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Retailers Post Same-Store Sales Gains in January
After a home run in December, retailers had another strong month in January. ICSC, Retail Forward, Retail Metrics and RetailSails have all crunched the numbers from the publicly-traded retailers that report same-stores sales and the figures show that the post-holiday shopping period went well for most firms.
Retail Forward, Retail Metrics and RetailSails concluded that same-store sales jumped 3.3 percent in the month while ICSC’s figures showed a 3.0 percent improvement. The numbers were slightly better than December’s result and made January the best month for retailers since July 2008 or April 2008, depending on whose numbers you look at.
ICSC’s tally shows that same-store sales rose 3.0 percent in January, the fourth time in five months that ICSC’s index has risen. The result was a slight increase from the 2.8 percent rise in December. ICSC expects retailers to post about a 2 percent gain in February. Read the rest of this entry »
Court Orders Joseph Freed To Hand Over Block 37; CRE Positions Remain in Demand (Tuesday’s News & Notes)
And the saga of the Block 37 development in Chicago continues. This week, a Judge ordered developer Joseph Freed & Associates to hand over the keys to the project to the receiver. But wishing to hold on, Freed tries to secure potential investors in the development.
- The court has forced Joseph Freed & Associates to turn over Block 37 to a previously appointed receiver, according to Chicago Business. Meanwhile, The Chicago Tribune reports that Freed has started discussions with potential investors in a bid to gain back control of the project.
- General Growth Properties has tapped investment bank UBS to help it emerge from Chapter 11, according to the Examiner.com.
- Retailer Daily reports that Wal-Mart will lay off 11,200 Sam’s Club workers in 2010. The retailer denies the lay-offs have anything to do with the recession.
- The National Retail Federation forecasts a 2.5 percent increase in retail sales in 2010, according to Reuters.
- A Student of the Real Estate Game reports that applications for jobs in commercial real estate remain near 2007’s levels, according to statistics compiled by Cornell University.
Big-Box Retailers Eye Urban Sites; Potential 2010 Closings (Weekend Roundup)
One of the emerging stories in retail real estate is that healthy retailers are making moves to grab prime locations that have opened up in urban markets. This is especially true of big box players. A few years ago, cities were blocking these efforts. There were talks of legislation to block big-box construction in some places. You don’t hear any of that anymore. It seems that what’s worse than big-box stores in urban locations is having vacant storefronts. As a result, we’ll see more of these kinds of deals take place.
For example, in Chicago Target is reportedly scoping the historic Carson Pirie Scott & Co. building on State Street as a new store. Similarly, in New York, Nordstrom, which is opening a Nordstrom Rack location in Union Square, is looking at another site on Fifth Avenue.
Here are some other news and notes about retail real estate from over the weekend.
- 24/7 Wall Street has prepared a roundup of 35 large retail companies to see which had the largest fall-offs in same-store sales in 2009 as a way of seeing what chains might be closing stores this year.
- Cabela’s is supposed to be one of the main attractions of the Meadowlands Xanadu project in northern New Jersey. But the firm’s CEO said last week that the store is “highly unlikely” to ever open. Construction on most of that project’s superstructure seems to be completed. But there’s no indication when–if ever–it’s going to open. Amazing.
- Sears’ latest strategy to boost its sales includes ramping up its online sales efforts.
- Seeking Alpha asks “Malls: All Bad or an Opportunity?” The post takes a look at the outlooks of several mall and outlet REITs.
- Moody’s latest look at CMBS delinquencies shows that defaults continued to rise in December.
- Square Feet blog does a nice job explaining how real estate receivers work.
Commerce Department Says Retail Sales Tanked in December
According to the Commerce Department, retail sales were negative in December. This is much bleaker data than the same-store sales comps that came out a week ago. The decline was not what economists had expected. Sales were expected to rise 0.5 percent according to economists surveyed by Marketwatch.
The only silver lining here is that retail trade sales were up 5.9 percent over last year. So this December did mark an improvement over last year’s disastrous holiday shopping season. However, a look at business breakout reveals that the types of retailers that shopping center owners rely on had the weakest performance. The best year-over-year seasonally adjusted performers were gasoline stations (+33.6 percent), nonstore retailers (+10.6 percent) and auto and other motor vehicle dealers (+7.6%).
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $353.0 billion, a decrease of 0.3 percent (±0.5%)* from the previous month, but 5.4 percent (±0.5%) above December 2008. Total sales for the 12 months of 2009 were down 6.2 percent (±0.2%) from 2008. Total sales for the October through December 2009 period were up 1.9 percent (±0.3%) from the same period a year ago. The October to November 2009 percent change was revised from +1.3 percent (±0.5%) to +1.8 percent (±0.2%).
Retail trade sales were down 0.2 percent (±0.5%)* from November 2009, but 5.9 percent (±0.5%) above last year. Gasoline stations sales were up 33.6 percent (±1.5%) from December 2008 and nonstore retailers sales were up 10.3 percent (±1.7%) from last year.
But why were the numbers so far off? Economist Dean Baker had a post up briefly here that seems to be gone now that said economists don’t account for a bias in same-store sales metrics when thinking about retail sales. Moreover, he points out that the December numbers showed a weak result in the general merchandise sector, which isn’t a great sign for retail real estate.
