A&P Bankruptcy Opens a New Era in Retail Real Estate

New Opportunities Ahead for Shopping Centers in Northeast U.S.

We recently saw the end of a long chapter in American retailing when the parent of the iconic A&P brand filed for Chapter 11. This is the second time in five years that the quaintly named Great Atlantic & Pacific Tea Company (now a division of Montvale-Para Holdings) has entered bankruptcy proceedings and it looks as though this is the end of the line. Once the Wal-Mart of its day, A&P created the supermarket concept in 1936, bringing a diverse inventory at low prices to a mass market and becoming the world’s largest retailer. There are many reasons for its demise, including a string of strategic blunders, and we can count on the media to deliver a full autopsy soon. But from my perspective, the primary failure of the 156-year old retailer was remaining static while the world was changing. A&P tried to retain its classic retailing model in the midst of a dynamic and robust competitive landscape of supercenters, dollar stores, convenience stores, and discounters. At the high-end, Whole Foods, Fresh Direct, and new concepts like Amazon Fresh and Blue Apron were staking their claims. In the middle, retailers such as ShopRite and Stop & Shop reinvented and modernized their stores. In an industry with razor-thin margins, the competitive squeeze was too much.

Whats Next for Grocery-Anchored Shopping Centers Post-A&P?

In a recent article, USA Today said “A&P’s biggest asset may be its real estate,” which includes A&P, Pathmark, Waldbaums, SuperFresh, Food Emporium, A&P Liquors, and Best Cellars stores. This puts the spotlight on the shopping centers of the Northeast region of the country, where most of these stores are located and where our portfolio is concentrated. It appears that Stop & Shop, Acme and Key Foods have struck deals on 120 of the locations. A&P has said it will close 25 stores, which leaves 176 on the block. Lots of retail real estate trends are in the making.

As leading retail leasing advisors, our Levin team sees the A&P bankruptcy as signaling a new paradigm. We’ve found that retaining competitive advantage following a change in a retail anchor tenant requires both strategic rethinking and capital infusion. Retenanting and repositioning is a constant factor in effective asset management. It’s part of the game plan for success in our dynamic retail real estate industry. Sometimes a bankruptcy is the driver, sometimes other factors are at play. Whatever the impetus, these are situations that present opportunities for reinvention and growth. And in a market that’s got plenty of post-recession momentum going, there’s cause for optimism in the face of anchor changes. It’s much too early to get specific about the effects of A&P’s passing, but the takeaway here is that one of the few things we can count on is change.

Hot Retail Real Estate Market Spawns Construction Boom

Flight to Quality is Seen in Major Retail Corridors in the Northeast
Heading into the heart of 2015, the Northeast retail real estate market looks robust. Tenants wanting to establish or expand their footprint here have turned aggressive in leasing, absorbing much of the prime retail space. What remains is commanding higher prices.

The result? An emerging supply/demand imbalance for Class A space that is beginning to create some barriers to entry for retailers, while spurring expansion of existing shopping center properties. For these new projects, flight-to-quality is a common theme, with developers focused on opportunities in established retail corridors, especially those offering the strength and stability of a grocery anchor.

Levin’s Construction Management Services See Strong Demand 

Examples of this retail real estate trend can be found in Levin’s own leasing and management portfolio. Our construction management team recently began an expansion of St. Georges Crossing, a fully leased, 317,000-square-foot property in Woodbridge, N.J. After arranging a long-term lease with T.J.Maxx, we broke ground on a 23,000-square-foot building for the fashion retailer, which will occupy a newly acquired parcel of adjacent land. Similarly, at Mid-Town Plaza in Middletown, Pa., we orchestrated the purchase of an adjacent parcel to accommodate the construction of a 7,380-square-foot AutoZone.

Additionally, at the 80,000-square-foot Clifton Plaza in Clifton, N.J., we leased and delivered a 15,000-square-foot, newly constructed building for Blink Fitness. And in Flemington, N.J., we orchestrated a lease with HomeGoods at The Shoppes at Flemington and then oversaw approvals, contractor sourcing and construction of a 22,000-square-foot, free-standing addition.

Flight to Quality Drives Expansion Projects in Key New Jersey Retail Areas

Reflecting the flight-to-quality play, Stafford Park, a thriving, 650,000-square-foot shopping center in Manahawkin, N.J., has been approved for an additional 195,000 square feet – including several prime pad sites. The retail portion of Stafford Park includes anchor tenants Costco and Target, plus PetSmart, Dick’s Sporting Goods, Best Buy, Ulta and Olive Garden.

In Southern New Jersey’s Burlington County, the ShopRite-anchored Bordentown Plaza provides a great example of shopping center redevelopment driven by the need for competitive positioning in an established retail corridor. ShopRite is slated for a complete renovation and expansion, and the entire, 179,000-square-foot center itself will be updated and repositioned. As the property’s retail leasing advisors, Levin is marketing more than 100,000 square feet of existing space, plus proposed pad sites.

