2014 Retail Forecast CASSIDY TURLEY
2014 Retail Forecast CASSIDY TURLEY
Contents Garrick Brown, Editor Research Director 201 California Street, Ste 800 San Francisco, CA 94111 Garrick.Brown@cassidyturley.com 916.329.1558
Economic Outlook 2014................................................................................. 3-6 Housing Vs. Policy, Redux........................................................................... 3 Despite Policy-Induced Hiccups, Consumer Confidence Rising........................ 3 Consumer Spending Anemic but Income Growth Picking Up........................... 4 It’s Still All About Housing…....................................................................... 5 But the Same Challenges Will Remain…....................................................... 6 Retailer Outlook 2014................................................................................. 7-14
Kevin Thorpe Chief Economist 2101 L Street, NW, Ste. 700 Washington, DC 20037 Kevin.Thorpe@cassidyturley.com 202.266.1161
Challenges of Weak Economy Supplanted by Challenge of E-Commerce........... 7 Population Shifts Still a Factor.................................................................... 8 What Are Retailers Looking For?................................................................... 9 Trends to Watch in 2014: M&A Activity…..................................................... 9 Trends to Watch in 2014: Grocery-Go-Round…........................................... 11 Holiday Shopping Outlook 2013 …............................................................ 14 Shopping Center Outlook 2014................................................................... 15-20 National Overview..................................................................................... 15 Neighborhood Centers on the Rebound....................................................... 15 Top Malls Continue to Strengthen............................................................... 15 Specialty Centers; All About the Outlets..................................................... 16 Adaptation Keeping the Power in Power Centers…....................................... 17 Construction Returning to Marketplace….................................................... 18 Class Acts Rule the Roost…...................................................................... 18 Looking Ahead …..................................................................................... 19 Regional Outlooks...................................................................................... 21-22 Statistical Overviews.................................................................................. 23-35 Pacific Summary...................................................................................... 23 Mountain Summary.................................................................................. 25 Midwest Great Plains Summary.................................................................. 27 Midwest Great Lakes Summary.................................................................. 28 Texas/South Central Summary.................................................................... 29 Southern US Summary.............................................................................. 31 Southeast Summary.................................................................................. 32 Northeast Summary.................................................................................. 34 Methodology.................................................................................................. 36 Key Cassidy Turley Statistics............................................................................ 37
Cassidy Turley 2014 Retail Forecast | 2
Economic Outlook 2014 Housing vs. Policy, Redux The big economic story of 2013 was the return of the housing market vs. the negative impact of fiscal policy. With strong gains that began in 2012, the housing market was poised at the beginning of last year to seriously bolster an anemic economic recovery. The weakness of the economy since the Great Recession, of course, was partially due to a housing market that had remained missing in action. Certainly, the depth of the economic havoc wrought by the recession and the deleveraging nature of the downturn were huge factors that we will continue to work through for years to come. But, the near complete absence of the housing market dictated that recovery could never accelerate beyond a snail’s pace at best. Yet, heading into 2013, all indicators were up for housing. The only question was whether this rebound would be strong enough and deep enough to boost GDP from the relatively weak low 2.0% range where it had been hovering up to the 3% mark more typical of “normal” performance. The question itself came down to the issue of whether or not dysfunction in Washington would continue to rattle the markets, undermine confidence and, at worst, not only derail the housing rally but send a fragile economy backwards. This isn’t exactly a new story. Since the first debt ceiling debate the potential of our policymakers to undermine confidence has been clear. Over the course of the past two years, politics has replaced underlying economic weakness as the major threat to the U.S. economy. We saw this again at the close of 2012 as the debt ceiling debate wore on. It reared its head again during the first quarter of 2013 with the sequester squabble and it may have reached a new peak this autumn with the government shutdown and debt ceiling II. Unfortunately, each episode has served as a significant drag on an economy that is desperately trying to shift into higher gear. There are major long-term issues that need to be addressed. Entitlements (primarily Social Security and Medicare) will eventually bankrupt the nation if current numbers hold. The deficit remains a major issue. No legitimate economist would ever argue those points, though there are legitimate questions in regards to the timing of further austerity measures—which will slow the economy. Of course, the real problem has less to do with the underlying issues now than the actual handling of those issues. The complete lack of compromise and the brinksmanship that has threatened to undermine the United States’ sovereign credit rating, inflate the deficit and potentially undermine confidence in the dollar as the dominant world currency is the problem.
Despite Policy-Induced Hiccups, Consumer Confidence Rising But there is good news. Certainly, the bad news is that consumer confidence has swooned with each political squabble. The latest dip in October of this year was nine points (according to the Conference Board’s Consumer Confidence Index survey). The last time that we saw confidence fall so sharply in a single month was in August 2011 when it fell by 14.0 points. Is it a coincidence that this was when the first debt ceiling debate resulted in the downgrading of the U.S. credit rating? No. it is not. The largest most recent drop in confidence prior to that was in October 2008 as the financial meltdown unfolded and confidence plummeted by a whopping 22.5 points. Policy, not the underlying economy, is the biggest economic threat that we continue to face.
Consumer Confidence Policy Issues Continue to Undermine Confidence 120.0
Index Value: 1985 = 100
100.0 80.0 60.0
Fiscal Cliff
Debt Ceiling II Government Shutdown
Sequester
40.0 20.0 0.0
Oct 2012
Nov 2012
Dec 2012
Jan 2013
Feb 2013
Mar 2013
Apr 2013
May 2013
Jun 2013
Jul 2013
Aug 2013
Sep 2013
Oct 2013
Consumer Confidence Index
Source: Cassidy Turley Research/Conference Board
But here’s the good news. After each of the most recent policy driven declines in consumer confidence, we saw relatively strong rebounds within a fairly quick period. Confidence fell by 14.0 points during the first debt ceiling debate in August 2011. Though it sputtered for two more months, consumer confidence rebounded by a combined 23.8 points over the course of November and December 2011. The fiscal cliff fiasco sent it downward by 13.0 points in December 2012/January 2013. But it surged by 9.6 points in February 2013. The sequester squabble immediately followed—dropping confidence by 6.1 points in March of this year. It rebounded by 7.1 points in April. Through November 2013 consumer confidence figures were not yet available when this report went to press, the likelihood is great that these figures will rebound the full nine points or more that were lost in October. Recent patterns are clear. Once these political showdowns go away, confidence rebounds sharply and at an increasingly fast pace.
Cassidy Turley 2014 Retail Forecast | 3
This bodes extremely well for a holiday shopping season that drew lackluster forecasts in September and October, but it also spells out more of what to expect next year when the issue of government funding and the debt ceiling will be revisited again in February. While one could argue (and would probably be right) that the quickening pace of consumer confidence surges following politically driven scares may have to do with the fact that these spectacles are starting to become old hat, the fact is that the underlying economy is improving and that this is impacting both consumer confidence and consumer spending.
Consumer Spending Anemic but Income Growth Picking Up The government shutdown slowed the release of a number of key economic metrics by agencies like the BEA and Census Bureau this autumn, but some interesting trends became apparent with data released in October and early November.
2.00%
$11,000
1.50%
$10,000
1.00% $9,000
0.50%
$8,000
0.00%
These lukewarm totals have been enough to help trigger some extremely cautious forecasts for the 2013 holiday shopping season. Yet, the International Council of Shopping Center’s (ICSC) chain store sales index actually posted relatively strong gains of 4.0% that month. Of course, this index is just an aggregate of same store sales for a select group of retailers and is relatively narrow in focus, but it does reflect the relatively conflicting indicators present in the marketplace. While October’s consumer spending figures were not yet available by the time this report went to press, we anticipate a return to positive territory—but anemic positive territory. However, we do expect growth to pick up over the holiday shopping season and for stronger numbers to begin to emerge next year. We think that consumer spending (on an annualized basis) will return to something a little bit closer to the 3.9% annualized rate of last year. Our optimism is not based on mere wishful thinking, however. It is based on two basic factors; the return of the housing market and the recent trend of income growth that has become apparent.
-0.50% $7,000
-1.00% -1.50%
$6,000
Total USA Consumer Spending (Billions), Seasonally Adjusted Annual Rate % Monthly Change
Source: Cassidy Turley Research, U.S. Bureau of Economic Analysis
Following the near-financial meltdown of September 2008, real consumer spending fell in the United States for six of the following seven months. Those declines over the final quarter of 2008 were enough to bring annual totals into the red for the first time in over 20 years and this is despite the fact that those metrics had been largely positive prior to that. Instead, actual consumer spending on an annualized basis fell by just under one percent that year. Despite the challenges faced during the initial days of the Great Recession and the prolonged, but anemic, recovery period since, consumer spending has generally been on the rise. It grew by 1.4% in 2009, 4.5% in 2010 and 4.9% in 2011. Of course, part of the strong gains of 2010 and 2011 were because total spending figures for those years were being compared against weak totals from the prior period.
Inflation continues to be a non-factor. Falling fuel prices in recent months have helped to play a role in this, but ultimately this continues to be a reflection of the general sluggishness of the economy. Continued gradual improvement in the economy over the course of the next year will mean that it will eventually be a factor to watch. In the meantime, one of the more encouraging recent metrics came in the form of strong personal income numbers in September (the latest period available).
U.S. Personal Income Total Personal Income, (Billions $, SAAR) USA
Total Personal Consumption Expenditures, (Billions $, SAAR) USA, Excluding Food & Energy
U.S. Consumer Spending
for 2013 (through September of this year) has only increased by 1.9%. The primary reason for this was the suspension of the payroll tax holiday in January 2013. This took a real bite out of worker paychecks and the impact was immediate and obvious. Over the course of 2012, monthly consumer spending totals increased by an average of 0.46%. This included a very strong fourth quarter (total three month gains of 1.1%). Yet, numbers immediately fell with January of this year. Monthly gains have averaged 0.22% since then.
2.50%
$15,000
2.00% $14,000
1.50% 1.00%
$13,000
0.50% 0.00%
$12,000
-0.50% -1.00%
$11,000
-1.50% -2.00%
$10,000
Total USA Personal Income (Billions), Seasonally Adjusted Annual Rate % Monthly Change
Consumer spending levels have since moderated. Annualized growth for 2012 came in at 3.8%. Meanwhile, year-to-date growth
Source: Cassidy Turley Research, U.S. Bureau of Economic Analysis
Cassidy Turley 2014 Retail Forecast | 4
It’s Still All About Housing… The outlook last year was for gradual improvement with gains driven by housing but tempered by policy headwinds. The outlook for 2014 is the exact same but comes from a vantage point that is further down that path. The nation’s housing markets made serious gains in 2013, even if some of that progress was obscured by policy debates. Nearly every housing market in the Case Shiller 20-City Index has shown considerable gains in pricing over the past twelve months. The latest data from the National Association of Realtors reflects pricing gains in the overwhelming majority of U.S. markets, with a substantial number of those reflecting increases of 10% or more over the past year.
Home Prices Surging 2013Q3 vs. 2012Q3, % Change Austin
9%
Raleigh
8%
Nashville
8%
Atlanta
42%
Portland
15%
Sacramento
42%
13%
Las Vegas
32%
United States Grand Rapids
Jacksonville
29%
Tucson
11%
Riverside
28%
Bismarck
11%
Colorado Springs DC
Los Angeles
26%
Houston
11%
San Antonio
8%
Baltimore
5%
Phoenix
25%
Charlotte
11%
St. Louis
8%
Columbus
4%
San Francisco
24%
Denver
10%
Boston
8%
New York, NY
3%
Orlando
24%
Dallas
10%
Newark
6%
Edison
1% -
San Diego
23%
Providence
10%
Cleveland
6%
Little Rock
4% -
San Jose
20%
Tampa
10%
Milwaukee
6%
Peoria
14% -
20% or greater
10% - 20%
12%
5% - 10%
8% 8%
5% or less
*No data available for Charlotte, Salt Lake City or Seattle
Source: Cassidy Turley Research/National Association of Realtors
This is critical because the depth of the Great Recession was due to the deleveraging nature of this particular downturn. And no other sector of the economy had more deleveraging to do than housing. Rebounding pricing means that this is now behind us. The absence of housing as an economic driver over the past few years was one of the primary factors behind the length of this downturn. Typically, housing leads recoveries, but in this instance it has been the missing link. During the previous three recessions (1980, 1991 and 2001), residential investment led the way out, growing more than 30% on average during the first years of recovery. In past cycles, this meant strong rebounds, thanks to millions of jobs and billions of dollars in
additional economic output. According the National Association of Home Builders (NAHB), were home construction near its historic norm, it would create an additional three million jobs. A 2008 study from the NAHB found that each new home built creates three new fulltime jobs (from construction to financial services to retail) and creates $90,000 in tax revenue. Even at half those numbers, the impact of housing is huge, especially when considering the fact that housing starts have set new records for lows throughout this downturn. Most economists agree that the housing sector traditionally has accounted for between 15% and 20% of the total U.S. economy.
U.S. New Home Completions New Housing Completions, Thousands of Units
Personal income rose by a strong 0.5% in September, the second month in a row in which it came in at this level. It is also the fifth month in a row of gains. Overall growth is now up 3.8% on a three-month annualized basis. Real disposable income also rose in September—to the tune of 0.4%. Income growth appears to be ticking up finally at the national level and in a consistent way. Consumers remain cautious and so much of these gains have not yet translated into significant gains in consumer spending. That is because the saving rate increased to 4.9% in September—the third straight month in which it has done so. The policy showdown likely played a role in this and October numbers are likely to be similar. However, we do anticipate that the trend of income growth will continue and that, barring any unforeseen shocks to the economy, consumers will eventually loosen their purse strings as well.
80.0
2011 Completions: 584.9 2012 Completions: 649.2 2013 Completions (thru August): 616.7
70.0
60.0
50.0
40.0
30.0
Oct-12 Nov-12 Dec-12 1-Jan Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13
New Home Completions
Source: Cassidy Turley Research/U.S. Census Bureau/ Department of Housing & Urban Development
The good news is that sales activity is back, home prices are rebounding, existing inventories are at near record lows and new home starts are at their highest level since before the financial meltdown of 2008. Permits remain high, meaning that this trend will continue, at least for now. Most of the markets we cover report that residential developer interest in land remains high with many builders getting ready for the next wave of new homebuilding. New home construction should continue to increase and accelerate heading into 2014 and beyond. Keep in mind that we lost over two million construction jobs during the recession and that most of those have not come back yet. We see the potential for as many as one million new construction jobs through the end of 2014. Likewise, the return of housing and homebuilding will boost GDP. Our anticipation is that a return to GDP in the low 3.0% range by the end of 2014 is a real possibility, if not likely. Meanwhile, consistent GDP growth in the high 2.0% range we think is a given. Most important to the retail landscape is the impact that rising home values will have on the marketplace. There is a direct correlation between housing wealth and consumption. In economic circles, the common belief has been that for every dollar increase in housing wealth will increase consumption by roughly $0.05. However, that theory has been challenged as of late. A 2011 paper by the economist Matteo Iacoviello found that the most recent numbers indicate that every dollar increase in housing wealth translates into
Cassidy Turley 2014 Retail Forecast | 5
a boost in consumption of $0.06. Yet, a recently released study by the economists at Wells Fargo showed that those values in recent years have been closer to $0.09. Regardless, the potential impact of an improving housing market for retailers is huge.
U.S. New Home Starts
New Housing Starts, Thousands of Units
90.0
2011 Starts: 608.8 2012 Starts: 780.6 2013 Starts (thru August): 819.1
80.0
70.0
60.0
50.0
40.0
Oct-12 Nov-12 Dec-12 1-Jan Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13
New Home Starts
Source: Cassidy Turley Research/U.S. Census Bureau/ Department of Housing & Urban Development
For years we have been dealing with the question of “the new frugality” and how long would it last. Retail fundamentals have become sharply bifurcated on all levels, partially due to this issue as pinched middle class consumers downsized, trading in trips to the Gap for trips to Old Navy. While retailers and restaurants on the lower end of the pricing spectrum have thrived throughout the recession, luxury brands and higher end dining only returned to growth mode a few years ago. But this still has not happened for the mid-priced retailer, whether we are talking about apparel, groceries, restaurants or any other retail sector. While we anticipate that consumers will not immediately revert to old shopping habits, and that the increasing encroachment of e-commerce will keep price competition high for many of these retailers, the fact is that the return of the wealth effect can only translate into increased consumer sales totals. This will only further strengthen retail fundamentals and drive greater demand for investment in retail real estate.
But the Same Challenges Will Remain… If the big economic story of 2013 was policy vs. housing, this year doesn’t promise much in the way of variety. Policy vs. Housing, Part II will see the same threats to economic growth as we will continue to struggle with dysfunction in Washington and, most likely, more political brinksmanship that may prove to undermine confidence in the economy. But, while the challenges will be the same, the underlying fundamentals will be slightly stronger. Perhaps the biggest difference is that by the middle of next year, economic growth should be strong enough for inflation to start to be a possibility once again. This is actually a good thing. The absence of this threat over the past few years hasn’t been by accident— it’s been due to how anemic the underlying fundamentals of the economy were. This will not be the case for much longer, but it also means that we will almost certainly see the Fed raising interest rates at some time next year to keep inflationary pressures at bay. The timetable could vary, but we anticipate this happening near the end of the second quarter—likely in May or June. So long as interest rates don’t move too far too fast, the impact on the overall economy will be minimal. But there will be one. This could slow the housing recovery and it will certainly have an impact on commercial real estate pricing as the price of borrowing becomes more expensive. But that is assuming the underlying economic fundamentals have heated up to the point of warranting such a move—which is ultimately a good thing. A stronger economy may bring higher interest rates, but it will also bring higher earnings, lower unemployment, greater consumer spending and—for landlords—better rental rate growth and NOI. In the meantime, look for the first big political squabble (over the debt ceiling once again) to start up again in late January.
