Retail Real Estate Scene R Michael Goman Acting CoDirector Center for Real Estate University of Connecticut November 2010 RR November 2010 Scope of Retail in CT Connecticuts Retail Real Estate Scene ID: 151584
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Connecticut’s Retail Real EstateScene
R. Michael GomanActing Co-DirectorCenter for Real EstateUniversity of ConnecticutNovember 2010 Slide2
RRNovember 2010
Scope of Retail in CTSlide3
Connecticut’s Retail Real Estate Scene November 2010
Retail:Consumer confidence: remains lowSales: remain mixedWomen’s apparel at ‘04/’05 levels
Shoppers returning: +3.7% to JuneBack to school – mixedHolidays ’10 – cautious optimismSlide4
Connecticut’s Retail Real Estate Scene November 2010
Retail:Hourglass effect: Luxury & Discount categoriesReduced inventories: markdowns droppingLess focus on cutting expenses
Anticipating top-line growth, againNewer store concepts being expandedSlide5
Connecticut’s Retail Real Estate Scene November 2010
Retail: Overall vacancy – September – 7.4%Slight improvement – Malls/Neighborhood centersQuoted asking rates continue to be down – 4.28% since Q3-09:
$16.14 Q3-09$15.57 Q1-10$15.38 Q2-10 $15.18 Q3-10
Expanding retailers: PC Richards, Ulta3, rue 21, Sonic, Checkers, HHGregg, Tractor Supply, Lumber Liq., SYMS, dollar formats
Market opportunities:
gain better positioning – EMS, Costco, Target;
smaller/local retailersSlide6
Connecticut’s Retail Real Estate Scene November 2010
Retail:Investment/sales activity: lots of buyers, few sellersA properties getting good cap ratesC properties being sold at deep discounts
B properties not moving: Bid/ask mismatchFurther fallout expected:Operating defaultsMaturity defaults
Construction loansSlide7
Connecticut’s Retail Real Estate Scene November 2010
Retail - Factors to Watch:Absorption: < new development, > adaptive re-useDevelopment - <1% LYFundamental changes in consumer behaviorAging Boomers:
time focus: travel, learningSpending focus: comfort, health/fitness, hobbies, investments, retirementPriority of time = convenience
CT’s shifting demographicsSlide8
Connecticut’s Retail Real Estate Scene November 2010
Retail - Factors to WatchLess “indulgence” spendingInternet retailConvergence of retail & bricks & mortar channelsConsumer confidence & spending
:Unemployment, housing prices, lost wealth, low wage increasesGovernment policies/political turmoilSlide9
Connecticut’s Retail Real Estate Scene November 2010
Industry Issues:New government regulations/policiesCap & TradeIASB/FASB changes re: real estate leasesV.A.T.
Green: GBC RetailStreamlined Sales TaxCRE ActSlide10
Connecticut’s Retail Real Estate Scene November 2010
Summary - Challenges:CT’s demographics: a flat marketContinuing vacanciesLow demand
Tenant concessions, shorter termsProjection: long, slow recoverySlide11
Connecticut’s Retail Real Estate Scene November 2010
Summary – Opportunity: Not much new developmentHigh barriers to entry Fundamentals: Leasing, management, marketing
Demographics: CT’s solid, stable marketsSales productivityRedevelopment opportunitiesSlide12
Connecticut’s Retail Real EstateScene
R. Michael GomanActing Co-DirectorCenter for Real EstateUniversity of ConnecticutNovember 2010