Outlook for Retail Real Estate in the Northeast: Increased Stability

The success of recently completed ground-up and renovation projects are bright spots in our region. And while we will continue to see quality inventory added to meet growing demand, the maturity of the market, combined with lengthy approval and building processes, will keep expansion in check. In other words, oversupply should not be a concern anytime in the near future. We expect the market’s stability to build steadily over the next couple of years. A continued low interest rate environment bodes well for the positive construction and investment activity we are seeing.

As always, well-located shopping centers with a strong tenant mix and curb appeal continue to draw retailers, consumers and investors. At the same time, we see some strengthening in the demand for properties in secondary positions. Landlords are becoming more creative in their approach to leasing in these spaces and are working hard to establish their properties as attractive alternatives to the scarce Class A’s.

The outlook for Northeast retail real estate remains nothing but positive through the balance of 2015 and beyond. Demand from national, local and franchise companies in active categories – including grocers, affordable fitness chains, off-price retailers and fast-casual restaurants, among others – will continue to drive vacancies down and rental rates up. And the level of development activity – both for new projects and expansions/renovations – speaks to growing confidence in the future of the retail sector in our area.

RECon 2015 Takeaway: Retail Real Estate is on the Rise Again

Keen Appetites for Value-Added Investment Set the Tone for Annual Las Vegas Gathering

With 35,000-plus attendees thronging last months ICSC RECon event in Las Vegas, it seems safe to say that commercial retail real estate is roaring back from the Great Recession in a big way. Its not just the number of attendees that impressed us but the amount of new blood among them and the intense deal-making mood that pervaded the convention center.

Solid Retail Fundamentals Are Driving the Market on Multiple Levels

Yes, weve seen more attendees at past RECons (the record is 50,000), but weve never seen one of these shows with more capital aggressively chasing deals. Frothy would be a good word to describe the acquisition-oriented activity. The big institutional investors, many of whom we advise, were in a bullish state of mind and on the hunt for high quality, core retail assets as well as core plus and value-added retail properties. In addition to dominant grocery anchored centers, power centers and properties that feature category leading brands and credit tenants are in strong demand.

Ground up development was also drawing its own healthy slice of investor attention. For the first time since the slump began, there is a pipeline of significant development money, which is good news for the construction management team at Levin. Behind all this investor interest is the growing strength of retail fundamentals, particularly in the top-tier markets, which are typically the under retailed, high barrier to entry markets as well as the growth markets.

RECon, As Usual, Reveals Retail Real Estate Trends: Mixed Use, Hot Markets, New Retail restaurant and Entertainment Concepts and Smaller Footprints for Big Box Tenants

Trend watchers always like to keep a sharp eye on gatherings like RECon, scanning the scene for the next big thing. The 2015 event yielded some hints about new industry directions, most of which have been evolving for some time. The biggest driver of change in retail; online shopping, is now a firmly entrenched consumer habit and retailers and retail real estate owners and managers continue to struggle to pry people away from their screens and back into bricks-and-mortar venues. So we see both new retail development and renovations to existing shopping centers that include new restaurant and entertainment concepts, cinemas, and event spaces joining the line-up of traditional retail stores. Mixed-use development is also a focus. Experimentation is the name of the game here, as developers search for the right mix of retail, restaurants, entertainment, residential and/or office uses, and tackle the subtle nuances of pedestrian traffic patterns and tenant positioning. Success in mix use, many are finding, depends on the dynamics of the individual market and thats not something that lends itself to a template or formula.

The retail real estate sector is nothing if not dynamic, and change tends to involve responses to new trends. Wal-Mart and Target, for example, are adjusting to unique environments, particularly the dense urban markets as well as to continued competition from the extreme discount grocers and dollar stores with smaller footprints and new concepts. Expect to see the continued rollout of The Wal-Mart Express convenience stores and The Neighborhood Markets, with emphasis on groceries.

All in all, RECon 2015 was a testament to the resiliency of our industry and a cause for optimism. We are on a roll!

Annual Post-Holiday Survey: Seasonal Cap Positive Year

Retailers Ramping Up Staffing and Tech-Related Marketing for 2015

The results of our annual Post-Holiday Retail Sentiment Survey are in and the news is good. Participating store managers in our 95-property, 13.0 million-square-foot shopping center portfolio reported a healthy rise in both yearly and holiday sales and traffic. Optimistic as a result of 2014’s performance, they’re also ramping up staffing and planning to put more technology into their marketing mixes in anticipation of continued momentum. That’s a retail real estate trend we like.

Our Research Mirrors NRF and ICSC Polls, But with Sales and Traffic Higher

Mirroring findings of the National Retail Federation (NRF) and the International Council of Shopping Centers (ICSC), 63.6 percent of our survey respondents reported 2014 holiday sales at the same or higher levels than 2013’s. Last year, only 51.2 percent reported sales at the same or higher level year over year. The NRF reported a smaller rise of 4.0 percent in total holiday retail sales, which include November and December sales, while ICSC reported a 3.6 percent increase.

