rent depend on the location of space.
However, if it is retail, then the rent would be determined by theproximityof thestore to customers, which means whether theproperty is in the residential area or it is solely located at the market in thecommercial area. Meanwhile, the rent is also determined by the location. Consequently, there are two different retail spaces available in the same area withhalf the difference in rent.
However, it is anticipated that the rents of rentals of the enclave shops would be higher than other nearby retail spaces for two reasons,first is that the customers have easy access to stores, meaning proximity to the customers, second is that this store would be one stop shop for all residents of that area. These two reasons would result in higher rents in that market.
Consequently, the investment for the investor is attractive, that would providea good return regarding rent and theinvestor would also have capital gains as well. Similarly, the locations of the shops areprime and attractive. Thus the rentals on these shopsare supposed to be $4 per square feet as we have discussed the characteristics of the property.
Hence, from aninvestors point of view, the investment is attractive,which would give value on long term basis. On the other hand, the rental of the property would also increase along with the capital gains. Meanwhile, in propertyinvestment, the free cash flow is very important to value the property. Indeed, the investors of the enclave shops would have positive cash flows along with capital gains................................