Return of the Wealth Effect “A one dollar increase in housing wealth increases consumption 9 cents…” Consumer Wealth and A Changing Wealth Effect, Wells Fargo Economics Group
= Source: Cassidy Turley Research/Wells Fargo Economists
Cassidy Turley 2014 Retail Forecast | 6
Retailer Outlook 2014 Challenges of Weak Economy Supplanted by Challenge of E-Commerce There are two basic factors impacting retailer demand today. The first remains the economy. While high-end consumers are back, the middle class largely remains in frugality mode. The good news is that this is slowly lessening and the return of the housing market will accelerate this trend. However, in terms of retailer performance it has led to the creation of what is more or less an exaggerated hourglass in which luxury retailers are doing well at one end of the spectrum and discounters are doing well at the other. Many mid-priced players, however, continue to face challenges. These challenges have been particularly exacerbated for hard goods chains that fall into this category because of the additional impact of the other major factor impacting retail today; the growing encroachment of e-commerce. In the meantime, from a retailer growth perspective, we continue to see strong activity at the far ends of the economic spectrum. Luxury retailers are back and are looking for space in the nation’s high street shopping districts and trophy shopping malls. We also continue to see new concepts from abroad in this category looking for new flagship locations on top shopping streets in markets like Manhattan, San Francisco, Beverly Hills and Chicago’s Michigan Avenue among others. Many luxury chains have also been active with their off-price concepts—particularly with growth in the nation’s flourishing outlet center marketplace.
Retail Growth 2014 Fitness/Health/Spa Concepts Drug Stores Thrift Stores Grocery (Smaller Format Concepts) Discount Ethnic Organic Upscale
Off-Price Apparel Pet Supplies Sporting Goods Wireless Stores Banks
Fast Food Fast Casual Automotive Discounters Dollar Stores
GROWING Source: Cassidy Turley Research
Meanwhile, discounters, off-price apparel and dollar stores all remain in aggressive growth mode and have largely been responsible for backfilling much of the vacant big box space that
had vexed landlords at the height of the recession. Dollar store growth remains explosive—the top five national chains have averaged 2,000 new units annually for the past three years and all have similar growth plans for 2014. Many are also upping their capital expenditure budgets for remodels on existing stores—in particular, a number of major dollar store chains are adding more freezer and refrigerator space as they seek to expand their offerings of consumables and compete more directly with traditional grocery players. Discounters are also upping growth totals. Costco alone has plans for at least 28 new stores over the next six months; 20 of which will be in the United States (the warehouse store giant is also expanding into Canada and Australia). Their plans include major pushes into the Midwest and the New Jersey/New York markets. And off-price apparel remains white hot as well. Marshall’s, TJ Maxx, Ross Dress for Less and Nordstrom Rack have all been in strong growth mode for the last three years and plan to continue that trend in 2014, though available quality mid-box space (all tend to use about 30,000 square feet) is becoming harder to find in most markets.
Retail Contraction 2014 Bookstores Video Stores Do-It-Yourself Home Stores Mid-priced apparel Mid-priced grocery (particularly unionized) Office Supplies Stationary/Gift Shops Shipping/Postal Stores And Casual Dining (Older, Struggling Concepts Shrinking)
DECLINING
Source: Cassidy Turley Research
The other big factor impacting retailer growth is the impact of e-commerce. This has now supplanted weak underlying economic fundamentals as the greatest threat to bricks and mortar retailers— at least those chains which have responded to the challenge. The continued growth of e-commerce is changing the buying patterns of consumers and is radically shifting the way that many retailers look at their real estate portfolios. This shift has been most profound for traditional hard-goods retailers. With consumers still largely in frugality mode and online sales growing at a pace of 15% or more annually (compared to roughly 5% for traditional retail stores), many traditional mall retailers have shifted their capital expenditure budgets away from bricks and mortar expansion towards building their e-commerce platforms and supply chains. Cassidy Turley 2014 Retail Forecast | 7
38,000 new storefronts over the next year. This number stood at just over 36,000 units one year ago. While an increase of just over 5% in total retailer unit demand comes as good news, this number masks more than a few challenges for landlords.
Rise of E-Commerce Online vs. Traditional Retail Sales Growth 1,877
Growth in $B
2,000
1,915
2,014
2,105
2,189
20% 15%
1,777
1,500
10%
1,000
5%
500
0
143
165
190
221
254
292
2009
2010
2011
2012
2013
2014
U.S. Retail
U.S. Online Retail
Retail % Change
Online % Change
0%
Y/Y Change %
2,500
-5%
Source: Cassidy Turley Research
This trend will only accelerate over the next two to three years. This is partially being driven in response to Amazon’s aggressive expansion of its supply chain network (the online giant plans to expand it’s roughly 55 million square feet of distribution centers to 90 million square feet by 2016) as it seeks to roll out same day delivery capabilities. Whether or not Amazon will succeed in being the first major company to roll out a successful same-day delivery model may not actually be the point. Whether they do, or not, they are creating an infrastructure that will be able to deliver next day delivery profitably. In the meantime, responding to this threat has become the focus for many retailers. For example, Kohl’s—which had been expanding at a rate of roughly 60 new stores annually—has put new stores on hold as it builds its e-commerce and supply chain platform. Ultimately, e-commerce will never replace the shopping experience but it will create many challenges for retailers that do not master a comprehensive omni-channel approach (bricks AND clicks) to the marketplace. Likewise, since shopping is about the experience and e-commerce is about convenience, retailers who fail to grasp that the new paradigm demands higher levels of in-store customer service will also face significant challenges ahead. In the meantime, however, e-commerce will continue to negatively impact demand for bricks and mortar shop space. But that is not the only way in which e-commerce is impacting bricks and mortar retail demand. While mid-priced hard goods players are largely either in no growth or contraction mode, we are seeing surging growth from retail chains that do not compete heavily with online competition. This largely breaks down to food users (grocery and restaurants) and service related retail (automotive service, dry cleaners, financial services/tax preparation, etc.). Restaurants, by far, are the most active sector. We track the expansion plans of over 3,000 national retail and restaurant chains and publish the results each spring in our Annual Retailer and Restaurant Expansion Guide. As this report went to press, we were tracking plans from retailers to open as many as
Roughly 43% of all the planned growth we are tracking currently is from restaurant users. This number has been steadily on the rise thanks to an onslaught of new fast casual concepts ranging from new, higher-end burger joints to new pan-Asian concepts and upscale wood-fired pizza chains among others. But it is critical to note that restaurants are now accounting for a larger percentage of growth in the marketplace than ever before. One year ago, dining concepts accounted for 38% of all the growth that we were tracking. Prior to 2011, this category typically averaged 35% or fewer of the planned units we tracked. There is no doubt that retailer demand has shifted and this is already having major ramifications for landlords as tenant mixes at local shopping centers become increasingly food-based. This also includes grocery players, which have increasingly become a staple at power centers and malls. While concerns remain about grocery consolidation among mid-priced, unionized chains, some recent developments in terms mergers and acquisitions may result in less fallout from these users even as a flood of new, smaller concept groceries ranging from discounters to high-end organic players remain in aggressive growth mode.
Population Shifts Still a Factor Beyond the obvious impact of economic conditions and the growing impact of e-commerce on retailer space demand, there are a number of other macro trends at work that continue to shape the marketplace. Everything follows basic consumer trends and continued demographic shifts in the United States continue to impact retail site selection at its core.
Population Growth Change by % in Population; April 2000 to April 2010 14.1%
4.2%
9.7%
12.0% 21.1%
4.7%
14.1%
10.0% 35.1%
24.6%
16.9%
6.1% 8.7%
13.2%
2.1%
6.0%
7.9% 6.7%
23.8%
7.8%
VT 2.8% NH 6.5% MA 3.1% RI 0.4%
-0.6%
4.1%
6.6%
3.3%
3.4%
1.6%
NJ 4.5% DE 14.6% MD 9.0% DC 5.2%
2.5% 13.0%
7.0%
7.4% 11.5%
9.1% 4.3%
7.5%
18.5% 15.3% 18.3%
20.6% 1.4% 17.6%
HOT!
WARM!
COOL!
Source: Cassidy Turley Research, US Census Bureau
Cassidy Turley 2014 Retail Forecast | 8
As coastal and select southern markets continue to see population growth and stronger levels of growth (both organically and through in-migration), these markets will continue to be the focus of both retailers and developers. As demonstrated through the most recent census numbers, population growth continues to be much greater in the Sun Belt and Western States and this trend was hardly impacted by the Great Recession. While California’s growth rate may have cooled slightly from 2000 to 2010, it still remained well above the national average. Meanwhile, Texas, the Southwest, Mountain States and the Southeastern U.S. were all on fire in the past decade. Analysts at Citibank’s Retail Research Group recently published a thought provoking paper in which they divided the country into six basic regions and then looked at the number of locations within those regions for an expanded list of some of the countries’ top retail chains. They found that the Southeast U.S. now accounts for 25% of the nation’s total population but 33% of current retail exposure from the chains in their survey. The Midwest was the second largest region in their survey in terms of total population—accounting for 21.4% of the nation’s consumers. But the Midwest accounted for only 17.0% of the retail locations in their survey. The Southwest was comparatively under-retailed in their findings—accounting for 18.0% of the nation’s population but just 16.0% of total retail exposure. The Northeast had relative parity with 17.7% of the nation’s population and 18.0% of its retail exposure. Meanwhile, the South Central region (which includes Texas) accounted for 11.6% of the total population and 11.0% of the retail presence of surveyed companies. Lastly, the Northwest came in at 4.4% of the total population and just 4.0% of total retailer exposure.
Retailer Exposure by Region, 2013
Southwest 18.0% 16.0%
Midwest 21.4% 17.0%
South Central 11.6% 11.0%
The typical profile now of a Class A shopping center project is one located on a premium corner, in a densely populated urban location with higher than average income demographics. With few exceptions, this is the profile for a shopping center with sub-5% vacancy or better and strong rental rate growth in nearly every major U.S. market. But, the fundamentals become weaker for each of those variables that you take away. That is because, at the street level, most retailers are still cautious with their growth and are looking for the proverbial “sure thing.” The best spaces in the best centers with the highest traffic levels and/or exposure and the densest population and highest income demographics. Of course, this is why recovery has been so uneven in the retail world and bifurcated by class. But those spaces have largely disappeared in most major marketplaces. The market is still bifurcated on the basis of Class—though to a lesser degree than it was either 12 or 24 months ago. But while Class A properties are now generally doing well in all U.S. markets, Class C properties are still struggling in nearly every national trade area. Class B properties are the big swing properties here and while these shopping centers were only doing well in the top 1/3rd of U.S. metros two years ago (those with the healthiest local economies like Washington DC, Boston, New York, Baltimore, San Diego, San Jose, San Francisco, Seattle, etc.), they have since rebounded. Class B product is now generally back to reasonable vacancy levels and rental rate growth in at least the top 70% of major U.S. markets.
Trends to Watch in 2014: M&A Activity Through October of this year, we tracked roughly $27 billion in retailer merger and acquisition activity in the United States. This is up significantly over the $23 billion we tracked over the entirety of last year. We anticipate that this trend will only accelerate heading into 2014.
Population / Retailer Exposure
Northwest 4.4% 4.0%
What Are Retailers Looking For?
Northeast 17.7% 18.0%
Southeast 25.0% 33.0%
There are a number of reasons for this, both in terms of consolidation and growth driven mergers. Ultimately, we see the growth driven deals outpacing those of retailers that are looking to merge for survival’ sake, though there will be a fair amount of that as well.
Retail M&A Activity 30 25 20
Source: Cassidy Turley Research, US Census Bureau, Citi Research
Interestingly enough, much of what the Citi Retail Group found in their analysis we see mirrored in the retailer growth requirements that we track. Demand is picking up across the board, but the coasts and Texas remain the hottest spots for site selection. However, the Southwest, Northwest and Mountain states are all also picking up significantly.
15 10
5 0
2006
2007
2008
2009
2010
2011
2012
2013 YTD
Source: Cassidy Turley Research/Conference Board
Cassidy Turley 2014 Retail Forecast | 9
Consolidation plays out further in the grocery world. Likewise, we expect to see more moves like this year’s merger of Office Depot and Office Max. The office supplies sector has been hit hard by online competition. Staples had emerged as the clear leader in the sector, primarily due to its strong omni-channel approach which saw declining sales levels from bricks and mortar locations largely supplanted by robust online sales, Serious questions as to the viability of both Office Depot and OfficeMax were starting to be asked in a marketplace where the perception was that there may only be room for two major national bricks and mortar chains. While it is too soon to say whether their merger will be a complete success, the two entities are infinitely stronger together than they were as competitors. But while we expect to see some M&A activity from concepts that are struggling, we think there will be even more activity at the other end of the spectrum.
“ Going forward, we expect even more M&A activity in 2014. Private equity firms, hedge and pension funds and private investors all remain on the lookout for new, strong concepts that they can grow in an improving and expanding economy. But the same holds true on the other end of the spectrum.”
Private equity firms, hedge and pension funds and private investors all remain on the lookout for new, strong concepts that they can grow in an improving and expanding economy. Meanwhile, we also continue to see investors looking to buy concepts on the cheap and turnaround plays will likely be plenty. We also anticipate that activity will be driven to some degree by segment leaders looking to pick up market share by purchasing viable competing concepts. All of which is likely to lead to more growth than contraction in the long run.
M&A Highlights Fall 2013 Advance Auto Parts/Carquest Auto Parts Advance Auto Parts purchased General Parts International, parent of Carquest Auto Parts, for about $2 billion in October. The deal would create one of the largest automotive parts providers in the nation. Advance Auto Parts currently operates about 4,020 stores nationally. The merger will boost those totals in the U.S. by about 1,250 company operated units (there are an additional 1,418 franchised U.S. Carquest units and 120 WorldPac locations—mostly in Canada). After merger, the new company will have roughly 6,100 units and total sales estimated at $9.2 billion. This move will create some redundancies and we anticipate that as many as 200 to 300 stores may be shuttered over the next few years as leases expire. Allen Edmonds Allen Edmonds was acquired by private equity firm Brentwood Associates in November for an undisclosed amount. The upscale men’s shoemaker will continue to operate independently under the Allen Edmonds banner. Allen Edmonds wholesales at numerous high end retailers nationally and operates 45 company-owned retail outlets in the U.S.
Captain D’s Seafood Restaurants/Grandy’s Country Cookin’ Private equity firm Centre Partners purchased Captain D’s Seafood Restaurants from Sun Capital Partners in October for an undisclosed amount. The deal included the 527-unit Nashville, Tennessee— based chain as well as the 60-unit (franchise only) chain Grandy’s Country Cookin’. Sun Capital had acquired the chain in 2010 and since helped to turn around sagging sales—it has posted 27 consecutive months of same store sales growth since. The chain has about 290 company-owned units. Sun Capital still has an extensive restaurant portfolio that includes Boston Market, Smokey Bones Barbeque & Grill, Bar Louie Restaurants, Friendly’s Ice Cream, Restaurants Unlimited, Garden Fresh, Fazoli’s, and Johnny Rockets. Carl’s Jr. /Hardee’s Roark Capital announced its plans to a majority stake in CKE, the parent company to fast food concepts Carl’s Jr. and Hardee’s in November. The deal would likely not close until December at the very earliest—more likely in early next year. Roark also owns Arby’s and their other investments include McAlister’s Deli, Wingstop and the Corner Bakery Café and Il Fornaio. They also recently acquired the Miller’s Ale House Chain in July and are responsible for the various concepts under the Focus Brands banner; Carvel, Cinnabon, Auntie Anne’s, Schlotzky’s and Moe’s Southwest Grill. Details of the deal have not been made available, but according to CKE’s most recent quarterly filings, the chain operated 424 Carl’s Jr. and 468 Hardee’s restaurants, with domestic and foreign franchisees accounting for an additional 2,371 units worldwide. Coffee Bean & Tea Leaf The Los Angeles, California-based Coffee Bean & Tea Leaf chain was acquired in September by a group of private equity companies, including Advent International, CDIB Capital, Mirae Asset Private Equity and the Sassoon family, for an undisclosed amount. The chain operates more than 900 company-owned and franchised stores across 15 states and in over 30 countries. We anticipate accelerated growth ahead. Johnny Rockets On the restaurant front, one of the largest deals we tracked this summer was the sale of Johnny Rockets to an affiliate of the private equity group Sun Capital Partners. Johnny Rockets operates about 220 U.S. locations and a total of 300 restaurants globally with 60 units in the development pipeline and expected to open over the next year. We anticipate that the new owners will likely boost growth in the coming years. Jos A. Banks/Men’s Wearhouse Jos. A. Banks ended its $2.3 billion bid to purchase Men’s Wearhouse in mid-November but a potential merger reportedly has the support of largest Men’s Wearhouse shareholder, Eminence Capital. In the most recent twist, news broke as this report went to press that Men’s Wearhouse had turned the tables on Jos. A Banks, offering $1.5 billion for its rival.
Cassidy Turley 2014 Retail Forecast | 10
Juicy Couture Leonard Green and his Authentic Brands Group bought Juicy Couture for $195 million in September from Fifth & Pacific Companies. Fifth & Pacific is reportedly looking to focus on its fast growing Kate Spade brand, while we anticipate a turnaround in store for Juicy Couture with new management.
Ritzman Pharmacies/Mast Pharmacy The already shallow pool of drug store players got even thinner in October. Ritzman Pharmacies acquired the five-unit Mast Pharmacy chain in northeastern Ohio for an undisclosed amount. With the deal, Ritzman will now operate 25 pharmacies throughout the Buckeye state.
Lion’s Choice The 23-unit Lion’s Choice restaurant chain was sold in September for an undisclosed amount. The St. Louis, Missouri-based roast beef concept was purchased by a private equity partnership that consists of Black Rock Holdings and Millstone Capital Advisors. The new ownership plans on adding as many as 15 additional restaurants in the St. Louis area and growing throughout the Midwest.
