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Connecticut’s Retail Real Estate Scene

Connecticut’s Retail Real Estate Scene. R. Michael Goman Acting Co-Director Center for Real Estate University of Connecticut November 2010 . Scope of Retail in CT. RR. November 2010. Connecticut’s Retail Real Estate Scene. Retail : Consumer confidence: remains low Sales: remain mixed

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Connecticut’s Retail Real Estate Scene

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  1. Connecticut’s Retail Real EstateScene

    R. Michael Goman Acting Co-Director Center for Real Estate University of Connecticut November 2010
  2. Scope of Retail in CT

    RR

    November 2010

  3. Connecticut’s Retail Real Estate Scene

    Retail: Consumer confidence: remains low Sales: remain mixed Women’s apparel at ‘04/’05 levels Shoppers returning: +3.7% to June Back to school – mixed Holidays ’10 – cautious optimism November 2010

  4. Connecticut’s Retail Real Estate Scene

    Retail: Hourglass effect: Luxury & Discount categories Reduced inventories: markdowns dropping Less focus on cutting expenses Anticipating top-line growth, again Newer store concepts being expanded November 2010

  5. Connecticut’s Retail Real Estate Scene

    Retail: Overall vacancy – September – 7.4% Slight improvement – Malls/Neighborhood centers Quoted 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 retailers November 2010

  6. Connecticut’s Retail Real Estate Scene

    Retail: Investment/sales activity: lots of buyers, few sellers A properties getting good cap rates C properties being sold at deep discounts B properties not moving: Bid/ask mismatch Further fallout expected: Operating defaults Maturity defaults Construction loans November 2010

  7. Connecticut’s Retail Real Estate Scene

    Retail - Factors to Watch: Absorption: < new development, > adaptive re-use Development - <1% LY Fundamental changes in consumer behavior Aging Boomers: time focus: travel, learning Spending focus: comfort, health/fitness, hobbies, investments, retirement Priority of time = convenience CT’s shifting demographics November 2010

  8. Connecticut’s Retail Real Estate Scene

    Retail - Factors to Watch Less “indulgence” spending Internet retail Convergence of retail & bricks & mortar channels Consumer confidence & spending: Unemployment, housing prices, lost wealth, low wage increases Government policies/political turmoil November 2010

  9. Connecticut’s Retail Real Estate Scene

    Industry Issues: New government regulations/policies Cap & Trade IASB/FASB changes re: real estate leases V.A.T. Green: GBC Retail Streamlined Sales Tax CRE Act November 2010

  10. Connecticut’s Retail Real Estate Scene

    Summary - Challenges: CT’s demographics: a flat market Continuing vacancies Low demand Tenant concessions, shorter terms Projection: long, slow recovery November 2010

  11. Connecticut’s Retail Real Estate Scene

    Summary – Opportunity: Not much new development High barriers to entry Fundamentals: Leasing, management, marketing Demographics: CT’s solid, stable markets Sales productivity Redevelopment opportunities November 2010

  12. Connecticut’s Retail Real EstateScene

    R. Michael Goman Acting Co-Director Center for Real Estate University of Connecticut November 2010
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