He explains:
The big culprit in this drop was the general merchandise sector (department stores and Wal-Mart), which had a 0.8 percent drop. The likely reason that many economists missed this drop is that they continue to ignore the same store sale bias. There are many fewer stores this year than last. This means that even if overall sales were constant, sales in same stores would rise. This bias will gradually disappear as we move forward and the comparison month in the previous year looks worse, but for now it is still substantial.
Calculated Risk’s monthly take is here.
Click for larger image
The Scariest Retail Sales Chart Ever
This comes courtesy of The Business Insider. It contrasts drops in retail sales in various recessions and shows what we’ve experienced since late 2007 is unlike anything we’ve seen previously.
Tales of Distressed Properties; Was “Originate-to-Distribute” Lending Model Flawed? (Tuesday’s News & Notes)
Seems like I’m in a neverending game of catchup these days. Here are some interesting recent news and notes from around the retail real estate world.
- Chris Macke, CEO of Chicago-based General Equity Real Estate, contributed a commentary to our sister publication NREI evaluating whether the “originate-to-distribute” model of lending was a culprit or a scapegoat in the lending mess we’ve seen in recent years. Macke argues that pinning the distress on a single source misses the point a bit. There were systemic problems at work, including issues with credit rating agencies.
- A Las Vegas Sun piece looks at the unfinished Summerlin mall outside Las Vegas. It’s a General Growth project that the paper calls a “monument to the recession.” It is both the victim of General Growth’s financial straits as well as the steep drop in the fortunes of the Las Vegas economy.
- Tesco is making an interesting move into China where it has built a 30,000-square-meter shopping mall. It’s the first mall the retailer has opened.
- In the first big mass store closing announcement of the year, Foot Locker says it will close 117 stores.
- The tales of distressed properties keep piling up. The Boston Herald reports on the Hanover Mall, which will be sold at a foreclosure auction on February 4.Walton Street Capital had a $87.5 million loan for the mall and was reported as being close to a default a month ago. Meanwhile, CoStar has a report on two properties in Florida going into receivership. Lastly, the Arizona Republic looks at the troubled histories of many of the components of the massive CityNorth project in Phoenix.
- Embattled Opus Corp. has a new CEO. Timothy Becker, principal and co-founder of Maplewood-based Lighthouse Management Group Inc., is now the CEO of the firm, replacing Mark Rauenhorst, who had stepped down in October.
- An ugly fight has broken out over the estate of Melvin Simon. According to the Indianapolis Business Journal, Melvin Simon’s daughter Deborah filed court papers Thursday afternoon charging her father was coerced into approving a new estate plan in February 2009 that dramatically increased the amount of his fortune going to her stepmother, Bren.
- BNET has an analysis showing that grocers did very well this holiday shopping season.
Retailers Hit a Home Run in December
After a weak November, retailers bounced back in a big way in December. ICSC, Retail Forward, Retail Metrics and RetailSails have all done the math in comparing results from various chains and the verdict is that many retailers had a very merry Christmas and largely beat expectations. Retail Forward, Retail Metrics and RetailSails concluded that same-store sales jumped 3.0 percent in the month while ICSC’s figures showed a 2.8 percent improvement. That made December the best month for retailers since July 2008 or April 2008, depending on whose numbers you look at.
ICSC’s tally shows that same-store sales rose 2.8 percent in December, the third time in four months that ICSC’s index has risen. The result is a nice rebound from the 0.3 percent drop in December. Overall, ICSC says the two-month figure for the holiday shopping season showed a 1.8 percent gain in same-store sales. The numbers beat ICSC’s initial projections, which predicted about a 1 percent increase for the November/December period. Read the rest of this entry »
The Colliers/FirstService Merger; Receiverships and Foreclosures (Thursday’s News & Notes)
Here are some key stories on retail and retail real estate from the past two days.
- There are two stories worth checking out from our sister publication NREI. There’s a report that looks at the recently announced merger between Colliers International and FirstService Real Estate Advisors that will create a brokerage behemoth on par with CB Richard Ellis and Jones Lang LaSalle. Another worthwhile piece examines the latest trends in CMBS delinquencies based on a report from Trepp LLC.
- CoStar has a piece looking at how the New Year has started with a flurry of foreclosures and receiverships on retail properties.
- Macy’s announced plans to close five stores. The closures are the result of an annual effort to close underperforming locations.
- We have our first retail bankruptcy of the year. Ski Market, a retailer of outdoor products and winter sports gear filed for Chapter 11 bankruptcy protection. The chain operates seven locations.
- The Los Angeles Times examined what’s happening with big-box vacancies in California, a trend we covered on a national basis in a feature we posted yesterday.
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Debate on CRE Continues; RCA Makes a Buy; Burkle Bids for Barneys and Barnes & Noble (Tuesday’s News & Notes)
by David Bodamer February 2nd, 2010
It seems like every couple of days there’s a new burst of articles on the state of commercial real estate. At one extreme, you have stories breathlessly running off one or two metrics that show that commercial real estate is going to destroy the economy. A common one is the Deutsche Bank figure that up to 65 percent of the $1.4 trillion in commercial mortgages coming due by 2013 will have trouble getting refinanced.
That works out to just more than $900 billion. It sounds terrifying. But let’s put that into a little perspective. The pain is being spread out over four years. (And that assumes none of these loans will get extended, which has not been what we’ve seen so far.) Remember, as well, that the idea is that those loans will have “trouble” getting refinanced, Read the rest of this entry »
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