Sears Sears is reportedly considering spinning off its Land’s End apparel business, as well as its automotive service centers. The move could raise the struggling chain as much as $2.5 billion. In August, the retailer had less than $700 million in cash on hand, with looming debt maturities in 2014.
Nationwide Vision Nationwide Vision was purchased by Refac Holdings in September for an undisclosed amount. Refac operates U.S. Vision, which operates roughly 770 full service vision care stores throughout North America, including locations within Belk, BJ’s, Boscov’s, Hudson Bay, JCPenney, Macy’s, Meijer and Sears stores. Nationwide Vision operates about 65 retail locations, primarily in Arizona, and will continue to operate under the same banner following the close of the sale. We anticipate accelerated expansion for this concept in the future. Neiman Marcus The Canada Pension Plan Investment Board and Ares Management (private equity) completed their purchase of Neiman Marcus in October. The deal, valued at $6.0 billion, will see about half of that amount repaying debt under the retailer’s existing credit facilities. The new owners have a track record of aggressive growth with some of the past retailers that they have invested in (99 Cents Only Stores, Smart & Final and GNC). The deal included 41 Neiman Marcus stores, two Bergdorf Goodman’s and 36 Last Call outlet locations. We anticipate that much of the future growth may in the form of Last Call outlets, though we would not be surprised to see a couple of new full-line, high-end department stores as well over the next couple of years. Office Depot/Office Max Office Depot and OfficeMax closed their $1.2 billion merger in early November. The chain will kill the OfficeMax banner and go by Office Depot—a change that it will begin to institute immediately. The new chain now operates about 845 retail stores across the country, but we anticipate that as many as one third or more of these may be shuttered in the next few years as the retailer eliminates redundancies and downsizes to smaller footprints as leases expire. Pep Boys Pep Buys acquired 17 Discount Tire Centers in Southern California in September from AKH Company for an undisclosed amount. The deal brings their national store count to more than 750 stores, with over 150 in the state of California alone.
Walgreen’s/Kerr Drug Walgreen’s completed its acquisition of regional North Carolina pharmacy chain Kerr Drug in November. Deal terms were not disclosed, but the transaction included 76 drug stores, as well as a distribution center. So far, no decision has been made on the rebranding of the chain, though we think it likely in the next 24 months. Wendy’s Wendy’s has been active in refranchising locations. In November, they announced the sale of 54 Salt Lake City area restaurants to NPC International. The Dublin, Ohio-based chain also announced plans to refranchise 38 company-operated units in the Phoenix marketplace to a partnership consisting of their former V.P. of Operations, John Peters and longtime Wendy’s franchisee Rick Holland. This follows moves earlier this year to sell 24 company-owned restaurants in the Seattle market to longtime franchisee Cedar Enterprises, 24 restaurants in the Kansas City area to NPC International, 30 restaurants in St. Louis to a group consisting of current Wendy’s franchisee and NBA great Junior Bridgeman and current NBA star Chauncey Billups and a total of 40 other restaurants in various markets to eight other franchisees. The move is part of the chain’s goal of refranchising 425 units this year in a move designed to free cash flow, boost operating margins and provide steadier income streams from higher royalty and rent payments. Yankee Candle In October, consumer products manufacturer Jarden closed on its acquisition of the 560-store (U.S. and Canada) Yankee Candle chain. Jarden paid a reported $1.75 billion in cash for the retailer and reportedly plans for cautious growth ahead.
Trends to Watch in 2014: Grocery-Go-Round In terms of M&A activity, the grocery sector has been among the most active and we don’t see that changing in 2014. Market consolidation continued to take place here as traditional grocery chains react to the continued expansion of new, smaller format grocery players—many of which are non-unionized—into the marketplace. We see growth from new concepts far outpacing Cassidy Turley 2014 Retail Forecast | 11
the amount of space that will be given back in the coming year. Walmart’s plans for their small-format (30,000 square feet) Neighborhood Market concept alone could potentially result in 4.5 million square feet of occupancy growth in 2014 (assuming they live up to high-end projections for growth). Over the past few years, the big three traditional players (Albertson’s, Kroger and Safeway) have largely been in consolidation mode. However, as demonstrated by the recent $2.6 billion acquisition of southeastern grocery banner Harris Teeter by Kroger, these players are now in acquisition mode. Safeway sold their Canadian division in June for a reported $5.7 billion and now has a warchest. Meanwhile, even privately held Albertson’s is now back in the acquisitions game having recently purchased the 50-unit United Supermarkets chain in Texas. So why are the big three traditional grocery players making these moves now? The reason is simple; all three have made moves to free up capital and all three know that the key to competing against all the new players in the marketplace is to build market share and revenues. And all three know that growing their brands will lead to better buying power and improve their ability to compete in terms of pricing. And right now growth via acquisition is currently a cheaper proposition than organic expansion.
“ Don’t be surprised to see more M&A activity in 2014 between competing chains struggling to compete with increased competition from the Internet. Investors looking to buy concepts on the cheap and turn them around will be plenty. Meanwhile, we will also continue to see segment leaders looking to pick up market share by purchasing viable competing concepts.”
There are plenty of smaller traditional chains that have struggled to compete against the onslaught of new competition over the past few years. The grocery business already has thin margins, but the impact of the Great Recession on consumer behavior (“the new frugality”), combined with encroachment of non-unionized players has made for an extremely challenging environment to say the least. Certainly, the bankruptcies of regional players like A&P and Bashas in recent years demonstrate this trend. Against this backdrop, acquisition by one of the larger traditional grocery chains could be a win-win for many of these players. Kroger plans on keeping the Harris Teeter brand alive, but the chain will now benefit from better buying power thanks to improved scale and procurement proficiencies. Because of this, we anticipate that M&A activity within the grocery sector will only increase over the next year. What will the net result be for the commercial real estate market? Ultimately it will be one of strengthening tenancy. Though we
almost always see an uptick in store closures after such moves (as new ownership seeks to cut dead weight from their portfolios), these moves should generally result in the strengthening of those chains that are acquired and translate into diminished chances of bankruptcy or larger retail failures. Still, that being said, it is entirely possible that we may see dozens (if not more) of underperforming stores closed in the months following deals and some slight uptick in vacancy levels in individual markets impacted by such moves.
Grocery Go Round Highlights Fall 2013 Albertson’s/United Supermarkets Albertson’s LLC also announced in September that it would be purchasing Lubbock, Texas-based United Supermarkets. The chain operates 50 supermarkets under three banners (United Supermarkets, Market Street and Amigos), as well as seven convenience stores and 26 gas stations under the United Express banner. Bi-Lo/Piggly Wiggly BI-LO Holdings entered into an agreement in September to acquire 22 Piggly Wiggly stores in the southeast (16 in South Carolina and six in Georgia) from Piggly Wiggly Carolina Company. The stores will be rebranded under the BI-LO banner. C&K Markets In late November, regional player C&K Markets filed for Chapter 11 bankruptcy protection. The chain, which operates about 60 stores in northern California and southern Oregon under the C&K Market, Ray’s Food Place, Shop Smart, Price Less Foods and Lo Buck$ banners was already in the process of selling off its fifteen pharmacies to focus on its core business. C&K traditionally focused on rural towns where they were the only grocery presence and commented that the bankruptcy was a result of expanding outside of that model, as well as the expansion of discounters into their traditional strongholds. The chain will close at least 20 locations but hopes to emerge from bankruptcy next year with at least 40 remaining stores that have “proven profitability.” Food Lion Repositioning is the name of the game with Food Lion, which has made significant investments in the roughly 170 stores that it operates throughout the Carolina’s. Food Lion, a division of Belgian conglomerate Delhaize, is planning on rolling out a new smaller footprint in the coming year with an increased focus on “Easy, Fresh and Affordable” as it seeks to compete more effectively with the flood of new, smaller concepts and organic players in the marketplace. Fresh & Easy/Wild Oats? Tesco announced plans in September to sell roughly 150 of the 200 Fresh & Easy stores that it operated in California, Arizona and Nevada to Ron Burkle’s Yucaipa Companies. Yucaipa has yet to officially announce its plans, but market speculation is that they
Cassidy Turley 2014 Retail Forecast | 12
will use these properties to reboot the Wild Oats Markets banner. Fresh & Easy declared bankruptcy shortly thereafter, in a move that would allow it to get out of the 50 or so remaining leases that it did not sell to Burkle’s group. Fresh Thyme In October, Fresh Thyme Farmers Market announced their plans to open up to 50 new stores throughout the Midwest over the next six years. The chain, created by former executives with both the Henry’s and Sunflower chains, has major financial backing from Meijer. The chain will operate in the 24,000 to 28,000 square foot range. Giant Eagle In November, Giant Eagle converted its second store to their new Market District concept. The location in Green, Ohio marks its eighth addition to their new upscale concept, which is reportedly producing impressive numbers. The chain has two other new Market District locations planned in Northern Ohio, with new growth for now likely to focus less on their traditional namesake banner than on the new upscale one. Harris Teeter/Piggly Wiggly Harris Teeter, only a couple of weeks after itself agreeing to be acquired by Kroger, also announced in September their plans to purchase seven Piggly Wiggly Carolina stores (this included six existing locations and one under construction—all in the Charleston, South Carolina metro). Piggly Wiggly Carolina has stated that these transactions will strengthen their balance sheet considerably and that they have no current plans to sell any additional stores, nor is the company at risk of bankruptcy. Nash Finch/Spartan Stores Minneapolis-based Nash Finch and Byron Township, Michiganbased Spartan Stores officially merged in November. The move was approved with 98% or greater approval from shareholders of both firms. The new entity will operate under the name SpartanNash Company starting in May of next year. The new entity will operate 177 supermarkets in 44 states under the banners of Family Fare Supermarkets, No Frills, Bag’n Save and Econofoods and will be the largest food distributor serving military commissaries and exchanges in the United States. The move is expected to result in the chain achieving cost savings through greater buying power, the elimination of redundancies and the strengthening of its supply chain. It is still unknown if any existing stores will be closed following this move, though some real estate repositioning prior to future growth is likely. Publix Publix announced in October that it would be off-loading the 14-store PIX gas station/convenience store chain that it has operated since 2001 to focus on its core grocery business. Circle K Stores, a division of Alimentation Couche-Tard will buy 13 stores (eleven in Florida and two in Georgia) while the remaining site in
Tennessee is being sold to the Kentucky-based Max Arnold & Sons. Meanwhile, the chain is focusing on resuming organic growth of its traditional grocery concept. Publix has plans to open eleven new stores (mostly in the 50,000 square foot range) throughout the Charlotte, North Carolina marketplace through the end of 2015. Safeway Safeway announced plans in October to exit the Chicago market, where it operates 72 Dominick’s stores. The chain recently closed the sale of its Canadian division to Sobey’s for $5.8 billion. That move should result in about $4 billion (after taxes and expenses) landing into the Pleasanton, California-based chain’s coffers. Safeway’s sale of Dominick’s is expected to raise between $400 and $500 million more. The chain plans on using those proceeds to paying down $2 billion in debt and repurchasing stock. A deal had not yet been announced as this report went to press, however, four stores were confirmed as to be sold to New Albertson’s, Inc. (which will operate them under the Osco-Jewel banner) and Roundy’s expanding Mariano’s banner in Chicago (they recently opened their 12th Chicagoland location) continues to be rumored as a suitor, though Kroger is likely a more realistic buyer. Such a move would give the giant a significant presence overnight in a market where it currently does not operate. However, Central Grocers and Walmart have also been rumored to be in play. Safeway owns the real estate for about twenty of these locations. Safeway has since been rumors of hostile takeover plans from hedge fund firm Jana Partners, and has adopted a poison pill defense to fend off any investors seeking to obtain more than 10% of shares outstanding. Walmart Walmart announced plans in September to build more than 200 new Walmart Neighborhood Market stores in the U.S. over the next 18 months to bring their total store base to roughly 500 units. Growth for the smaller concept grocery only stores, which measure only 30,000 square feet compared to typical Walmart Supercenter footprints that start at 125,000 square feet and go up, has yet to reach the pace that was originally expected when Walmart first began rolling out the concept in the immediate aftermath of the recession. That being said, the company has recently refined its business model to create more operating efficiencies and to bring returns from the smaller format stores closer to those being realized by the Supercenters. As Walmart continues to improve the logistics model serving this new footprint, look for growth to explode. This will be a game changer in the grocery world, however, had Walmart been able to aggressively roll out this concept a couple of years ago when the balance sheets of more traditional grocers were in more perilous shape, they likely would have succeeded in knocking out a number of smaller, regional chains. Walmart would like to eventually reach as many as 700 units for this concept in the US. In 2014, they will likely open between 120 and 150 Neighborhood Markets and Walmart Express stores (this is their smallest concept at just 15,000 square feet), compared to about 115 Supercenters.
Cassidy Turley 2014 Retail Forecast | 13
Holiday Shopping Outlook 2013 As this report went to press there were a number of indicators that were not yet available that will have a telling impact on what to expect from this year’s holiday sales season. Unfortunately, heading into the holiday season there were as many reasons to be pessimistic as optimistic. The biggest problem is the calendar; this year has six fewer shopping days than last year and loses an entire weekend. That alone could make the difference between a 3% and 4% seasonal gain in most seasons. Throw into the mix the fact that consumer spending has been down slightly all year and that consumer confidence had been rattled in September/ October by the government shutdown and you have plenty of reasons for retailers to be nervous about receiving the proverbial lump of coal in their stockings this Christmas.
Holiday Sales Performance 2002-2012 Holiday Shopping Days vs. NRF Holiday Sales Growth 31 9%
30 29
10-Year Average: 3.3%
28
7% 5%
27
Some positives we anticipate this year are lower gas prices, the impact of the Holiday Creep (the start of the holiday sales period continues to come sooner with Black Thursday now the true beginning of the season) the likelihood of better weather and the impact of the Sony/Playstation console wars on potentially driving up sales. But we also expect those positives will be countered by the impact of showrooming and online shopping, fewer shopping days, the absence of any “must have” gifts in the children’s sector, the likelihood of less self-gifting this year (numerous consumer studies have pointed towards this phenomenon), lower retailer inventory levels and continued declines in mall foot traffic erasing most of those positives. The biggest issue, however, remains consumer sentiment and continued caution at the macro level—shopper spending power has been feeling the pinch all year and this will likely play out this holiday sales season as lukewarm annual sales growth totals. Still, it is important to keep in mind that the ten-year average for sales growth according to the National Retail Federation has been 3.3%. Certainly everyone in the industry would like to see totals in the 4.0% range or better. And there is no doubt that should actual performance come in at 3.3% this year that many in the media will run with the storyline of this year’s disappointing holiday sales season. But, a 3.3% gain— while not as strong as what was hoped for—would, in fact, represent totals in line with the historical average.
3%
26
1%
25 24
-1%
23 -3%
22 21
-5%
Shopping Days
% Holiday Sales Growth
Source: Cassidy Turley Research, National Retail Federation, Citi Research
In terms of the predictions from the major forecasting groups, most anticipate sales growth this year to be below the averages of the past few years but still at respectable levels. The National Retail Federation forecast solid growth of 3.9% this year. The International Council of Shopping Centers was not far behind at 3.7%. Wells Fargo’s economists agreed with the ICSC at 3.7%, but we also saw a number of much weaker predictions as well. Consumer tracking gurus Shopper Trak predicted 2.4% sales growth while Customer Growth Partners were slightly more optimistic at 3.9%. Morgan Stanley forecast a bleak 1.6% total. Our forecast is for 3.0% to 3.5% sales growth, though we hope we are erring on the side of caution. We believe that a strong rebound in November’s consumer confidence tallies and a solid Black Friday weekend will be the key to determining whether sales growth ends up falling into the low or high 3% range, though we also think totals outside of that range (on either side) are unlikely.
Cassidy Turley 2014 Retail Forecast | 14
Shopping Center Outlook 2014 National Overview As of the close of Q3 2013, shopping center vacancy across the 60 major markets that we track in the United States stood at 8.7%. This compares to a vacancy rate of 8.8% at the midyear point of 2013 and a vacancy rate of 9.6% one year ago. This is the lowest level of vacancy that the market has recorded since the Great Recession—retail shopping center vacancy in the United States peaked at 10.8% in Q2 2009. But while we are entering into the fourth year of consecutive occupancy gains, recovery in the overall retail sector has lagged behind that of most other commercial real estate property types.
missing in action during the recession and who are only now slowly starting to drive modest levels of demand in the nation’s strongest trade areas. Yet, the community/neighborhood/strip sector has seen occupancy levels increase by over 27.8 million square feet in the past year. Deliveries accounted for nearly 10.4 million square feet of new product over the last twelve months and about 8.8 million square feet of this space was occupied upon delivery. Meanwhile, secondgeneration space accounted for the remaining 19 million square feet of occupancy gains that we tracked over the past four quarters.
Community / Neighborhood / Strip Center Statistics The centers that we track accounted for over 42.2 million square feet of occupancy growth over the past twelve months. Deliveries are also at their highest level since the Great Recession. We have tracked nearly 18 million square feet of new shopping center product that has come online over the past year. For the most part, these numbers have directly translated into growth. As little new construction is taking place on a speculative basis (and virtually no anchor or box space is being built at all without commitments in place before construction), we estimate that roughly 85% of that total—or about 15.3 million square feet-consisted of space that was accounted for immediately upon delivery. Meanwhile, second generation space saw its occupancy levels increase by approximately 26.9 million square feet during the same period.
U.S. Shopping Center Statistics Region
Total Gross Leasable Area
Total Vacant SF
Vacancy %
Last 12 Months Net Absorption
Deliveries
Under Const.
