Prolific builder turns to existing properties

Bruce Goodman may not be a household name. But millions of households sure know the names of the stores the developer has brought to their communities.

Costco. Dick's. Target. Barnes & Noble. CVS. Lowe's. Best Buy. They are part of a long list of tenants that occupy more than 125 shopping centers and other retail space Goodman has created and managed, mainly in Pennsylvania and New Jersey.

Goodman has been at it since 1978, when he bought a gas station on the border of Philadelphia's East and West Oak Lane and turned it into a Burger King. Since then, the property has become a CVS - and Goodman a wealthy man, though how wealthy he won't say. His Goodman Properties and Goodman Management L.L.C. are private companies, with a commercial real estate portfolio of more than four million square feet that is valued by one estimate at more than $1 billion.

Yet despite all the riches development work has brought him, Goodman is steering his company away from it, at least for now. While the economy slogs toward recovery and shoppers continue to browse more than spend, the man considered one of the region's largest private developers has shifted his focus to buying the already built - and occupied.

Known as net-lease properties, these commonly include drugstores, banks, and other good-credit tenants that often assume maintenance responsibilities for their spaces.

"We're still developing shopping centers and specialty retail," Goodman said last week, "but opportunities are few and far between."

And they will mainly stay that way until 2015, said Jim Galbally, a vice president and specialist in retail-property sales at Jones Lang LaSalle Inc., a provider of real estate services.

According to its research, the retail-vacancy rate in the Philadelphia metropolitan area was 9.4 percent in the second quarter of 2011, up from 6.5 percent for the same period in 2007.

That equates to a little more than 5.7 million square feet in a total market of 60.9 million square feet in neighborhood and community retail centers, the most prevalent shopping venues.

Correspondingly, rental rates have dropped, reaching their lowest - $17.39 a square foot in this market - in the second quarter of 2010, down from a high of $18.17 a square foot in the second quarter of 2008, Jones Lang LaSalle has determined.

"Before you see new development, we have to have some of the excess space, the current vacancy, absorbed - which will take some time," Galbally said.