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Kidder Mathews 2nd Quarter Retail Report August 2, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News, Retail Sales Comps.
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Below is the Kidder Mathews 2Q retail market report compiled by Andy Robinson in our appraisal department. The report details construction activity, retail sales, rent forecasts and highlights sales comparables for the first half of 2011.

The investment activity chart shows continued improvement in both deal volume and cap rate compression.

The full report is available by clicking here: Retail-Market-Research-Seattle-2011-2q.

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For Sale: Harbor Towne Center, Oak Harbor, WA July 21, 2011

Posted by Erik Swanson in Listings.
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Puget Sound Investment Review – July 2011 July 18, 2011

Posted by Erik Swanson in Puget Sound Investment Review.
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Just Listed: 38th Street Retail Center, Tacoma, WA July 7, 2011

Posted by Sean Tufts in Listings.
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Investment Sales Volume June 1, 2011

Posted by Sean Tufts in Articles, Blogs, Research/Data, Retail News.
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Retail investment continues to improve locally and around the nation. As data continues to roll in a clearer picture is starting to come together which mirrors what we have been seeing on the ground the last couple of months. Retail Traffic’s latest article explores the changes in the credit markets as capital starts to flow to other deals besides class-A core product. It also touches on the some of the reasoning behind the increased demand and resulting drop in cap rates.

Two of the biggest reasons investors have come back into the marketplace en masse are improving retail sales and record low interest rates. In April, same-store sales for U.S. chain stores, as measured by ICSC, rose 8.5 percent. Year-to-date, same-store sales are up 4.9 percent—a vast improvement over recent years, when same-store sales often posted declines. Retailers have gone from shutting down new opening plans in 2008 to mulling expansion in 2010 to actually signing leases this year.”

This year we have seen an increase of over 160% in dollar volume of retail centers sales in the Puget Sound compared to all of last year. If deal volume continues at this pace (which could happen if deals like the Kimco portfolio close) it will represent a nearly 400% increase in deal volume and record as the largest year since 2007.

Nationally, cap rates continued their fall for the fifth straight quarter. Below is Retail Traffic and Real Capital Analytics graph of retail cap rates and price per square foot.


The full article is well worth the read.

For Sale: Marysville Investment Property – $1,163,000 June 1, 2011

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Just Sold: Eastway Center, Renton, WA May 27, 2011

Posted by Sean Tufts in Retail News, Retail Sales Comps, Sale.
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Costar: Rising Occupancy Should Bring Growth In Retail Rents By Year-End May 13, 2011

Posted by Sean Tufts in Articles, Blogs, Research/Data, Retail News.
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Costar provided the rosiest outlook for retail rents we have seen in a very long time with their latest article, “Rising Occupancy Should Bring Growth In Retail Rents By Year-End”. The title alone provides a warm and fuzzy feeling for any owner or broker that deals in retail real estate. With rents falling an average of 35% from their peak this is very welcome news and provides some hope for a future recovery.

The recovery is obviously further along in specific areas, especially the Northeast, where “Retail sales have already returned to 2007 levels, with year-over-year growth in the 6% range for the last couple quarters — well above the historical range of 4.5% to 5%”. That may be true out East, but we have yet to feel the rebound. Below is a chart of taxable retail sales in the state of Washington. It does appears to have leveled off and based on the sales reports of the area’s major retailers (Costco, Nordstrom, etc) we expect the Q1 numbers to show further signs of improvement.

Year Total Taxable Units
2010 Annual $100,808,236,059 186,652
2009 Annual $100,879,383,855 185,254
2008 Annual $114,007,928,210 188,124
2007 Annual $118,957,667,480 190,003
2006 Annual $111,442,431,996 187,340
2005 Annual $102,154,111,438 185,348
2004 Annual $93,440,674,067 180,206
2003 Annual $87,664,282,658 174,629
2002 Annual $85,368,356,296 169,471
2001 Annual $84,913,896,471 165,756
2000 Annual $85,344,751,728 166,217

Activity on the leasing side has picked up since the beginning of the year, led primarily by national tenants that have realized that the window is likely closing on sweetheart deals at the bottom of the market. With basically zero in the construction pipeline we expect that it will not be long until the vacancy rate starts to inch down and we finally see some upward pressure on rental rates. We will still lag behind the East Coast and rent growth is unlikely to occur any time before next year but we absolutely appreciate the optimism!

Here is the full article for your weekend reading pleasure!

Will the internet kill the retail store? May 3, 2011

Posted by Sean Tufts in Articles, Blogs, Research/Data, Retail News.
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Over the last couple of years we have had what seems to be weekly conversations about the impact the internet has on retail centers. Retail Traffic’s article today from David Lynn of ING Clarion sheds some terrific light on how the dynamic seems to be unfolding.

The argument is made that the internet is actually a complementary tool instead of something that is going to be the downfall of the retail sector. Lynn explains it this way:

The Internet has become a supplemental tool for savvy retailers. Many retailers are successfully incorporating their own websites into multi-channel strategies by offering multiple means for a consumer to obtain a particular good. Although retailers may face execution challenges, multi-channel retailing can effectively increase overall profitability… The technology enables retailers to maintain smaller inventories and more efficient stores, but this does not directly equate to smaller floorplates and less real estate.”

I would add that the impact is similar to the question about tenants surviving the recession. Those that have made it today have proved that they can adapt and have a much higher probability of long term success. Even some of largest tenants did not survive the downturn because they could not handle the change brought on by the recession. They may not have lasted long anyways under their current strategy with or without the recession. When’s the last time you rented a movie at a traditional movie store? As in all businesses, it comes down to the business model and they adaptability of the retailer. Consumers are never going to buy everything online. In fact, the article makes the claim only 4.2% of total retail industry sales were online.

Read the full article here. While you are there, check out another worthwhile article, “Costar Sees Stability in the U.S. Retail Scene“.

Costar Repeat-Sale Analysis April 21, 2011

Posted by Sean Tufts in Articles, Research/Data, Retail News.
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This report is becoming one of my favorites to help decipher the mass of information that floods my inbox every week. The report does an excellent job of breaking down geographical and sector differences. The graph below is an excellent example of that:

As you can see the West Coast and retail in general are well off of their 2007 peaks. I highly recommend downloading the entire report, which can be found here (CCRSI-April2011) as it provides much more data.

Sales volume continues to climb from the depths, increasing 19% from the same month last year. Distressed sales accounted for one in five total sales during this period. Based on what we are seeing on the ground, we expect that percentage to drop as more stabilized product traded hands in March 2011 than we have seen in the last 3+ years.