Pacific
935,617,213
65,870,018
7.0%
7,171,157
2,735,839
3,430,094
Mountain
481,232,546
48,245,654
10.0%
7,226,206
2,225,325
1,923,450
Great Plains
293,561,866
27,815,954
9.5%
1,845,339
893,342
509,967
Great Lakes
726,221,168
79,558,885
11.0%
5,603,014
2,125,878
377,120
Texas South Central
671,216,332
60,016,840
8.9%
6,992,374
2,925,033
931,877
193,742,090
22,882,282
11.8%
1,232,022
274,663
7,700
1,186,563,516
104,272,110
8.8%
7,787,178
4,728,968
4,664,727
777,640,354
49,782,019
6.4%
4,422,923
2,057,594
2,540,313
5,265,795,085
458,443,762
8.7%
42,280,213
17,966,642
14,385,248
Southern US Southeast Northeast National
Region
Total Gross Leasable Area
Total Vacant SF
Vacancy %
Last 12 Months Net Absorption
Deliveries
Under Const.
Pacific
637,576,599
52,082,014
8.2%
4,069,478
1,764,279
2,238,167
Mountain
323,619,598
37,813,038
11.7%
4,629,078
769,723
158,006
Great Plains
189,778,773
19,340,926
10.2%
1,512,079
234,180
58,528
Great Lakes
474,378,875
60,279,406
12.7%
3,993,432
1,517,181
318,825 393,746
Texas South Central
468,709,951
49,167,976
10.5%
4,998,628
2,143,312
Southern US
134,853,488
15,591,382
11.6%
1,093,908
138,663
2,400
Southeast
812,083,857
84,787,610
10.4%
4,479,826
2,400,019
2,573,235
Northeast National
484,516,124
38,151,698
7.9%
3,058,895
1,398,701
1,067,813
3,525,517,265
357,214,050
10.1%
27,835,324
10,366,058
6,810,720
Source: Cassidy Turley Research/Costar
Part of the resurgence of this property type has been the fact that food and service related retailers are driving demand currently. While there is some consolidation occurring in the grocery world, new smaller format concepts are more than making up for those losses and neighborhood centers are overwhelmingly where they land. The traditional tenant mix of the neighborhood and community centers have always been grocery or drug anchors, with a mix of restaurants and local services and generally fewer hard goods or big box retailers—which is where much of the contraction in the industry is still taking place. This will only strengthen in the coming year as demand trends will continue to shift towards retailers that don’t compete with the Internet. Meanwhile, the return of new home development in the United States will mean more development—most of it in the form of new neighborhood or strip centers—as retailers return to following rooftops.
Source: Cassidy Turley Research/Costar
Neighborhoods On the Rebound Of course, not all shopping center types have performed the same. The biggest gains over the past year have come from community, neighborhood and strip centers. Vacancy for this product type now stands at 10.1%. This product type was hardest hit during the recession. Many markets entered the downturn with a glut of unanchored strip product to begin with and this particular subtype of shopping center is most dependent upon mom-and-pop retailers—who largely went
Top Malls Continue to Strengthen Despite the fact that many traditional mall tenants are not currently in growth mode, malls continue to enjoy the lowest vacancy levels of any shopping center product type. We are currently tracking a national vacancy rate of just 4.8%. This is down from Q2’s reading of 4.9% and reflects a reduction from 5.8% one year ago. Malls have accounted for just under 1.8 million square feet of net absorption over the past year, while deliveries have added just under 900,000 square feet of new space to the marketplace.
Cassidy Turley 2014 Retail Forecast | 15
Mall properties still account for the lion’s share of the nation’s retail trophy assets and continue to benefit from a marketplace in which Class A space is seeing the highest levels of tenant interest and activity. However, these numbers don’t tell the whole story. Most of the major markets that we track have reported the same trend across the board; Class A space availability is extremely tight and Class B malls are faring well in all but the weakest economies. However, Class B space still faces some challenges in some marketplaces and Class C mall properties in virtually every trade area (including those with the strongest local economies) are where the overwhelming majority of vacancy resides today. Our estimate is that vacancy for Class C malls throughout the United States is closer to the 8% range, while Class A vacancy is now just below the 2% mark.
However, it is critical to note that NCREIF only tracks institutional grade properties—in other words, the cream of the crop. So these numbers are almost entirely driven by core trophy assets—mostly malls. Unfortunately, once you step outside the realm of Class A and Class B+ assets in most markets is where you begin to see the challenges facing the retail landscape. Retailer demand remains all about Class A and, in some markets, Class B space. Beyond that is where most of the nation’s retail shopping center vacancy remains. It is where rental rate growth has largely remained flat or is still actually posting modest declines in some of the countries’ weakest marketplaces. It is where nearly all of the weaknesses for the entire sector are concentrated.
Specialty Centers; All About the Outlets Returns by Property Type
National specialty center vacancy as of the end of Q3 2013 stood at 7.6%. This product classification also includes lifestyle centers, outlet centers and theme retail projects. Vacancy has remained in essentially the same place for the past six months. One year ago, it stood at 8.0%. Over the past year, we have tracked just under 4.8 million square feet of occupancy growth for this property type as roughly 4.5 million square feet of new product (nearly all of it in the form of outlet centers) was delivered to the marketplace.
14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0%
0.0%
Multifamily
Hotel
Industrial
1-Year Returns
Office
Specialty Center Statistics
Retail
10-Year Returns
Region
Source: Cassidy Turley Research, NCREIF
Perhaps a more telling statistic on mall performance comes not from the leasing side of the equation, but from the investment world. The National Council of Real Estate Investment Fiduciaries (NCREIF) recently released a report that showed that retail properties have performed better than any other commercial real estate property type in terms of return on investment. They reported at the close of Q3 that (on an unleveraged basis) retail properties had averaged a 13.2% rate of return over the previous year and had yielded an average of 10.5% over the past decade.
U.S. Mall Statistics Region
Pacific
Total Gross Leasable Area
Total Vacant SF
Vacancy %
Last 12 Months Net Absorption
Deliveries
Under Const.
113,370,244
2,905,056
2.6%
724,221
345,838
154,408
Mountain
57,015,445
2,883,647
5.1%
321,096
38,331
1,514,000 29,789
Great Plains
41,593,229
2,575,383
6.2%
134,006
56,410
Great Lakes
95,688,878
7,583,729
7.9%
(77,801)
6,500
-
Texas South Central
75,423,970
3,565,354
4.7%
324,805
6,200
-
Southern US
-
-
18,957,974
2,886,430
15.2%
(226,842)
Southeast
148,052,408
6,097,252
4.1%
343,397
194,987
Northeast
117,021,531
3,312,614
2.8%
242,214
227,260
747,500
National
667,123,679
31,809,465
4.8%
1,785,096
875,526
2,445,697
-
Source: Cassidy Turley Research/Costar
Total Gross Leasable Area
Total Vacant SF
Vacancy %
Last 12 Months Net Absorption
Under Const.
Deliveries
Pacific
33,988,970
2,578,496
7.6%
558,964
567,795
922,422
Mountain
13,404,050
1,094,960
8.2%
1,050,051
1,083,867
245,585
Great Plains
10,170,540
1,302,454
12.8%
405,028
588,183
421,650
Great Lakes
22,144,834
1,189,997
5.4%
131,379
4,500
3,895
Texas South Central
20,783,225
1,409,055
6.8%
682,444
397,345
6,360,546
1,170,785
18.4%
(160,986)
41,593,928
2,918,281
7.0%
1,472,487
19,802,872
1,098,340
5.5%
632,264
409,000
330,000
168,248,965
12,762,368
7.6%
4,771,631
4,507,077
3,166,633
Southern US Southeast Northeast National
1,456,387
1,243,081
Source: Cassidy Turley Research/Costar
Higher end lifestyle centers continue to do well and hold their own competing against Class A mall projects. However, there is no question that this product type was overbuilt in some trade areas. For years there has been a running joke in development circles that if you aren’t sure how to position your new project, just throw in a fountain and you can call it a lifestyle center. And this may illustrate one of the challenges that this product type faces. The highest end product accounts for some of the nation’s best performing trophy centers, but this sector of the marketplace was overbuilt heading into the downturn. As a result, some weaker projects have taken a lot longer to rebound. Thanks to the growing impact of e-commerce, many of the apparel and hard goods retailers who traditionally make up the tenant mix for lifestyle centers have slowed or reversed growth. Most absorption for this product type now is coming from dining or food related concepts
Cassidy Turley 2014 Retail Forecast | 16
(higher end grocers like Whole Foods are increasingly part of the standard tenant mixes at these centers). But if performance for lifestyle centers has been a mixed bag, demand remains white-hot for outlet center space. This is one of the few product types where we have seen developers build speculatively. In general, most of these projects lease-up before construction is done. Discount and outlet concepts are one of the few areas where we are seeing a lot of apparel players who are otherwise in no or slow growth mode looking to grow. For example, while Nordstrom will likely build no more than one full service department store over the next year, they are looking to expand their off-price Nordstrom Rack concept by as many as 60 stores over the next two years. Likewise, the recent acquisition of Nieman Marcus will probably result in increased expansion—not necessarily for the chain’s namesake concept but for its off-price Last Call stores.
Adaptation Keeping the Power in Power Centers If you look at it from a demand perspective, it would appear that power centers would be the product type in greatest peril. Power centers are all about big box retail, but nearly every single category big box user type is shrinking. This includes categories that are in sharp consolidation mode due to competition with the Internet (bookstores, consumer electronics, office supplies, etc.). Most of these chains are not only closing stores but also slashing footprints. But it also includes some strong categories like pet supplies—where most chains are generally in modest growth mode—but more are experimenting with smaller concepts of 10,000 square feet or less. The fact is that retailers are shrinking their box presence overall, whether we are talking about grocery stores, home improvement or just about any other category. This is the twilight of the big box age.
Power Center Statistics Region
Total Gross Leasable Area
Total Vacant SF
Vacancy %
Last 12 Months Net Absorption
Deliveries
Under Const.
150,681,400
8,304,452
5.5%
1,818,494
Mountain
87,193,453
6,454,009
7.4%
1,225,981
333,404
Great Plains
52,019,324
4,597,191
8.8%
(205,774)
14,569
-
Great Lakes
134,008,581
10,505,753
7.8%
1,556,004
597,697
54,400
Texas South Central
106,299,186
5,874,455
5.5%
986,497
378,176
538,131
Pacific
115,097 5,859
33,570,082
3,233,685
9.6%
525,942
136,000
5,300
Southeast
184,833,323
10,468,967
5.7%
1,491,468
677,575
848,411
Northeast
156,299,827
7,219,367
4.6%
489,550
National
904,905,176
56,657,879
6.3%
7,888,162
Southern US
22,633 Source: 2,217,981
395,000
mid-size boxes (and larger), though due to the cost of converting space for this use, there is an equally strong argument that this is more about adaptive re-use. Regardless, against this backdrop, one would assume that power centers were taking it on the chin. But they are holding up well. And this isn’t just because the best operators have taken creative approaches to leasing and have been willing to invest in expensive demising and upgrades of their space (which they have). But it is also because the very nature of power center space has changed. Call them power neighborhood centers or regional neighborhood centers or whatever you like. The fact is that the old paradigm of just throwing up some boxes, leasing to a few regional players and hoping for a strong 10-mile trade area is dead. The new paradigm for power centers is about straddling both the power and community/ neighborhood center worlds. Despite this, the power centers that we track are reporting vacancy (as of Q3 2013) of just 6.3%. This is down from a reading of 6.4% in Q2 and 7.0% a year ago. We’ve tracked just under 7.9 million square feet of occupancy growth for this product type over the past twelve months. During that same time, developers added nearly 900,000 square feet of new product to the marketplace. The question, of course, is with big box demand shrinking (both in terms of retailer demand for locations and actual footprint), why are power centers continuing to perform so well? Adaptation is the answer. While there remain disparities in performance within this sector that are nearly all based on class, there are a few common threads that we have seen with the best performing power centers. The first is that these landlords were not afraid to spend money to demise larger, vacant boxes a few years back when big box vacancy became a major issue. Those who made the investment were able to chop up larger space and land new, more nimble junior box users. The second major trend has to do with embracing food users, particularly grocery tenants. The addition of grocery components makes perfect sense—small format grocery players have proven to be excellent tenants for power centers looking to backfill vacant Circuit City locations. But this play isn’t just about getting empty space filled—it is about repositioning. The idea is simple; power centers used to be all about big box retailers with regional draws. Add some grocery components and now you have hedged your bets with both regional and local draws.
1,962,198
Source: Cassidy Turley Research/Costar
The only exception to the rule would be sporting goods—which remains robustly in growth mode both in terms of units and footprints—due largely to a mix of successful experiential retail and limited competition from online sales (particularly when it comes to firearms). One could also argue that health clubs fit in here as well. Larger concepts have backfilled a substantial amount of vacant
The new power center is really a hybrid neighborhood center. Nearly all of the new development that we are tracking for this product type includes significant commitments in place from food anchors, as opposed to the old host of big box users. Target and Walmart Superstores, in particular, have proven to be extremely attractive tenants to land. Both offer strong neighborhood and regional draws in terms of shoppers, but they both also prove to be attractive anchors for inline tenants to follow.
Cassidy Turley 2014 Retail Forecast | 17
Construction Returning to Marketplace From 2002 to 2008 developers added nearly 140 million square feet of new shopping center space to the marketplace. Those numbers dropped precipitously during the Great Recession. From 2009 to 2012 we tracked just 23.2 million square feet of new product that was delivered. Mostly this was in the form of additional pad buildings at existing shopping centers, though outlet centers saw strong growth and there were a couple of regional malls—long in the works from before the downturn—that were delivered as well. Yet, in the past year, we have tracked nearly 18 million square feet of new shopping space that was delivered to the marketplace. The development pipeline, so far, has overwhelmingly been about infill urban projects (whether new or redevelopment). But with the return of the nation’s housing market and new home construction expected to pick up significantly in 2014, we anticipate that new construction levels will pick up further next year. Of the roughly 18 million square feet of new product delivered over the past year, nearly 60% of that has been at existing centers where expansions or redevelopment took place. In terms of product types, community/neighborhood/strip centers accounted for the lion’s share of activity. We tracked just under 10.4 million square feet of product that has been delivered over the past year, accounting for just under 30% of all new construction. Specialty centers accounted for just over 4.5 million square feet of new product—nearly all of which was in the form of outlet centers—which remain white hot. Malls accounted for just under 2.5 million square feet of new space, while the nation’s power center inventory grew by just under two million square feet.
U.S. Shopping Center Development Shopping Center Deliveries
MSF 2002 – 2008 30
Millions, SF
25
20.9
20.7
19.5
20
MSF 2009 – 2012
25.5
24.1
18.4
17.7
15
M SF Last 12 Months
19.3
14.2
14.0
10
8.6 5.1
5 0
3.4
3.2
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013 YTD
Source: Cassidy Turley Research/Costar
We are now tracking 14.4 million square feet of new shopping space under construction in the United States. This is the largest amount of new space in the development pipeline that we have tracked since early 2009 when the pipeline was still emptying following the onset of the recession in September 2008. Once again, the community/ neighborhood/strip category leads the pack with over 6.8 million square feet of space under development. Specialty centers follow with nearly 3.2 million square feet of product under construction, while malls account for just over 2.4 million square feet of planned deliveries. Lastly, we are tracking just under two million square feet of
new power center development. These projects have varying delivery timelines over the next six quarters. The Southeast U.S. leads the way with just under 4.7 million square feet of space under development. The Pacific region follows with 3.4 million square feet. There is just over 2.5 million square feet of new development underway throughout the Northeast, while the Mountain region has roughly 1.9 million square feet of new projects in the works. The Great Lakes, Great Plains, Texas and South U.S. regions all have less than one million square feet of active construction projects in their respective pipelines. Proposed projects are up as well. The Directory of Major Malls is now tracking 36 major projects in the planning stages throughout the U.S. that are one million square feet in size or greater. The majority of these are mall or lifestyle center projects and a substantial number of them are mixed-use in nature. But despite, the uptick in new development activity, we have yet to see many developers willing to build speculatively and we don’t expect that to change anytime soon. This certainly won’t be the case in terms of anchor tenancy anytime within the next few years—if not throughout the entire foreseeable future. The building pattern for the next decade is likely to be based upon secure commitments in place to anchors, minimal speculative building on inline space and delivery in phases. Retail fundamentals may be improving, and the construction pipeline growing, but don’t expect much in the way of risk taking any time soon.
Class Acts Rule the Roost Overall retail vacancy has been on a downward trajectory going on four years now, but declines in vacancy have been relatively slow with changes measured more in basis than percentage points. Of course, recovery has been uneven both geographically and across product types. But across every market that we track and across every shopping center type we have also seen sharp divisions in performance on the basis of class. In virtually every market that we track, we found that retailer demand for Class A space was extremely robust and this held true in even the most challenged local economies. Of course, this is nothing new. Recovery started with Class A—even with a diminished pool of actively growing tenants this is where retailers look first for growth. Retailer demand has been on the upswing for four years now and though this demand has only increased incrementally each year, in a marketplace where there has been little in the way of new construction Class A options are now few and far between in most markets. Demand for quality space has now spilled over to Class B product in most major U.S. markets with vacancy for these shopping centers falling and rents finally starting to show some signs of growth (rents have been on the upswing for Class A product in most trade areas for well over two years now). But this trend has yet to spread to many secondary and tertiary markets—particularly in portions of the Midwest and South. It also hasn’t, and likely won’t, spread to Class C product—which will continue to remain challenged even in some of the nation’s tightest vacancy marketplaces. Cassidy Turley 2014 Retail Forecast | 18
Directory of Major Malls – Top U.S. 20 Proposed Shopping Centers Project
Location
Shopping Center Type
Mixed Use?
