After a series of historic lows, the Architecture Billings Index (ABI) was up more than eight points in March. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the March ABI rating was 43.7, up from the 35.3 mark in February. This was the first time since September 2008 that the index was above 40, but the score still indicates an overall decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 56.6.
“This news should be viewed with cautious optimism,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “The fact that inquiries for new projects increased is encouraging, but it will likely be a few months before we see an improvement in overall billings. Architects continue to report a diversity of business conditions, but the majority is still seeing weak activity levels.”
Moody’s published it’s most recent commercial real estate indices. Square feet uploaded the pdf to Scribd, which I’ve copied here. The index shows further declines, not surprisingly. Retail is down 8.5 percent year over year.
Our sister publication Supermarket Newsprovides a look at why convenience stores are faring surprisingly well during this recession.
First, new formats are rolling out with convenience front and center. Last week, for example, Giant-Carlisle launched a new convenience store concept called Giant to Go. The company’s pitch is twofold: an emphasis on fresh items and quality along with savings from its Bonus Card loyalty program, tied to a gas discount initiative. This format, like some others before it, wisely targets fresh foods rather than competing only with the commodity grocery offerings of traditional c-stores. It’s also on target by incorporating a strong value component to avoid leaving the impression of being pricey in the midst of a downturn.
Meanwhile, a number of stores are launching new layouts around convenience. Food Lion will be unveiling a new convenience/prepared-meal aisle in 17 stores that eschews the typical category approach in favor of grouping items by level of convenience, such as amount of time needed for preparation. In another effort, Giant Eagle has retooled an Express store to emphasize fresh prepared meals and grocery items that are most frequently purchased, with the fastest-turning items up front.
These new ventures show retailers are committed to experimenting with convenience, not just with the products for sale but also the in-store experience. The reality is that recession hasn’t changed the time pressures on many customers. Shoppers avoiding restaurants are still looking for value-oriented ways of replicating that experience at home.
The Wall Street Journalprofiles Chaim Katzman in connection with the ongoing wooing of Ramco-Gershenson Properties Trust by Equity One. In the latest development, Equity has nominated two people to Ramco’s board.
Mr. Katzman believes real-estate prices are at bargain levels. The Dow Jones Equity All-REIT index of 113 stocks has declined 50% on a total return basis in the past year, and prices paid for U.S. retail property have declined 25% from last year’s levels, according to Real Capital Analytics.
“We definitely feel that this is a buying opportunity,” Mr. Katzman said. “I’ll be surprised if you don’t see us trying to do more [buying]. I think the next couple of years will determine who the big players for the next 20 years are going to be.”
Mr. Katzman and select others are among the few brave enough to buy while the property markets still are in turmoil. Germany’s Otto family, which controls European mall owner ECE Projektmanagement, is paying $112.5 million for a 20% equity stake in Developers Diversified Realty Corp., the owner of 710 big-box shopping centers in the U.S.
The Success of C-Stores
by David Bodamer April 22nd, 2009
Our sister publication Supermarket News provides a look at why convenience stores are faring surprisingly well during this recession.
No Comments Related Topics: Commentary, News, Retail, Retail Real Estate |