Observations & Conversations
 |
Sometimes you gotta do whatever it takes and make one lousy deal in order to do a better deal with another tenant in the center |
Thankfully, Christmas came and went without any
horrendous news stories and we’re off to a new year. Most retailers survived the
holiday season.. A lot of them gave away the store before Christmas with super
duper discounts and after-holiday sales had some stuff priced at almost free,
yet comp store sales averaged between three percent up and down for 2002. Comp
store sales for the first month of 2003 however are expected to be dreadful to
just dismal with the rest of the year being still up in the air. Jobless rates
are rising, most people in the stockmarket or mutual funds aren’t as wealthy as
they were a year ago, but look at the number of new vehicles on the road.
Housing sales are record breaking and large ticket items have been flying out
the door to furnish and redo these new homes.
Credit is becoming easier to get, but the demand is high. I hear that there are
so many people looking to refinance, buy a house or invest in rental property
that loan officers don’t even return calls these days, because business is so
plentiful. In the last two weeks, I know two people that got pre-approved for
$40,000 in credit cards and their credit rating is so low their own mother would
consider them a sub-par risk! I watched hundreds of people sign up for store
credit cards in the past few months, so they could get a discount with purchase.
Consumer bankruptcies rose in 2002, but business filings have been relatively
flat. 2002 only saw a few retailers making headlines with bankruptcy news. Kmart
led the pack. Yet 2001 set a 13-year record high for business bankruptcies, and
we saw Ames, Crown Books, Drug Emporium, HomePlace, Lechters, Payless Cashways,
National Record Mart, Lids, Quality Stores, West Coast Video, Zainy Brainy,
Track n Trail, Play Co. Toys, Regal Cinemas, Service Merchandise and Forest City
Auto Parts file. Experts predict 2003 will outpace bankruptcy filings in 2002
both for consumers and businesses.
More vacancy is expected to occur and rents are stabalized at best in all types
of real estate, be it office or retail. The amount of vacant Kmarts and Ames
that have been available for quite some time, plus the new batch of vacant
Kmartsis making some landlords reaccess and lower their expections on rents. I
hear more and more about anchorless malls, not by design but by default because
anchors went dark. So I think 2003 is going to be a rough year, but nothing we
can’t figure our way out of. Enough of us in the business have survived less
profitable times and the odds are that this is just another bump in the road.
However, fashion designers are raising hemlines this season and some wives tales
say that if hemlines go up, so does the stock market and life is good. Lets hope
I’m wrong and they’re right.
Another factor in comp store sales is price deflation. For instance, now a flat
screen monitor is priced at under $200 and plasma televisions can be bought for
under a $1,000, but two years ago these items were priced at double or triple of
today’s price. So to do comp store sales on the same item, they have to sell
double or triple the number of items to show flat sales. This really going to
affect electronic, appliance and computer store sales in the next year. I think
we’re going to hear more and more retailers using price deflation as a reason to
declining comp store sales.
A mantra I’m starting to read and hear about is the American family is on a
mission to simplify their lives. I think they are really spent up and out for
awhile, therefore they won’t be buying as much as they did last year. So retail
margins are going to get tighter and they’ll want better deals from their
landlords. Buyers will want more reasonable cap rates. And the story goes on and
on. But the good news is that we’re all still here. The bad news is that we’re
all going to have to work smarter and harder to do as well in 2003 as we did
last year.
A few things The Dealmakers can help you with getting more leads on your desk in
hopes of a prosperous 2003:
1) If you have property for lease, let us know by sending an email to
property-forlease@dealmakers.net and to our editor
rich@dealmakers.net or fax it to Rich
at 609-587-3511. Include city, state, street location, name of center, space
available, anchors, cotenants, traffic counts and demos, plus your contact info.
Your space for lease will be exposed to tens of thousands of real estate pros.
2) If you’re looking to sell or acquire sites, send your acquisition needs or
details about the site you have for sale to
commercial-realestate@property.com and again to our editor at
rich@dealmakers.net or fax to
609-587-3511.
3) Need a broker go to our web site
www.property.com scroll down and click on the Broker’s Guide, it’s a
database of brokers broken down by specialty of expertise and geographic region.
4) Need tenants, join the Dealmakers newsgroups and get an email everyday on a
tenant looking for sites. Go to our web site
www.property.com and click on the button left that say “Real Estate
Dealmaking News Groups.”
5) Need more tenants, try a demo of TenanstSearch, an online database of 7,000
retailers. Go to www.tenantsearch.com
6) Need more tenants asap, The Dealmakers fax broadcatsing service can send a
fax to 500 potential tenants in just a few hours. To see how many retailers we
have that are looking in your market, go to
www.property.com/faxbrodcastform1.htm and just tell us about your preferred
use and size of the vacancy and by the end of the day we’ll let you know if we
have potential tenants for your site on our database.
7) Advertise at and attend the ICSC events. The calendar is on page http://www.property.com/deals/make_deals.html.
8) Read The Dealmakers every week on hard paper or online at
http://tenant-search.net/dealmakers/
9) Find more retail news at online at
http://www.property.com/RetailNews/news.asp
10) To assess your marketing efforts read Shopping Center Marketing 101,
available online at
http://www.property.com/sc_marketing.htm and another article outlining 77
Ways to Lease Your Center online at
www.property.com/73ways/page0.htm