Gross Leasable Area
Anchors
Developer
Mall at Luxury Point
Sayreville, NJ
Lifestyle Specialty
Yes
2,600,000
Bass Pro Shops
O'Neill Properties Group
Copper Ridge at Northgate
Colorado Springs, CO
Lifestyle Specialty
Yes
2,000,000
Bass Pro Shops
Northgate Properties
Berry Farms
Franklin, TN
Lifestyle Specialty
No
1,800,000
Boyle Investment Company
Okatie Crossing
Bluffton, SC
Lifestyle Specialty
No
1,600,000
Horne Properties
The Shops at East Prairie
Ames, IA
Lifestyle Specialty
No
1,500,000
Wolford Development
Konterra Town Center East
Laurel, MD
Lifestyle Specialty
Yes
1,500,000
Konterra Realty
Parkside Town Commons
Raleigh-Cary, NC
Lifestyle Specialty
Yes
1,500,000
Target, O2 Fitness, Frank Theatres
Kite Realty Group
The Falls
Bristol, VA
Lifestyle Specialty
No
1,500,000
Cabela’s
Interstate Realty Advisors
Columbia Crossing
Columbia, IL
Lifestyle Specialty
Yes
1,500,000
Seaport Square
Boston, MA
Lifestyle Specialty
No
1,500,000
The Shops at Summerlin Centre
Las Vegas, NV
Super Regional Center
Yes
1,500,000
Waller Town Center
Waller, TX
Lifestyle Specialty
No
1,400,000
Cullinan Properties
Ka Makana Ali'i
Kapolei, HI
Lifestyle Specialty
No
1,400,000
DeBartolo Development
The Commons at 7th Standard
Bakersfield, CA
Super Regional Center
Yes
1,385,000
Bidart Bros.
The Railyards
Sacramento, CA
Lifestyle Specialty
No
1,300,000
Inland American Retail Mgmt.
Estrella Falls Mall
Goodyear, AZ
Super Regional Center
Yes
1,300,000
Macerich
The Triangle
Murrieta, CA
Lifestyle Specialty
No
1,300,000
Domenigoni Barton Properties
The Pinnacle
Bristol, TN
Super Regional Center
Yes
1,300,000
Delta Shores
Sacramento, CA
Lifestyle Specialty
No
1,300,000
The Bridges at Mint Hill
Mint Hill, NC
Lifestyle Specialty
No
1,500,000
The overwhelming majority of shopping center vacancy that exists today throughout the United States is in Class B or C product. Even in the most economically challenged markets where the overall metrics indicate flat overall asking rents, Class A rents are climbing by as much as 5% or more annually. In mid-performing markets we have seen Class A rents climb by as much as 10% and we have seen increases of more than that in some of the hottest trade areas. Until enough new product is delivered to the marketplace to sate demand, expect this trend to continue. The shortage of Class A space is now starting to discourage growth in some trade areas. For example, we know of a number of retailers who have slowed or postponed planned expansion in the San Francisco Bay Area as they patiently wait for quality space to become available. We have heard similar anecdotal information from multiple markets on both coasts (demand remains white hot in Texas, however, because developers never fully stopped building here during the recession space options remains plentiful). This has proven beneficial to many trade areas that came late to the recovery but that are blossoming now—particularly for a number of cities in the Mountain region. Phoenix and Las Vegas were hammered by the recession but have seen retail demand and activity radically improve in the past 18 months. Denver is white-hot in terms of demand while Salt Lake City is also seeing strong activity. In recent years, our review of top producing trade areas (in terms of retailer demand and occupancy growth) have consistently included
G.J. Grewe WS Development Dillard’s, Macy’s
Bass Pro Shops, Belk, Regal Cinemas
Howard Hughes
Johnson Commercial Development Merlone Geier
Belk
Howard Hughes
metros like Washington DC, New York, San Francisco, San Jose, Boston, Houston, Dallas and San Diego. But thanks to economic recovery picking up in a number of major secondary markets and the fact that retailers are now finding little room to grow in many of these markets, we have seen a number of upstart trade areas surpassing these cities in terms of actual occupancy growth.
Looking Ahead Retailer demand next year will still be primarily about the economy or the Internet. Discounters and luxury players will be active but just as the middle class consumer will still largely be in frugality mode, midpriced hard goods players will largely be inactive in terms of bricks and mortar growth. Meanwhile, food related users (restaurants and grocery) and service users will remain extremely active.
“ The overwhelming majority of shopping center vacancy that exists today throughout the United States is in Class B or C product. Even in the most economically challenged markets where the overall metrics indicate flat overall asking rents, Class A rents are climbing by as much as 5% or more annually. In mid-performing markets we have seen Class A rents climb by as much as 10% and we have seen increases of more than that in some of the hottest trade areas. Until enough new product is delivered to the marketplace to sate demand, expect this trend to continue.”
Cassidy Turley 2014 Retail Forecast | 19
Though there will be closures and consolidations among a number of major chains, large scale bankruptcies will be fewer overall than what we saw this year or last. Space givebacks will be down slightly while demand will be up slightly. Neighborhood centers will see the greatest level of improvement; malls the least—but a rising tide will lift all boats.
“ …the most important economic trend impacting mom-andpop demand is the return of housing appreciation. Home equity lines of credit are the initial line of funding for most (an estimated 75%) of these start-ups. Though the numbers will be tepid to begin with, we will see small business creation gradually accelerating over the next 24 months.”
The return of the housing market will remain the single greatest overriding economic story and the one with the most significance for retail. Rising home values will continue, though not at the whiplash pace of the past 18 months. Instead, we will begin to see housing values in most markets falling into more sustainable levels of growth. New home construction will ramp up; this will help to drive lower unemployment, greater wage growth and improved consumer spending. The real impact might not be clearly felt until 2015, but it will be felt. Shopping Centers (All Types)
Vacancy Rate 3Q 2013
Vacancy Rate 2Q 2013
Vacancy Rate 3Q 2012
1.
San Francisco, CA (Includes SF Peninsula)
3.0%
3.0%
3.0%
2.
Hawaii
3.4%
3.5%
3.6%
3.
Pittsburgh, PA
4.8%
4.7%
5.5%
4.
New York Metro (NYC, Long Island, Southern CT)
4.9%
4.9%
5.1%
5.
San Jose, CA
5.3%
5.4%
5.7%
6.
Boston, MA
5.5%
5.2%
5.3%
7.
Salt Lake City, UT
5.5%
5.3%
5.9%
8.
San Diego, CA
5.6%
5.2%
5.8%
9.
Oakland/East Bay, CA
5.6%
5.8%
5.8%
10.
Orange County, CA
5.6%
5.8%
5.8%
11.
Washington DC
5.7%
5.7%
5.6%
12.
Los Angeles, CA
5.9%
5.7%
6.0%
13.
Santa Barbara, CA
6.2%
6.1%
6.2%
14.
Des Moines, IA
6.6%
6.5%
7.1%
15.
Baltimore, MD
6.7%
6.5%
7.2%
16.
Austin, TX
6.7%
6.6%
7.0%
17.
Northern New Jersey
6.8%
6.7%
7.2%
18.
Minneapolis/St. Paul, MN
7.0%
7.0%
7.6%
19.
Miami, FL
7.0%
6.9%
7.1%
20.
Seattle, WA
7.2%
7.0%
7.6%
21.
Raleigh/Durham, NC
7.3%
7.2%
7.0%
22.
Charleston, SC
7.3%
6.9%
6.9%
23.
Denver, CO
7.7%
7.6%
8.3%
24.
New Orleans, LA
7.8%
7.6%
8.8%
25.
Portland, OR
7.9%
7.7%
8.1%
Most importantly, the return of increasing home values will translate into stronger consumer spending, less frugality among middle-class shopper and a resurgence of small business creation. In terms of retailer demand, mom-and-pop retail has been the missing link. These are the bread-and-butter tenant type for neighborhood and strip retail centers, but they also certainly help to increase the pool of demand for all retail space. While we have only just begun to see some signs of life from this sector (after nearly six years), the action has largely been limited so far to the nation’s strongest local economies. That is because that is where we see the greatest strength in home values. This is why the most important economic trend impacting mom-and-pop demand is the return of housing appreciation. Home equity lines of credit are the initial line of funding for most (an estimated 75%) of these start-ups. Though the numbers will be tepid to begin with, we will see small business creation gradually accelerating over the next 24 months.
Lowest Vacancy Markets
San Francisco
Hawaii
Pittsburgh
3.0% 3.4% 4.8%
Look for continued incremental declines in overall shopping center vacancy heading into 2014. We anticipate that overall vacancy will fall to near the 7.9% mark by the close of next year, despite the fact that new construction will pick up considerably and 2014 will see many of the issues surrounding the shortage of Class A space alleviated.
Source: Cassidy Turley Research/Costar
Cassidy Turley 2014 Retail Forecast | 20
Regional Outlooks While there have been a few dynamics that have changed since our last report, there have been a number of trends that haven’t. Bifurcation by class is one of them. Slow growth is another. The good news here is that of 60 total markets that we track, only 17 posted increased vacancy levels over the past year. Of those, five still have vacancy rates of 8.0% or less and some of these trade areas are markets where some of the most robust growth in recent years has taken place. Vacancy in Boston now stands at 5.5% (up from last year’s reading of 5.3%), but despite this uptick this remains one of the hottest retail markets in the nation. The same holds true of Washington DC where vacancy has climbed from 5.6% to 5.7% over the past year. Philadelphia vacancy has ticked up from 7.7% to 8.0%. In each of these three cases, retailer demand and leasing activity has remained strong but have been outpaced by the resurgence in new development that is taking place in these trade areas.
Highest Vacancy Markets
Reno
Memphis
Birmingham
14.9% 13.9% 13.7% In terms of overall vacancy, the San Francisco shopping center market led the way with just 3.0% vacancy—though it is important to remember that the majority of this city’s inventory is in the form of freestanding retail or street-level retail in mixed-use buildings— segments of the marketplace that these numbers do not cover. Other major markets in the top ten include; Hawaii (3.4%), Pittsburgh (4.8%), New York City Metro (4.9%), San Jose (5.3%), Boston (5.5%), Salt Lake City (5.5%), San Diego (5.6%), Oakland/East Bay (5.6%) and Orange County CA (5.6%). Keep in mind, that these are the top U.S. markets in terms of vacancy levels—not necessarily occupancy growth, though nearly all of these have posted strong positive net absorption trends in the past year. Nor do these numbers measure demand. For example, demand levels remain white hot in Houston, Dallas and are very strong in a number of other Texas markets, yet no Lone Star State metros made our top ten. This is because throughout the recession, the Texas economy was the best performing in the United States and was one of the few places where retail development has continued to take place. While Texas markets have continued to post among the best occupancy
growth numbers and highest levels of demand of any in the United States, many have also experienced considerable levels of new development. And so while activity and demand are both strong in most major metros there, vacancy levels are also generally elevated. Shopping Centers (All Types)
Vacancy Rate 3Q 2013
Vacancy Rate 2Q 2013
Vacancy Rate 3Q 2012
26.
Philadelphia, PA
8.0%
7.7%
7.7%
27.
Little Rock, AK
8.1%
7.2%
6.7%
28.
San Antonio, TX
8.1%
7.7%
9.0%
29.
Richmond, VA
8.4%
8.4%
8.9%
30.
Houston, TX
8.5%
8.4%
8.8%
31.
Tulsa, OK
8.6%
8.3%
8.6%
32.
Hampton Roads, VA
8.7%
8.4%
7.9%
33.
Tucson, AZ
9.3%
9.1%
10.1%
34.
Louisville, KY
9.6%
9.3%
9.1%
35.
Chicago, IL
9.6%
9.5%
9.8%
36.
Orlando, FL
9.6%
9.7%
9.8%
37.
Tampa, FL
9.7%
9.4%
9.2%
38.
Indianapolis, IN
10.0%
9.7%
10.1%
39.
Albuquerque, NM
10.0%
9.7%
10.1%
40.
Dallas, TX
10.2%
10.0%
10.6%
41.
Milwaukee/Madison, WI
10.3%
9.9%
10.7%
42.
Mobile, AL
10.3%
8.6%
7.9%
43.
Kansas City, MO
10.5%
10.1%
10.4%
44.
Charlotte, NC
10.5%
10.1%
10.2%
45.
Oklahoma City, OK
10.6%
10.3%
11.0%
46.
Inland Empire, CA
10.6%
10.3%
10.5%
47.
Nashville, TN
10.6%
10.7%
11.6%
48.
Jacksonville, FL
10.8%
10.3%
11.1%
49.
St. Louis, MO
10.9%
10.9%
11.1% 11.5%
50.
Sacramento, CA
10.9%
10.9%
51.
Omaha, NE
11.7%
10.6%
9.5%
52.
Las Vegas, NV
11.8%
11.1%
12.2%
53.
Cincinnati/Dayton, OH
11.9%
11.8%
12.3%
54.
Phoenix, AZ
12.2%
12.1%
13.6%
55.
Detroit, MI
12.2%
11.6%
12.0%
56.
Atlanta, GA
12.2%
12.1%
12.6%
57.
Cleveland, OH
12.6%
12.1%
12.2%
58.
Birmingham, AL
13.7%
13.4%
13.6%
59.
Memphis, TN
13.9%
13.8%
14.4%
60.
Reno, NV
14.9%
13.8%
14.5%
Source: Cassidy Turley Research/Costar
Rounding out our top twenty markets in terms of vacancy, in rankings eleven through 20 are; Washington DC (5.7%), Los Angeles (5.9%), Santa Barbara (6.2%), Des Moines (6.6%), Baltimore (6.7%), Austin (6.7%), Northern New Jersey (6.8%), Miami (7.0%) and Seattle (7.2%).
Cassidy Turley 2014 Retail Forecast | 21
Mid-performing markets in terms of vacancy (rankings 21 through 40 in our survey) include a number of Southern markets where activity is on the upswing (Houston and New Orleans are both extremely hot markets), as well as a few Western trade areas where improvement has been steadily accelerating over the past few months (Denver and Seattle). This portion of our national vacancy survey includes; Raleigh/Durham (7.3%), Charleston SC (7.3%), Denver (7.7%), New Orleans (7.8%), Portland (7.9%), Philadelphia (8.0%), Little Rock (8.1%), San Antonio (8.1%), Richmond (8.4%), Houston (8.5%), Tulsa (8.6%), Hampton Roads (8.7%), Tucson (9.3%), Louisville (9.6%), Chicago (9.6%), Orlando (9.6%), Tampa (9.7%), Indianapolis (10.0%), Albuquerque (10.0%) and Dallas (10.2%).
Largest Decrease in Vacancy (3Q 2013 vs 3Q 2012)
Mobile
Omaha
Little Rock
10.3% 11.7% 8.1% There are starkly different storylines present in the numbers of the bottom 20 markets in our survey. Eight of them have seen vacancy creep up over the past year—half of these trade areas had been posting declining levels of vacancy until recently. In nearly every case, sluggish occupancy growth combined with minimal levels of new development conspired to drive vacancy levels higher. Yet, a number of the markets in our bottom 20 have not only posted declining levels of vacancy in the past year, but strong levels of occupancy growth as well. The common thread here is that these trade areas remain fragile with Class B and C product continuing to face significant challenges for the most part. Rounding out our national vacancy survey at rankings 41 through 60 were; Milwaukee (10.3%), Mobile (10.3%), Kansas City (10.5%), Charlotte (10.5%), Oklahoma City (10.6%), Inland Empire (10.6%), Nashville (10.6%), Jacksonville (10.8%), St. Louis (10.9%), Sacramento (10.9%), Omaha (11.7%), Las Vegas (11.8%), Cincinnati (11.9%), Phoenix (12.2%), Detroit (12.2%), Atlanta (12.2%), Cleveland (12.6%), Birmingham (13.7%), Memphis (13.9%) and Reno (14.9%).
Largest Increase in Vacancy (3Q 2013 vs 3Q 2012)
Phoenix
New Orleans
Nashville
12.1% 7.8% 10.6% The markets at the bottom of our survey are a mix of markets geographically; Midwestern, southern and a few of the western markets hardest hit by the housing market collapse. While most of these markets are already showing signs of improvement statistically, we anticipate improvement even in those trade areas where vacancy levels increased over the past year. In our recent surveying of brokers in the marketplace, even markets like Detroit and Cleveland reported increasing retailer demand and tight conditions for premium space. Most of these markets are only now starting to see improving conditions for Class B product, but the process has begun. Of course, the real challenge for many of these trade areas is the overhang of Class C space in the market—which, in most cases, will not be going away and will continue to negatively impact overall numbers. Still, barring any unforeseen shocks to the system, the current pace of occupancy growth should continue to improve heading into 2014.
