TRF Pacific

Specialty: Grocery-anchored retail
Principals:Kay Carlson, Doug Exworthy, Bob Parks, Rick Parks, Tim Russell, Phillip Scott
Founded: 1975
Headquarters: Seattle
Current projects: Whole Foods Interbay; downtown Woodinville shopping center; Whole Foods Redmond


Photo courtesy of TRF Pacific
Whole Foods Market is the primary tenant at TRF’s Interbay Urban Center in Seattle.

Tight credit, high unemployment and a sluggish economy: That’s no formula for retail success, but it’s what TRF Pacific has to work with.

The retail developer and property manager has weathered the recession by keeping its storefronts filled. TRF, which owns and manages more than 850,000 square feet of retail property at 14 locations, has reduced its vacancy rate from 18 percent in 2009 to 7.7 percent in 2010, according to Doug Exworthy, a principal with the firm.

Retaining tenants

Holding onto tenants requires more individualized attention now. The firm, which says it has sustained a lease renewal rate of 97 percent amid the current market cycle, works with its tenants to renew and extend their leases, and to ensure they’re in a lease program that works for them.

Filling vacancies is another matter.

“There are certain spaces out there that are functionally obsolete,” Exworthy said, citing the old Larry’s Market space in Bellevue, which has been vacant for two and a half years.

At 67,000 square feet, it’s a size that retailers aren’t looking for anymore, he said. TRF announced six weeks ago that Uwajimaya grocery and gift store will lease just over half the space, and the firm will seek a complementary tenant for the remaining 32,000 square feet.

A vacant 35,000-square-foot space in the firm’s downtown Woodinville shopping center was recently leased to Ross Stores, a discount clothing chain. Exworthy said it was too large for a typical Ross store, but too small to hold a second tenant.

“We were saying to ourselves that it’s better to get a tenant that would take the whole space, and take a little less rent,” he said.

Smaller spaces

Rick Parks, another principal at the firm, said the market has moved in the last few years, with tenants seeking smaller spaces, leaving property managers to figure out how to retool their spaces to meet demand.

“It takes a lot more work to lease a 35,000-square-foot space than it did four years ago,” he said. “It takes more time to close a deal.”

It wasn’t too long ago, Exworthy said, that you could “just open a shopping center and let tenants sign up.”

TRF opened its Interbay Urban Center, anchored by Whole Foods, in 2009, just as the economy was tanking, he said.

Several storefronts are still vacant, and so the firm has worked to find new ways to draw visitors, such as creating an event space for residents of the surrounding neighborhoods. The idea is for neighbors think of the shopping center as a center of the community.

Still, the economy isn’t putting retailers in the mood to shop for more space.

“There’s maybe a third or a quarter of the active tenants (than there were) three years ago,” Parks said.

Scraping bottom

“Here in the Puget Sound area, we’re at the bottom as far as commercial real estate goes,” Exworthy said. “I have a hunch we’ll be at the bottom for a while. Until we see employment grow, retailers will have trouble making sales.”

New retail development is also on hold for now.

“There’s still a gap between what it costs (to develop) and the rents you can get,” Parks said.

Lenders will entertain proposals for developments with good anchors in good locations, Exworthy said, but retail is “a hard product type to get financed.”

TRF, which owns and manages properties in other western states, is keeping its focus on the Puget Sound area, where the firm sees more potential.



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