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Kimco Achieves 90% Leasing for Mill Station Development

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Retail REIT Kimco Realty Corp. KIM has been experiencing decent demand for its Mill Station Signature Series Development project in Baltimore County, MD. Most recently, the company announced the addition of preeminent grocery banner — Giant Food — a subsidiary of Ahold Delhaize USA, to its anchor lineup at this project. It will occupy 66,450 square feet at the Mill Station.

With the incorporation of Giant, the company has been able to achieve approximately 90% of leasing for its $108-million Signature Series development project. In fact, Giant joins a promising tenant lineup at this project, including Lowe’s Home Improvement LOW, Marshalls, HomeSense, Burlington, Five Below FIVE, Costco and AMC Theatre. While Costco is slated to open this fall, the other retailers will likely open their stores through 2019.

The shopping center is being constructed on the site of the previous Owings Mills Mall in Baltimore County. Spanning 621,000 square feet of space, the Mill Station development will have a dynamic line-up of up to 30 retailers and restaurants. It will have retail outlets and offices interconnected through an extensive walkway network.

The property is likely to grab attention since it is easily accessible, backed by the favorable positioning directly off I-795 and next to the Owings Mills Station stop on Baltimore’s Metro SubwayLink. The site also has a favorable demography, with a population of 167,000 in the surrounding five-mile area, with average household income of around $95,000. As such mall traffic is likely to be high and the property is expected to witness decent demand from tenants.

Moreover, Kimco divulged final architectural adaptations for Mill Station’s Courtyard. It will have 45,000 square feet of retail surrounding a four-season landscaped lawn, as well as an outdoor gathering space. With scope for programming and events, this space is likely to grab attention of shoppers as well as visitors.

Notably, of late, e-commerce has been grabbing market share from brick-and-mortar stores, and declining mall traffic, store closures and retailer bankruptcies have raised concerns and affected performance of retail real estate landlords, including Kimco and others like Macerich Company MAC and Taubman Centers, Inc. TCO.

Nevertheless, Kimco is countering the tepid scenario, and the company’s 2020 Vision envisages the ownership of premium assets in major metro markets in the United States, as well as a reduction of its non-core portfolio. The company is aimed at improving its portfolio mix with development and redevelopment efforts.

In fact, amid transformation in the retail landscape, Kimco is focusing on service and experiential tenants and omni-channel players. Additionally, the company is aiming to expand its small shops portfolio. These shops basically comprise service-based industries, such as restaurants, salons and spas, personal fitness and medical practices. The shops enjoy frequent customer traffic and are Internet resistant. Amid limited new supply and favorable demographics, this diversification will likely help Kimco limit its operating and leasing risks.

However, in line with its 2020 vision, the company is making substantial dispositions. While such efforts are encouraging for the long term, the dilutive effect on earnings from high disposition activity cannot be avoided in the near term.

Kimco currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company’s shares have appreciated 19.6% in the past six months compared with its industry’s decline of 0.1%.

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