Cassidy Turley 2014 Retail Forecast | 22
Statistical Overview Pacific Summary HAWAII
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
3.6%
3.8%
3.7%
40,429
228,565
179,388
50,747
$32.20
184,302
2.8%
2.8%
3.5%
5,183
47,115
-
-
$36.35
790,201
121,279
15.3%
15.4%
17.3%
145
15,199
-
-
$39.35
Strip
1,564,849
111,501
7.1%
6.9%
5.8%
(4,153)
(20,959)
-
-
$23.84
Malls
3,750,236
-
0.0%
0.7%
0.7%
25,223
26,288
-
15,558
$47.63
27,939,791
963,672
3.4%
3.5%
3.6%
66,827
296,208
179,388
66,305
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
73,509,676
8,440,298
Power/Regional Centers
20,581,685
Power/Regional Centers
Current Qtr Total SF Vac
Vac %
15,134,224
546,590
6,700,281
Last 12 Months
Prior Yr
Community/Neighborhood
Total GLA
Historical Vacancy Prior Qtr
Shopping Centers
Specialty Centers
All Shopping Centers
INLAND EMPIRE, CA*
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
11.5%
11.5%
11.4%
55,527
68,842
196,172
400,574
$15.61
1,795,608
8.7%
9.3%
10.3%
124,070
321,967
4,500
-
$18.16
6,179,444
728,738
11.8%
12.6%
11.4%
51,792
(17,889)
4,990
-
$20.21
Strip
14,112,273
1,704,086
12.1%
11.9%
12.1%
(968)
81,046
90,445
-
$15.84
Malls
12,463,786
764,798
6.1%
6.2%
6.8%
15,762
234,593
165,750
-
$39.86
126,846,864
13,433,528
10.6%
10.3%
10.5%
246,183
688,559
461,857
400,574
Vac %
Historical Vacancy
Total GLA
Current Qtr Total SF Vac
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
118,082,427
7,934,037
35,277,462
Shopping Centers
Specialty Centers
All Shopping Centers
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
*Riverside & San Bernardino Counties, CA
LOS ANGELES, CA
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
6.7%
6.7%
7.0%
29,127
395,760
67,962
167,218
$21.82
1,548,530
4.4%
4.7%
5.2%
116,898
284,235
13,472
-
$23.69
7,412,940
411,163
5.5%
4.0%
4.2%
16,724
33,097
135,000
200,000
$40.02
Strip
38,372,329
2,908,626
7.6%
7.8%
8.0%
96,627
292,168
124,042
91,614
$22.93
Malls
29,587,724
597,252
2.0%
2.3%
2.6%
96,442
177,696
4,088
-
$20.84
228,732,882
13,399,608
5.9%
5.7%
6.0%
355,818
1,182,956
344,564
458,832
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
36,301,791
2,036,257
Power/Regional Centers
10,332,576
Specialty Centers
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
OAKLAND/EAST BAY, CA
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
5.6%
6.2%
6.1%
222,609
399,599
244,192
80,000
$20.83
509,467
4.9%
6.2%
7.2%
134,132
235,219
-
-
$16.89
1,934,567
56,652
2.9%
2.9%
3.4%
-
398,327
402,589
147,214
$30.00
Strip
6,071,429
518,428
8.5%
8.4%
8.2%
(3,251)
14,953
23,802
16,588
$19.77
Malls
7,889,741
393,549
5.0%
5.0%
4.4%
9
(45,446)
-
-
$25.39
62,530,104
3,514,353
5.6%
5.8%
5.8%
353,499
1,002,652
670,583
243,802
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
54,867,423
3,641,676
Power/Regional Centers
11,744,315
Shopping Centers
All Shopping Centers
ORANGE COUNTY, CA
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
6.6%
6.9%
6.7%
161,852
61,166
13,501
-
$22.59
666,307
5.7%
5.7%
6.3%
(122)
68,694
-
-
$28.33
4,814,056
559,357
11.6%
11.8%
11.3%
10,564
(16,095)
-
460,208
$24.42
Strip
11,639,376
754,103
6.5%
6.6%
8.2%
20,204
205,578
11,774
-
$21.64
Malls
14,046,168
359,708
2.6%
2.7%
2.9%
15,069
70,019
16,000
14,600
$37.09
All Shopping Centers
97,111,338
5,981,151
6.2%
5.9%
6.2%
207,567
389,362
41,275
474,808
Shopping Centers
Specialty Centers
Cassidy Turley 2014 Retail Forecast | 23
Statistical Overview Pacific Summary PORTLAND, OR Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
43,284,699
3,534,696
Power/Regional Centers
14,075,507
Specialty Centers
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
8.2%
8.3%
8.7%
84,607
297,347
54,485
-
$15.32
934,242
6.6%
6.0%
6.5%
(25,732)
171,915
203,633
6,969
$17.68
2,101,207
32,964
1.6%
1.3%
3.1%
(4,803)
31,563
-
-
$32.39
Strip
8,835,479
1,113,824
12.6%
12.7%
12.7%
16,365
19,844
9,039
-
$15.93
Malls
6,768,604
326,971
4.8%
5.1%
4.7%
17,599
(6,922)
-
-
$15.17
75,065,496
5,942,697
7.9%
7.7%
8.1%
88,036
513,747
267,157
6,969
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
43,758,623
5,048,153
Power/Regional Centers
15,096,979
Shopping Centers
All Shopping Centers
SACRAMENTO, CA
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
11.5%
11.9%
12.8%
148,198
564,344
20,300
409,827
$16.40
1,211,406
8.0%
10.1%
10.9%
328,816
465,427
33,955
109,497
$19.47
3,389,584
385,161
11.4%
11.2%
11.4%
(5,728)
22,219
25,216
-
$21.25
Strip
10,663,945
1,715,890
16.1%
16.0%
15.7%
(7,432)
(37,267)
5,000
-
$14.67
Malls
4,587,805
99,301
2.2%
2.2%
2.2%
-
-
-
21,000
77,496,936
8,459,911
10.9%
10.9%
11.5%
463,854
1,014,723
84,471
540,324
Vac %
Historical Vacancy
Total GLA
Current Qtr Total SF Vac
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
Community/Neighborhood
44,809,009
3,276,516
Power/Regional Centers
12,397,567
Shopping Centers
Specialty Centers
All Shopping Centers
SAN DIEGO, CA
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
7.3%
7.0%
7.6%
44,482
542,771
439,630
14,932
$21.51
444,550
3.6%
3.6%
3.8%
5,007
37,557
6,000
5,600
$26.47
2,189,818
99,254
4.5%
4.3%
5.6%
(5,910)
22,509
-
115,000
$22.53
Strip
10,828,690
792,569
7.3%
7.6%
8.1%
33,888
93,891
4,881
3,900
$19.34
Malls
12,513,425
27,685
0.2%
0.2%
1.0%
-
251,313
160,000
-
$36.00
All Shopping Centers
82,738,509
4,640,574
5.6%
5.2%
5.8%
77,467
948,041
610,511
139,432
Vac %
Shopping Centers
Specialty Centers
SAN FRANCISCO, CA* Shopping Centers
Total GLA
Current Qtr Total SF Vac
Community/Neighborhood
7,644,197
328,781
Power/Regional Centers
3,670,796
Specialty Centers
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
4.3%
4.4%
3.7%
9,826
(47,182)
-
270,000
$27.68
53,299
1.5%
1.8%
3.0%
11,534
57,251
-
-
$29.68
1,484,246
34,965
2.4%
2.5%
3.3%
2,579
13,845
-
-
$60.00
Strip
1,909,880
63,387
3.3%
3.4%
5.1%
1,319
34,183
-
-
$28.27
Malls
3,871,160
69,991
1.8%
2.0%
1.9%
5,671
2,670
-
96,000
$30.00
18,580,279
550,423
3.0%
3.0%
3.0%
30,929
60,767
-
366,000
Total GLA
Current Qtr Total SF Vac
Vac %
25,437,908
1,632,261
6,581,029
All Shopping Centers
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
*Includes San Francisco and San Mateo Counties
SAN JOSE, CA
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
6.4%
6.8%
6.9%
103,095
245,760
142,941
356,560
$27.38
368,801
5.6%
6.8%
7.4%
80,664
120,303
-
-
$33.03
715,372
-
0.0%
0.0%
2.3%
-
16,600
-
-
Strip
5,613,855
319,948
5.7%
5.7%
6.9%
(2,424)
97,543
33,276
-
$25.51
Malls
7,587,949
111,465
1.5%
1.4%
1.5%
(5,262)
5,436
-
-
$33.00
45,936,113
2,432,475
5.3%
5.4%
5.7%
176,073
485,642
176,217
356,560
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 24
Statistical Overview Pacific Summary SANTA BARBARA, CA Shopping Centers
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
5,917,025
507,625
Power/Regional Centers
2,533,490
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
8.6%
8.4%
8.9%
(12,113)
21,761
-
-
$18.11
30,563
1.2%
1.5%
1.8%
6,280
15,622
-
-
$36.80
-
-
0.0%
0.0%
0.0%
-
-
-
-
$-
Strip
960,025
45,952
4.8%
5.1%
4.4%
3,437
(3,697)
-
-
$20.22
Malls
-
-
0.0%
0.0%
0.0%
-
-
-
-
$-
9,410,540
584,140
6.2%
6.1%
6.2%
(2,396)
33,686
-
-
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
45,889,354
3,932,359
Power/Regional Centers
11,689,713
Specialty Centers
All Shopping Centers
SEATTLE, WA
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
8.6%
8.7%
9.2%
108,158
391,923
95,049
376,207
$17.58
557,377
4.8%
4.9%
6.2%
11,965
165,081
-
-
$23.25
2,977,535
148,963
5.0%
5.0%
6.3%
-
39,589
-
-
$24.63
Strip
12,368,113
1,174,451
9.5%
9.1%
10.4%
(51,543)
121,539
8,400
-
$18.17
Malls
10,303,646
154,336
1.5%
1.5%
1.6%
(18)
8,574
-
7,250
$29.53
All Shopping Centers
83,228,361
5,967,486
7.2%
7.0%
7.6%
68,562
726,706
103,449
383,457
Total GLA
Current Qtr Total SF Vac
Vac %
14,958,420
1,580,455
1,722,711
Shopping Centers
Specialty Centers
Mountain Summary ALBUQUERQUE, NM
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.6%
10.5%
11.0%
856
73,141
-
-
$12.36
84,956
4.9%
3.1%
1.8%
(31,753)
(51,393)
3,000
-
$16.13
252,283
9,000
3.6%
3.6%
3.6%
-
-
-
-
Strip
3,576,399
378,352
10.6%
10.5%
12.2%
7,218
66,393
11,544
-
$13.93
Malls
3,182,681
321,608
10.1%
10.1%
10.1%
-
-
-
-
$9.00
23,692,494
2,374,371
10.0%
9.7%
10.1%
(23,679)
88,141
14,544
-
Vac %
Historical Vacancy
Total GLA
Current Qtr Total SF Vac
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
Community/Neighborhood
63,610,412
5,627,593
Power/Regional Centers
24,909,067
Specialty Centers
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
DENVER, CO
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
8.8%
9.0%
9.7%
110,485
754,469
261,836
5,000
$14.14
1,663,260
6.7%
6.4%
7.5%
(70,804)
240,177
39,256
-
$18.66
1,929,458
80,345
4.2%
5.7%
4.5%
30,034
35,249
30,960
-
$21.57
Strip
9,986,637
884,709
8.9%
9.7%
10.3%
82,332
176,416
38,742
7,500
$14.86
Malls
13,761,334
573,994
4.2%
4.2%
4.4%
(962)
34,695
-
14,000
$22.81
114,196,908
8,829,901
7.7%
7.6%
8.3%
151,085
1,241,006
370,794
26,500
Shopping Centers
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 25
Statistical Overview Mountain Summary LAS VEGAS, NV Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
41,655,980
6,055,058
Power/Regional Centers
16,161,650
Specialty Centers
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
14.5%
14.6%
15.5%
23,166
419,781
-
8,400
$14.97
1,085,947
6.7%
6.6%
7.8%
(24,673)
185,080
12,404
-
$18.25
2,921,963
198,805
6.8%
6.9%
9.4%
3,500
76,170
-
192,432
$22.64
Strip
9,419,903
1,381,683
14.7%
14.7%
15.8%
14,497
117,583
8,838
-
$14.78
Malls
6,460,295
317,707
4.9%
6.6%
4.8%
109,890
(4,703)
-
1,500,000
$22.70
76,619,791
9,039,200
11.8%
11.1%
12.2%
126,380
793,911
21,242
1,700,832
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA
Community/Neighborhood
89,976,969
12,885,843
Power/Regional Centers
26,223,171
Shopping Centers
All Shopping Centers
PHOENIX, AZ
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
14.3%
14.6%
16.3%
263,804
1,910,701
175,771
9,500
$13.62
2,062,087
7.9%
8.8%
9.8%
254,331
515,759
9,085
5,859
$18.28
4,319,234
379,518
8.8%
8.5%
10.6%
(13,957)
701,388
698,931
-
$22.24
Strip
13,226,389
2,297,208
17.4%
17.2%
18.9%
(28,762)
223,434
20,022
-
$13.44
Malls
20,339,279
1,125,903
5.5%
6.1%
6.5%
113,003
190,172
-
-
$25.15
154,085,042
18,750,559
12.2%
12.1%
13.6%
588,419
3,541,454
903,809
15,359
Vac %
Historical Vacancy
Total GLA
Current Qtr Total SF Vac
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
11,427,939
1,525,294
3,062,713
712,469
690,674
Strip Malls
Shopping Centers
Specialty Centers
All Shopping Centers
RENO, NV
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
13.3%
12.9%
13.8%
(50,247)
53,094
-
-
$14.10
23.3%
23.0%
23.2%
(7,671)
2,984
-
-
$12.99
68,622
9.9%
9.9%
4.8%
-
(35,423)
-
-
$21.00
2,823,926
502,048
17.8%
17.2%
19.0%
(6,725)
44,193
11,968
-
$15.41
1,926,419
151,651
7.9%
7.9%
8.2%
-
29,837
24,837
-
$18.94
19,931,671
2,960,084
14.9%
13.8%
14.5%
(64,643)
94,685
36,805
-
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA 33,563,962
1,695,438
Power/Regional Centers
9,811,783
Specialty Centers
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
SALT LAKE CITY, UT
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
5.1%
4.9%
5.8%
(64,309)
452,325
220,000
-
$12.67
602,187
6.1%
5.9%
5.8%
(19,073)
(28,553)
-
-
$14.89
2,374,197
294,012
12.4%
11.3%
10.3%
17,599
267,546
353,976
53,153
$22.49
Strip
7,065,440
465,789
6.6%
6.9%
7.7%
23,831
76,825
-
-
$13.96
Malls
8,960,949
361,172
4.0%
4.0%
4.7%
(5,908)
69,048
13,494
-
$19.74
61,776,331
3,418,598
5.5%
5.3%
5.9%
(47,860)
837,191
587,470
53,153
Total GLA
Current Qtr Total SF Vac
Vac %
18,477,105
2,009,974
5,302,358
Shopping Centers Community/Neighborhood
All Shopping Centers
TUCSON, AZ
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.9%
10.8%
12.1%
(18,777)
249,218
21,002
127,606
$14.72
243,103
4.6%
4.6%
6.0%
104,415
333,374
269,659
-
$18.94
916,241
64,658
7.1%
7.1%
7.6%
465
5,121
-
-
$23.54
Strip
3,850,117
523,594
13.6%
14.1%
13.9%
19,877
11,505
-
-
$12.87
Malls
2,384,488
31,612
1.3%
1.3%
1.4%
-
2,047
-
-
$26.77
30,930,309
2,872,941
9.3%
9.1%
10.1%
105,980
601,265
290,661
127,606
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 26
Statistical Overview Midwest/Great Plains Summary DES MOINES, IA Shopping Centers
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
8,661,881
514,396
Power/Regional Centers
1,494,664
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
5.9%
6.1%
6.7%
9,698
69,267
-
-
$10.02
158,869
10.6%
8.0%
8.3%
(39,525)
(34,767)
-
-
$14.08
503,259
12,888
2.6%
5.5%
6.0%
14,725
17,467
-
17,500
$21.51
Strip
2,389,441
279,222
11.7%
12.2%
14.1%
12,946
86,528
34,244
-
$11.06
Malls
5,022,149
222,407
4.4%
4.4%
4.6%
-
6,515
-
-
$16.37
18,071,394
1,187,782
6.6%
6.5%
7.1%
(2,156)
145,010
34,244
17,500
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
43,694,810
4,864,215
Power/Regional Centers
15,801,792
Specialty Centers
Specialty Centers
All Shopping Centers
KANSAS CITY, MO
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
11.1%
10.9%
11.6%
(33,149)
247,472
65,100
6,000
$10.98
1,587,973
10.0%
10.2%
10.2%
17,774
33,635
10,000
-
$16.03
3,098,312
490,795
15.8%
16.0%
13.9%
5,723
170,565
268,383
4,150
$15.89
Strip
7,053,345
997,874
14.1%
14.4%
15.0%
19,384
67,146
7,004
-
$11.98
Malls
8,047,849
197,556
2.5%
2.9%
2.9%
39,334
33,809
-
-
$24.68
77,696,108
8,138,413
10.5%
10.1%
10.4%
49,066
552,627
350,487
10,150
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
41,360,169
3,243,084
Power/Regional Centers
14,963,231
744,273
2,997,032
Strip
Shopping Centers
All Shopping Centers
MINNEAPOLIS/ST. PAUL, MN
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
7.8%
8.1%
8.9%
115,528
467,473
34,051
7,928
$13.38
5.0%
5.1%
5.3%
15,626
53,616
-
-
$15.29
112,577
3.8%
4.8%
5.1%
31,751
41,739
-
400,000
$19.21
11,581,408
1,262,590
10.9%
11.1%
12.2%
24,263
176,681
36,470
-
$12.76
Malls
12,433,098
446,919
3.6%
3.6%
3.6%
50,278
51,493
56,410
29,789
$17.43
All Shopping Centers
83,334,938
5,809,443
7.0%
7.0%
7.6%
237,446
791,002
126,931
437,717
Total GLA
Current Qtr Total SF Vac
Vac %
13,563,536
1,645,584
7,297,312
Shopping Centers
Specialty Centers
OMAHA, NE
Historical Vacancy
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
12.1%
11.6%
11.9%
(66,340)
(35,610)
-
-
$11.28
980,004
13.4%
13.5%
8.9%
3,826
(323,307)
4,569
-
$9.70
256,566
-
0.0%
0.0%
2.0%
-
5,071
-
-
$18.00
Strip
3,978,606
484,780
12.2%
13.1%
13.3%
36,610
53,687
9,000
-
$11.57
Malls
2,323,394
84,557
3.6%
5.6%
5.6%
46,584
46,584
-
-
$10.07
27,419,414
3,194,925
11.7%
10.6%
9.5%
20,680
(253,575)
13,569
-
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
48,050,135
4,837,794
Power/Regional Centers
12,462,325
Specialty Centers
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
ST. LOUIS, MO
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.1%
10.1%
10.6%
53,297
273,780
25,000
-
$11.74
1,126,072
9.0%
9.2%
9.6%
20,675
65,049
-
-
$14.19
3,315,371
686,194
20.7%
20.7%
17.9%
254,561
170,186
319,800
-
$12.99
Strip
9,445,442
1,211,387
12.8%
13.0%
13.7%
14,671
105,655
23,311
44,600
$13.10
Malls
13,766,739
1,623,944
11.8%
11.9%
11.8%
9,666
(4,395)
-
-
$15.57
All Shopping Centers
87,040,012
9,485,391
10.9%
10.9%
11.1%
352,870
610,275
368,111
44,600
Shopping Centers
Cassidy Turley 2014 Retail Forecast | 27
Statistical Overview Midwest/Great Lakes Summary CHICAGO, IL
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
11.4%
11.8%
12.4%
519,566
1,694,902
442,772
207,483
$14.48
2,757,913
6.2%
6.6%
7.1%
662,567
884,500
538,000
-
$17.08
8,207,805
315,594
3.8%
4.3%
4.5%
36,326
54,556
4,500
3,895
$23.52
Strip
34,760,267
4,615,506
13.3%
12.8%
12.8%
(78,551)
(83,473)
89,083
37,000
$16.01
Malls
29,920,842
1,073,862
3.6%
3.1%
2.8%
(153,191)
(248,356)
-
-
$21.96
251,698,860
24,149,415
9.6%
9.5%
9.8%
986,717
2,302,129
1,074,355
248,378
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
49,723,844
7,027,645
Power/Regional Centers
15,378,908
Specialty Centers
Power/Regional Centers Specialty Centers
All Shopping Centers
Current Qtr Total SF Vac
Vac %
134,471,129
15,386,540
44,338,817
Last 12 Months
Prior Yr
Community/Neighborhood
Total GLA
Historical Vacancy Prior Qtr
Shopping Centers
CINCINNATI/DAYTON, OH
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
14.1%
14.3%
14.9%
104,809
396,433
8,524
-
$9.48
1,337,074
8.7%
8.8%
10.1%
19,404
211,332
-
-
$15.23
5,105,176
217,890
4.3%
4.6%
4.3%
19,387
482
-
-
$11.30
Strip
9,429,834
1,280,794
13.6%
13.6%
13.3%
39,012
13,611
45,488
-
$12.75
Malls
10,878,335
905,521
8.3%
8.4%
9.2%
7,340
104,417
6,500
-
$9.37
All Shopping Centers
90,516,097
10,768,924
11.9%
11.8%
12.3%
189,952
726,275
60,512
-
Vac %
Historical Vacancy
Total GLA
Current Qtr Total SF Vac
Net Absorption
Deliveries
Community/Neighborhood
57,902,966
7,476,508
Power/Regional Centers
24,468,040
2,379,068
2,146,016
Strip Malls
Shopping Centers
CLEVELAND, OH
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
12.9%
13.1%
13.3%
206,841
403,693
196,083
-
$9.65
9.7%
9.6%
10.3%
(4,315)
176,847
49,697
16,900
$12.22
274,591
12.8%
12.8%
13.0%
-
4,598
-
-
$19.17
10,723,735
1,211,861
11.3%
11.5%
11.5%
26,525
39,194
22,397
-
$11.17
16,914,339
2,752,433
16.3%
16.2%
16.3%
(5,500)
12,633
-
-
$14.17
112,155,096
14,094,461
12.6%
12.1%
12.2%
223,551
636,965
268,177
16,900
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA
Community/Neighborhood
72,018,452
10,690,552
Power/Regional Centers
26,278,667
Shopping Centers
Specialty Centers
All Shopping Centers
DETROIT, MI
Last 12 Months
Under Construction
Average Quoted Rate
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
14.8%
14.9%
15.2%
363,202
646,411
441,083
3,630
$11.89
1,996,299
7.6%
8.0%
8.7%
111,933
303,025
10,000
2,500
$13.72
3,453,164
306,302
8.9%
8.4%
9.2%
(15,364)
10,769
-
-
$18.13
Strip
19,581,837
3,054,587
15.6%
15.5%
15.7%
(3,479)
49,068
39,356
11,612
$13.23
Malls
21,394,688
1,383,426
6.5%
6.5%
6.6%
2,676
34,491
-
-
$7.05
142,726,808
17,431,166
12.2%
11.6%
12.0%
458,968
1,043,764
490,439
17,742
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA
Community/Neighborhood
33,536,562
3,736,058
Power/Regional Centers
14,857,129
Shopping Centers
Specialty Centers
All Shopping Centers
INDIANAPOLIS, IN
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
11.1%
11.3%
12.0%
48,361
336,171
36,183
59,100
$11.34
1,433,434
9.6%
9.5%
9.5%
(26,690)
(19,700)
-
35,000
$16.82
902,823
20,976
2.3%
3.2%
7.0%
8,000
42,024
-
-
Strip
7,272,470
870,131
12.0%
11.6%
11.2%
(27,618)
(45,204)
13,373
-
$13.52
Malls
8,885,346
475,855
5.4%
5.3%
5.4%
(4,439)
(200)
-
-
$14.23
65,454,330
6,536,454
10.0%
9.7%
10.1%
(2,386)
313,091
49,556
94,100
Shopping Centers
Specialty Centers
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 28
Statistical Overview Midwest Great Lakes Summary MILWAUKEE/MADISON, WI Total GLA
Current Qtr Total SF Vac
Vac %
37,055,892
4,082,778
Power/Regional Centers
8,687,020
Specialty Centers
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
11.0%
11.1%
11.8%
60,141
429,922
147,505
-
$10.45
601,965
6.9%
7.0%
8.3%
5,561
157,866
47,000
270,330
$14.76
2,329,850
54,644
2.3%
2.5%
3.2%
3,639
18,950
-
-
$20.40
Strip
7,901,887
846,446
10.7%
10.9%
11.7%
15,115
112,704
35,334
-
$13.44
Malls
7,695,328
992,632
12.9%
12.9%
13.1%
-
19,214
-
-
$8.12
63,669,977
6,578,465
10.3%
9.9%
10.7%
84,456
738,656
229,839
270,330
Shopping Centers Community/Neighborhood
All Shopping Centers
Texas/Panhandle/Lower Mississippi Delta Summary AUSTIN, TX Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
25,670,754
2,415,277
Power/Regional Centers
17,363,487
Specialty Centers
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
9.4%
9.8%
10.1%
176,135
279,116
125,945
-
$16.20
647,034
3.7%
4.1%
4.6%
58,198
163,927
12,026
-
$18.91
2,202,148
19,149
0.9%
1.3%
1.6%
20,533
26,338
10,845
-
$18.00
Strip
6,674,898
737,529
11.0%
10.6%
11.7%
(32,236)
82,932
43,246
3,550
$17.97
Malls
5,233,547
10,754
0.2%
0.1%
0.2%
434
3,934
6,200
-
57,144,834
3,829,743
6.7%
6.6%
7.0%
223,064
556,247
198,262
3,550
Total GLA
Current Qtr Total SF Vac
Vac %
120,993,162
14,777,073
32,156,099
Shopping Centers
All Shopping Centers
DALLAS, TX
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
12.2%
12.4%
13.0%
311,835
1,216,317
295,361
166,076
$12.77
1,841,742
5.7%
5.5%
6.0%
(84,877)
134,096
56,356
370,838
$19.82
6,493,915
351,153
5.4%
5.3%
6.6%
(7,796)
88,362
8,500
-
$17.61
Strip
31,081,505
3,761,716
12.1%
11.9%
13.4%
28,711
622,542
236,624
26,525
$14.62
Malls
26,522,259
1,404,564
5.3%
5.0%
5.2%
(67,193)
(14,100)
-
-
$21.27
217,246,940
22,136,248
10.2%
10.0%
10.6%
180,680
2,047,217
596,841
563,439
Vac %
Historical Vacancy
Total GLA
Current Qtr Total SF Vac
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
118,585,274
10,989,000
28,294,032
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
HOUSTON, TX
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
9.3%
9.3%
10.0%
97,243
1,204,407
342,728
83,560
$13.56
1,631,576
5.8%
6.1%
6.2%
111,165
342,247
223,148
44,908
$22.40
5,813,750
585,053
10.1%
10.0%
10.7%
(5,665)
347,471
350,000
-
$12.77
Strip
34,492,164
3,667,900
10.6%
10.3%
10.5%
(56,392)
118,975
149,680
57,250
$15.81
Malls
23,676,443
1,114,209
4.7%
4.6%
4.8%
(29,939)
14,870
-
-
$15.98
210,861,663
17,987,738
8.5%
8.4%
8.8%
116,412
2,027,970
1,065,556
185,718
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 29
Statistical Overview Texas/Panhandle/Lower Mississippi Delta Summary LITTLE ROCK, AR Total GLA
Current Qtr Total SF Vac
Vac %
11,220,024
1,182,122
4,976,430
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.5%
9.2%
8.3%
(152,781)
(252,387)
-
-
$9.98
183,793
3.7%
3.5%
3.4%
2,109
(3,291)
10,000
-
$16.42
977,856
57,726
5.9%
5.3%
7.0%
(6,060)
11,203
-
-
$19.80
Strip
3,656,909
253,986
6.9%
6.7%
6.7%
(10,664)
(2,658)
7,600
-
$14.33
Malls
-
-
0.0%
0.0%
0.0%
-
-
-
-
$-
20,831,219
1,677,627
8.1%
7.2%
6.7%
(167,396)
(247,133)
17,600
-
Total GLA
Current Qtr Total SF Vac
Vac %
17,053,019
1,660,411
Power/Regional Centers
2,712,407
Specialty Centers
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
NEW ORLEANS, LA
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
9.7%
10.4%
11.4%
296,065
476,607
212,000
-
$13.06
106,506
3.9%
4.3%
5.1%
9,675
30,741
-
-
$34.00
1,564,808
44,385
2.8%
2.8%
3.6%
-
12,066
-
-
Strip
3,235,349
387,618
12.0%
11.9%
12.7%
(1,700)
23,469
-
-
$13.50
Malls
5,275,326
128,769
2.4%
2.1%
4.1%
(18,192)
86,999
-
-
$19.36
29,840,909
2,327,689
7.8%
7.6%
8.8%
285,848
629,882
212,000
-
Total GLA
Current Qtr Total SF Vac
Vac %
21,213,885
2,269,262
6,903,629
509,651
707,996
Strip Malls
Shopping Centers Community/Neighborhood
All Shopping Centers
OKLAHOMA CITY, OK
Historical Vacancy Prior Qtr
Prior Yr
Qrtly Net Absorption
10.7%
10.1%
10.7%
7.4%
7.7%
8.5%
72,703
10.3%
10.2%
6,981,680
516,016
7.4%
3,002,340
732,234
38,809,530
Last 12 Months Net Absorption
Deliveries
Under Construction
(119,307)
4,017
9,200
-
$9.66
23,028
78,513
-
-
$14.00
17.5%
(574)
74,228
28,000
-
$15.86
8.3%
8.6%
60,241
90,083
4,080
-
$11.42
24.4%
24.4%
31.1%
-
202,029
-
-
$6.00
4,099,866
10.6%
10.3%
11.0%
(36,612)
448,870
41,280
-
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA 34,191,360
3,258,920
Power/Regional Centers
9,955,919
Specialty Centers
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
SAN ANTONIO, TX
Last 12 Months
Average Quoted Rate
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
9.5%
9.2%
11.0%
(106,668)
853,695
397,926
-
$13.06
753,972
7.6%
7.9%
9.0%
32,829
204,893
67,146
117,510
$21.30
1,908,325
152,010
8.0%
7.2%
15.8%
(14,700)
150,178
-
-
$13.53
Strip
9,344,270
907,921
9.7%
9.2%
9.5%
(36,207)
27,578
51,686
7,542
$14.40
Malls
8,706,759
109,514
1.3%
1.3%
1.8%
7,013
51,378
-
-
$25.78
64,106,633
5,182,337
8.1%
7.7%
9.0%
(117,733)
1,287,722
516,758
125,052
Total GLA
Current Qtr Total SF Vac
Vac %
18,329,218
1,934,596
Power/Regional Centers
3,937,183
Specialty Centers
Shopping Centers Community/Neighborhood
All Shopping Centers
TULSA, OK
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.6%
10.5%
10.9%
78,336
279,142
228,451
49,243
$9.16
200,181
5.1%
5.9%
7.8%
32,212
113,884
9,500
4,875
$8.81
1,114,427
126,876
11.4%
11.5%
8.9%
814
(27,402)
-
-
$13.56
Strip
5,986,480
448,629
7.5%
7.6%
6.5%
6,998
(25,207)
38,785
-
$11.07
Malls
3,007,296
65,310
2.2%
1.9%
1.5%
(7,000)
(20,305)
-
-
$28.29
32,374,604
2,775,592
8.6%
8.3%
8.6%
111,360
320,112
276,736
54,118
Shopping Centers Community/Neighborhood
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 30
Statistical Overview Southern US Summary BIRMINGHAM, AL Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
22,365,185
3,091,397
Power/Regional Centers
10,067,171
Specialty Centers
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
13.8%
13.9%
14.9%
10,060
238,440
-
-
$8.13
1,156,247
11.5%
11.2%
15.2%
(24,367)
488,423
136,000
-
$21.55
1,178,000
182,375
15.5%
16.1%
16.3%
7,538
9,438
-
-
$13.89
Strip
5,209,886
475,604
9.1%
9.3%
9.3%
11,086
9,528
2,415
-
$11.58
Malls
2,469,936
763,147
30.9%
28.6%
15.4%
(56,058)
(382,801)
-
-
$42.00
41,290,178
5,668,770
13.7%
13.4%
13.9%
(51,741)
363,028
138,415
-
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA 24,876,666
2,249,293
4,763,801
Shopping Centers
All Shopping Centers
LOUISVILLE, KY
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
9.0%
9.1%
9.2%
26,606
61,070
34,107
-
$10.30
245,309
5.1%
5.0%
5.1%
(7,210)
(3,279)
-
-
$23.53
364,956
89,707
24.6%
29.7%
34.2%
18,687
35,187
-
-
$16.82
Strip
3,564,171
576,107
16.2%
15.0%
14.6%
(19,620)
(21,936)
40,765
-
$13.42
Malls
3,668,576
395,899
10.8%
10.6%
9.8%
(8,764)
(36,486)
-
-
$8.63
37,238,170
3,556,315
9.6%
9.3%
9.1%
9,699
34,556
74,872
-
Total GLA
Current Qtr Total SF Vac
Vac %
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
MEMPHIS, TN Shopping Centers Community/Neighborhood
Historical Vacancy Prior Qtr
Prior Yr
Qrtly Net Absorption
Last 12 Months Net Absorption
Deliveries
Under Construction
Average Quoted Rate
24,088,748
3,385,998
14.1%
14.3%
15.5%
63,734
351,073
14,080
-
$10.42
Power/Regional Centers
8,360,337
749,223
9.0%
9.0%
8.7%
3,478
(20,879)
-
5,300
$9.36
Specialty Centers
1,588,394
338,948
21.3%
21.3%
21.3%
-
(726)
-
-
$21.64
Strip
7,352,896
894,439
12.2%
12.3%
12.8%
9,145
56,113
9,759
2,400
$12.68
Malls
3,194,627
849,040
26.6%
26.6%
26.9%
-
11,638
-
-
$1.19
44,585,002
6,217,648
13.9%
13.8%
14.4%
76,357
397,219
23,839
7,700
Shopping Centers
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
9,157,477
984,563
Power/Regional Centers
1,775,117
Specialty Centers
All Shopping Centers
MOBILE, AL
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.8%
10.2%
9.6%
(53,919)
(101,377)
-
-
$10.39
119,802
6.7%
6.7%
6.7%
-
(1,356)
-
-
$18.00
1,777,656
393,418
22.1%
15.5%
10.4%
(118,648)
(208,394)
-
-
$14.31
Strip
2,463,135
228,682
9.3%
9.3%
9.8%
(651)
12,897
-
-
$11.12
Malls
2,470,766
98,704
4.0%
4.0%
4.0%
-
-
-
-
17,644,151
1,825,169
10.3%
8.6%
7.9%
(173,218)
(298,230)
-
-
Total GLA
Current Qtr Total SF Vac
Vac %
29,961,144
3,101,545
Power/Regional Centers
8,603,656
Specialty Centers
All Shopping Centers
NASHVILLE, TN
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.4%
10.5%
11.8%
31,072
421,735
-
-
$12.25
963,104
11.2%
11.3%
11.9%
7,613
63,033
-
-
$18.45
1,451,540
166,337
11.5%
11.7%
11.7%
4,216
3,509
-
-
$11.76
Strip
5,814,180
603,754
10.4%
10.7%
11.0%
34,019
66,365
37,537
-
$14.39
Malls
7,154,069
779,640
10.9%
13.4%
13.4%
176,364
180,807
-
-
$24.00
52,984,589
5,614,380
10.6%
10.7%
11.6%
253,284
735,449
37,537
-
Shopping Centers Community/Neighborhood
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 31
Statistical Overview Southeast Summary ATLANTA, GA Total GLA
Current Qtr Total SF Vac
Vac %
114,582,545
16,583,360
34,753,423
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
14.5%
14.6%
14.8%
171,076
370,438
16,399
64,977
$12.23
2,725,677
7.8%
8.0%
8.7%
46,381
319,330
13,000
-
$12.30
7,286,610
775,461
10.6%
10.8%
11.6%
374,661
424,985
403,786
4,571
$13.11
Strip
35,039,082
5,138,984
14.7%
15.1%
15.3%
166,540
237,465
32,872
-
$13.32
Malls
24,152,446
1,181,989
4.9%
5.0%
7.3%
31,418
587,299
-
-
$25.03
215,814,106
26,405,471
12.2%
12.1%
12.6%
790,076
1,939,517
466,057
69,548
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA 13,550,932
1,154,767
2,232,392
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
CHARLESTON, SC
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
8.5%
8.6%
8.9%
8,549
53,610
7,208
139,246
$14.40
94,113
4.2%
4.7%
5.8%
10,047
36,030
-
-
$14.49
581,969
-
0.0%
0.0%
0.0%
-
-
-
-
$24.99
Strip
2,954,868
309,790
10.5%
11.0%
8.6%
15,439
(55,226)
-
-
$13.45
Malls
2,101,239
6,560
0.3%
0.3%
0.7%
-
8,150
-
-
$20.00
21,421,400
1,565,230
7.3%
6.9%
6.9%
34,035
42,564
7,208
139,246
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
46,810,360
5,651,445
Power/Regional Centers
17,908,223
Specialty Centers
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
CHARLOTTE, NC
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
12.1%
11.9%
12.1%
335,627
481,480
518,241
372,400
$11.74
990,681
5.5%
6.3%
6.4%
133,078
245,617
99,874
-
$16.28
3,664,847
428,300
11.7%
11.8%
10.5%
4,807
(41,808)
-
-
$9.72
Strip
9,107,862
1,112,535
12.2%
12.2%
13.0%
3,290
100,933
34,812
-
$13.24
Malls
8,062,653
803,564
10.0%
10.0%
9.3%
(9)
(53,084)
-
-
$15.37
85,553,945
8,986,525
10.5%
10.1%
10.2%
476,793
733,138
652,927
372,400
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA 33,868,055
3,506,546
Power/Regional Centers
9,611,687
Specialty Centers
Shopping Centers
All Shopping Centers
HAMPTON ROADS, VA
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.4%
10.5%
9.8%
109,396
83,235
284,201
61,642
$11.93
339,915
3.5%
3.5%
3.4%
(1,975)
(8,784)
3,750
-
$19.86
1,895,326
148,897
7.9%
6.8%
7.0%
(20,919)
(16,171)
-
-
$23.09
Strip
6,893,034
702,141
10.2%
10.5%
10.0%
38,795
45,987
65,824
9,930
$13.97
Malls
5,873,965
388,182
6.6%
6.4%
6.1%
(9,698)
(31,458)
-
-
$16.26
58,142,067
5,085,681
8.7%
8.4%
7.9%
115,599
72,809
353,775
71,572
Total GLA
Current Qtr Total SF Vac
Vac %
31,706,634
3,636,220
Power/Regional Centers
4,130,606
Specialty Centers
Shopping Centers Community/Neighborhood
All Shopping Centers
JACKSONVILLE, FL
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
11.5%
11.3%
12.6%
(35,955)
462,310
111,120
-
$12.58
574,851
13.9%
13.9%
14.9%
-
39,515
-
-
$10.19
1,158,502
62,400
5.4%
5.4%
5.4%
-
-
-
-
Strip
7,493,149
957,755
12.8%
12.7%
12.8%
(7,825)
21,642
12,736
17,000
$13.72
Malls
5,843,080
185,299
3.2%
3.2%
3.5%
7,309
32,995
11,987
-
$17.08
50,331,971
5,416,525
10.8%
10.3%
11.1%
(36,471)
556,462
135,843
17,000
Shopping Centers Community/Neighborhood
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 32
Statistical Overview Southeast Summary MIAMI, FL
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
8.2%
8.2%
8.4%
38,470
367,899
195,773
-
$18.52
1,197,491
7.0%
7.1%
7.5%
15,499
84,573
-
500,000
$21.83
6,420,687
542,333
8.4%
8.8%
8.6%
19,954
251,211
262,290
500,000
$21.15
Strip
25,170,487
1,711,703
6.8%
6.4%
6.7%
(110,742)
22,805
40,163
-
$19.45
Malls
23,695,482
414,110
1.7%
1.9%
2.2%
27,139
150,139
35,000
-
$34.15
178,320,395
12,528,898
7.0%
6.9%
7.1%
(9,680)
876,627
533,226
1,000,000
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
55,358,870
6,167,466
Power/Regional Centers
13,221,204
Power/Regional Centers Specialty Centers
All Shopping Centers
Current Qtr Total SF Vac
Vac %
105,951,306
8,663,261
17,082,433
Last 12 Months
Prior Yr
Community/Neighborhood
Total GLA
Historical Vacancy Prior Qtr
Shopping Centers
ORLANDO, FL
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
11.1%
11.5%
12.0%
194,540
755,435
305,407
-
$13.81
810,405
6.1%
6.1%
6.0%
(5,984)
(12,343)
-
-
$16.43
6,149,466
372,030
6.0%
5.9%
7.0%
(11,396)
252,535
210,616
-
$18.86
Strip
10,744,699
1,427,824
13.3%
13.3%
12.8%
1,673
(18,627)
30,622
-
$15.00
Malls
13,205,195
712,788
5.4%
5.4%
3.7%
(1)
(222,029)
-
-
$15.16
All Shopping Centers
98,679,434
9,490,513
9.6%
9.7%
9.8%
178,832
754,971
546,645
-
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
34,734,920
3,105,778
Power/Regional Centers
11,422,281
Specialty Centers
Shopping Centers
Specialty Centers
RALEIGH/DURHAM, NC
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
8.9%
9.0%
8.7%
75,686
79,135
140,686
-
$14.85
526,405
4.6%
4.7%
5.1%
18,543
449,275
418,901
325,000
$16.58
2,803,241
76,995
2.7%
2.9%
2.5%
5,000
(7,757)
-
90,102
$14.84
Strip
3,770,134
509,365
13.5%
13.1%
11.9%
(15,978)
(57,141)
6,000
4,706
$15.54
Malls
7,073,104
130,849
1.8%
1.8%
1.8%
(1,181)
(99)
-
-
$30.00
59,803,680
4,349,392
7.3%
7.2%
7.0%
82,070
463,413
565,587
419,808
Total GLA
Current Qtr Total SF Vac
Vac %
26,146,678
2,725,369
7,686,441
Shopping Centers
All Shopping Centers
RICHMOND, VA
Historical Vacancy
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.4%
10.9%
11.1%
128,090
360,545
207,714
185,244
$13.19
370,872
4.8%
4.6%
4.9%
(18,208)
6,281
-
20,011
$19.08
54,528
-
0.0%
0.0%
0.0%
-
-
-
-
Strip
4,140,121
384,405
9.3%
9.6%
11.8%
13,017
103,574
-
-
$14.45
Malls
4,282,901
84,562
2.0%
2.0%
2.0%
2,443
2,943
-
-
$17.00
42,310,669
3,565,208
8.4%
8.4%
8.9%
125,342
473,343
207,714
205,255
Current Qtr Total SF Vac
Vac %
Historical Vacancy
Total GLA
Community/Neighborhood
74,212,473
8,048,500
Power/Regional Centers
14,124,987
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
TAMPA, FL
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
10.8%
11.0%
10.8%
133,128
(52,695)
26,970
904,232
$12.73
856,856
6.1%
5.9%
5.9%
(25,803)
(29,844)
-
-
$18.09
1,900,385
146,974
7.7%
7.9%
8.6%
3,847
15,962
-
-
$23.76
Strip
18,489,224
2,164,544
11.7%
11.5%
11.4%
(21,227)
(21,726)
32,150
-
$14.07
Malls
11,675,582
410,247
3.5%
3.5%
3.6%
3,594
15,502
-
-
$25.52
120,402,651
11,627,121
9.7%
9.4%
9.2%
93,539
(72,801)
59,120
904,232
Shopping Centers
Specialty Centers
All Shopping Centers
Cassidy Turley 2014 Retail Forecast | 33
Statistical Overview Northeast Summary BALTIMORE, MD Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
41,540,091
3,017,930
Power/Regional Centers
15,473,475 2,278,621
Shopping Centers
Specialty Centers
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
7.3%
7.4%
8.1%
55,252
450,675
110,638
325,000
$19.69
700,734
4.5%
4.7%
5.8%
30,803
191,646
-
-
$28.07
185,708
8.2%
8.7%
9.6%
11,950
209,511
195,823
-
$18.77
Strip
6,157,690
493,072
8.0%
7.6%
7.6%
2,475
24,380
55,532
-
$18.01
Malls
12,402,564
795,582
6.4%
6.4%
6.5%
3,478
16,099
-
-
$26.72
All Shopping Centers
77,852,441
5,193,026
6.7%
6.5%
7.2%
103,958
892,311
361,993
325,000
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
73,956,385
4,565,083
Power/Regional Centers
25,447,408
BOSTON, MA
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
6.2%
6.1%
6.3%
(27,098)
334,033
257,586
-
$15.87
960,799
3.8%
3.5%
3.6%
(74,836)
(48,372)
2,260
395,000
$12.80
3,893,302
174,374
4.5%
4.2%
6.0%
(10,000)
443,251
409,000
177,000
$18.88
Strip
14,400,242
1,199,109
8.3%
8.3%
8.4%
(5,970)
47,384
40,359
3,900
$14.82
Malls
17,686,301
514,702
2.9%
2.9%
2.7%
-
(30,000)
-
-
135,383,638
7,414,067
5.5%
5.2%
5.3%
(117,904)
746,296
709,205
575,900
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
86,818,750
4,483,705
5.2%
Power/Regional Centers
22,793,391
980,057
4.3%
4.3%
4.8%
3,721,694
515,655
13.9%
13.8%
13.5%
Strip
18,050,366
1,492,468
8.3%
8.2%
7.8%
Malls
27,610,959
339,801
1.2%
1.3%
158,995,160
7,811,686
4.9%
4.9%
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
81,225,496
7,207,213
Power/Regional Centers
31,238,106
Shopping Centers
Specialty Centers
All Shopping Centers
NEW YORK CITY METRO* Shopping Centers
Specialty Centers
All Shopping Centers
NORTHERN NEW JERSEY
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
5.5%
5.7%
305,102
854,820
387,741
630,849
$20.57
2,609
104,321
-
-
$22.20
(3,025)
(14,785)
-
-
$22.94
(8,671)
(57,437)
23,686
-
$21.04
1.4%
6,080
36,053
-
-
$30.97
5.1%
302,095
922,972
411,427
630,849
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
8.9%
8.9%
9.8%
73,888
815,243
38,200
234,654
$19.09
1,404,399
4.5%
5.1%
5.5%
203,639
330,385
5,251
-
$25.08
3,167,504
84,367
2.7%
3.0%
4.5%
9,702
134,397
-
153,000
$26.70
Strip
15,623,191
1,571,707
10.1%
10.2%
10.4%
29,247
83,744
41,700
14,000
$19.55
Malls
30,739,417
678,738
2.2%
2.1%
2.2%
(18,164)
(12,595)
-
747,500
$51.37
161,993,714
10,946,424
6.8%
6.7%
7.2%
298,312
1,351,174
85,151
1,149,154
Total GLA
Current Qtr Total SF Vac
Vac %
140,278,909
13,803,995
59,297,303
Shopping Centers
Specialty Centers
All Shopping Centers
PHILADELPHIA
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
9.8%
9.9%
9.9%
292,394
564,556
462,812
124,410
$14.04
3,158,644
5.3%
5.2%
5.3%
(57,983)
27,314
15,122
-
$13.44
6,660,880
222,529
3.3%
3.8%
4.2%
33,095
60,489
-
-
$18.23
Strip
20,071,416
1,909,978
9.5%
9.3%
9.4%
(51,991)
(6,562)
15,687
-
$14.23
Malls
29,139,081
1,347,782
4.6%
4.7%
3.8%
8,288
(250,297)
-
-
$18.67
255,447,589
20,442,928
8.0%
7.7%
7.7%
223,803
395,500
493,621
124,410
Shopping Centers Community/Neighborhood Power/Regional Centers Specialty Centers
All Shopping Centers
* includes New York City, Long Island and Southern CT
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
Cassidy Turley 2014 Retail Forecast | 34
Statistical Overview Northeast Summary PITTSBURGH, PA Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
29,378,433
1,586,823
Power/Regional Centers
17,523,619
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
5.4%
5.7%
6.2%
80,059
286,669
41,400
60,000
$11.20
715,468
4.1%
4.4%
4.5%
53,834
75,902
-
-
$17.34
2,359,492
101,415
4.3%
4.4%
4.7%
2,585
8,912
-
-
Strip
4,712,936
331,617
7.0%
6.7%
7.5%
(15,027)
136,445
89,530
-
$15.71
Malls
11,845,773
431,591
3.6%
3.1%
6.1%
(65,481)
499,053
225,000
-
$12.36
All Shopping Centers
65,820,253
3,166,914
4.8%
4.7%
5.5%
55,970
1,006,981
355,930
60,000
Total GLA
Current Qtr Total SF Vac
Vac %
Community/Neighborhood
90,746,261
6,577,184
Power/Regional Centers
37,186,171
Shopping Centers
Specialty Centers
WASHINGTON, DC
Historical Vacancy
Last 12 Months
Prior Qtr
Prior Yr
Qrtly Net Absorption
7.2%
7.9%
7.7%
567,925
480,713
119,235
483,083
$19.53
1,280,967
3.4%
3.4%
3.6%
73,703
209,668
142,050
3,400
$22.14
7,399,746
179,183
2.4%
3.0%
2.6%
267,089
384,019
383,872
648,408
$48.38
Strip
12,914,382
1,037,666
8.0%
8.0%
8.9%
41,936
182,980
72,686
5,775
$20.53
Malls
29,684,197
983,520
3.3%
3.3%
2.3%
4,279
(163,060)
148,000
-
$17.04
177,930,757
10,058,520
5.7%
5.7%
5.6%
954,932
1,094,320
865,843
1,140,666
Shopping Centers
Specialty Centers
All Shopping Centers
Net Absorption
Deliveries
Under Construction
Average Quoted Rate
Cassidy Turley 2014 Retail Forecast | 35
Methodology
Disclaimer This report and other research materials may be found on our website at www.cassidyturley.com. This is a research document of Cassidy Turley in Washington, DC. Questions related to information herein should be directed to the Research Department at 202-463-2100. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Cassidy Turley is a leading commercial real estate services provider, with 400 million square feet managed on behalf of institutional, private and corporate clients and $22 billion in completed transactions for 2012.
Methodology Cassidy Turley’s quarterly estimates are derived from a variety of data sources, including its own proprietary sample of market activity, historical inventory data from Bureau of Labor Statistics Employment data, CoStar and other third party data sources. The market statistics are calculated from a base building inventory made up of shopping center properties deemed to be competitive in the local retail markets. The inventory is subject to revisions due to resampling. Vacant space is defined as space that is available immediately or three months (90 days) after the end of the quarter. Sublet space still occupied by the tenant is not counted as available space. The figures provided for the current quarter are preliminary, and all information contained in the report is subject to correction of errors and revisions based on additional data received. Explanation of Terms Total Inventory: The total amount of retail space within a shopping center. Total Space Available: The sums of new, relet and sublet space that is unoccupied and being actively marketed. Vacancy Rate: The amount of unoccupied space (new, relet and sublet) expressed as a percentage of total inventory. Absorption: The net change in occupied space between two points in time. (Total occupied space in the present quarter minus total occupied space from the previous quarter, quoted on a net, not gross, basis.) Asking Rents: Triple net average asking rents.
Regional Map
West Midwest South Northeast Cassidy Turley 2014 Retail Forecast | 36
Key Cassidy Turley Statistics A Leader in Commercial Real Estate Services At Cassidy Turley, we are market leaders, industry leaders and community leaders. Nationwide, clients recognize us for the creative sophistication of our real estate advice as well as for the discipline and accuracy of our service delivery. We are a trusted partner and advocate, supporting our clients’ overall business performance. In markets across the country, we are respected as a leading provider of commercial real estate services as well as for our community engagement. Our thorough understanding of local business practices and market dynamics, combined with our customer focus and service commitment, give our clients a distinct edge in commercial real estate across the globe.
Local Market Leaders, Nationwide Key Statistics • More than 60 U.S. offices • 65 international offices* • More than 3,800 professionals • More than 970 brokers • 2012 transactions – Gross transaction volume $22 billion – Gross capital markets volume $9.2 billion • 400 million sf managed portfolio on behalf of institutional, corporate and private clients • More than 23,000 client locations served *Through GVA Partnership
• Our professionals have deep ties to our communities and our industry, and a thorough understanding of local business leaders and practices, giving Cassidy Turley and our clients an edge. • Our in-depth, local market knowledge provides a comprehensive understanding of market dynamics and enables us to effectively forecast market trends – providing insight to clients and helping them make informed real estate decisions. • Our leadership position is recognized in the communities we serve. We are often rated in local business journals as a “Best Place to Work,” and are honored for our many local philanthropic efforts.
Industry Leadership • Named to Leaders List of 2013 Global Outsourcing 100 • Over 80% of real estate executives familiar with our brand ranked it Very Good or Excellent – Wall Street Journal survey • Ranked a Top 5 Brand – Lipsey’s 2013 Commercial Real Estate Brandy Survey • Ranked in the Top 5 in Best Practices Index – Commercial Property Executive • 2012 Greenest Company Index – Commercial Property Executive • Named by the EPA a 2013 ENERGY STAR® Partner of the Year
World-Class Expertise • Many of our associates have honed their skills in their respective markets for years – even decades – gaining an understanding of industry best practices and serving as thought leaders. • Cassidy Turley has served clients’ needs outside of the United States since 1985. In order to better serve our clients in Europe and Asia-Pacific, Cassidy Turley is proud to partner with GVA, the founder and majority shareholder of GVA Worldwide, which serves key markets in over 25 countries.
Cassidy Turley 2014 Retail Forecast | 37