An impressive, though slightly smaller, percentage (60.0 percent) of our survey respondents also reported the same or higher traffic to their stores this year compared to the 2013 holiday season. That said, retail analytics firm RetailNext Inc. reported a 7.1 percent year-over-year decline in traffic at brick-and-mortar stores during December.

What accounts for the more robust numbers from our managers? Our survey is conducted at the grassroots level and involves a regional mix of local, regional and national retailers, while many larger, national studies focus on ‘big picture’ corporate earnings or only major retail organizations. That differentiates our study, which sometimes counters what others report – like in the case of holiday traffic. This different approach gives a picture of what merchants are seeing at the ground level, in realtime.

Retailers Expectations Met or Exceeded by 2014 Holiday Shopping Season

Since our survey measures the sentiment of retailers along with sales and traffic, expectations are an important element. And 2014 scored well. According to our participants, the 2014 holiday season met expectations (44.4 percent) or exceeded them (24.4 percent). For context, last year only 13.4 percent of respondents said that their holiday season was better than they thought it would be.

Two Holiday Sales Peaks Are Emerging as a Retail Real Estate Trend

Seasonal sales peaked earlier for a larger percentage of our responding managers this year. For 15.9 percent, sales spiked before Thanksgiving, and for 19.3 percent they peaked during the Thanksgiving/Black Friday weekend (compared to 12.8 percent and 15.4 percent, respectively, in 2013). That percentage dropped off in early December and then surged, with 26.1 percent reporting a peak during the weekend before Christmas.

Retailers have been promoting the Black Friday sales push earlier and for longer, which has extended that buying period to include more and more of November. The slowdown early in December and spike just before Christmas likely reflect emerging patterns in online shopping, with consumers returning to physical stores as the holiday nears and shipping deadlines become tight. RetailNext’s study supports this observation, citing December’s “bookend” performance for brick-and-mortar stores.

Holiday Staffing Levels Expected to Stick

While some sources reported a drop in seasonal retail hiring in 2014 (including consulting firm Challenger, Gray & Christmas, Inc., which reported a 4.0 percent drop), a significantly larger percentage of our survey respondents hired temporary workers during the holiday season – 43.3 percent vs. 33.7 percent in 2013.

Even more encouraging, 62.0 percent of those say they intend to retain some of those positions in 2015. That’s a big jump over last year, when only 40.5 percent said that they would transition seasonal workers to permanent staff. And while the percentage is down year-over-year, nearly one third (31.5 percent) of survey respondents anticipate their companies will open new stores in 2015. We see this as really good news, especially in light of January announcements of store closings and layoffs by Macy’s, JC Penny and other large retailers. It’s good news for commercial retail leasing too!

Use of Tech in Marketing Is a Retail Trend Thats Here to Stay

In recent Retail Sentiment Surveys, we’ve closely tracked our tenants’ growing use of technology in marketing, and the trend appears to continue unabated. For the holidays, 74.2 percent of survey respondents incorporated technology such as mobile apps, social media, email and text message marketing into their promotional mix. Among those respondents, 63.2 percent said they believe the efforts bolstered holiday sales performance. Additionally, 44.9 percent of all respondents indicated they will add or enhance marketing efforts involving technology in the coming year.

Technology innovations are entrenched in how the retail industry does business, and our survey pool reflects this. Our respondents are seeing direct benefits, especially in social media, mobile apps and email. It is encouraging to hear how these new tools are making a difference.

Several third-party reports support our findings. The Consumer Electronics Association indicated more than half of shoppers who use mobile devices prefer to look up information while shopping, rather than talk to store employees. And BDO recently found that 84 percent of retailers are using social media, with this platform projected to comprise an average of 19 percent of their marketing efforts this year.

2014: All Around It was a Very Good Year

The U.S. Census Bureau announced a 4.0 percent rise in retail sales in 2014. Over half of our survey respondents (51.7 percent) reported 2014 sales levels above or the same as 2013, a slight uptick from the 2013 post-holiday survey, when just under half (49.4 percent) reported the same or higher sales year over year.

Levin’s retailers feel good about what 2015 will bring. A full 67.0 percent of respondents are optimistic about the coming year’s potential. And it’s important to note that this percentage is higher than the average for the prior three years (65.1 percent).

Retailers have reason to be positive. Overall indicators for the retail industry point to further positive momentum. Gas prices are down. Unemployment is down. And consumer confidence and spending are rising. We expect continued steady growth in the near term, and our tenants appear to mirror this sentiment.

Levin’s next retail sentiment survey will be conducted in late May and early June, gauging mid-year performance. Watch for the results here on our blog.

Will Falling Gas Prices Pump New Life Into Retail Sales?

Retail Trend Watchers Predict Upcoming Surge in Consumer Spending

Across the U.S., drivers are doing the happy dance at the gas pump. And they’ve got cause for celebration. Between September 25, 2014 and January 5, 2015, the average price of gas fell every single day, dropping nearly a full dollar from July levels and delivering a reported total savings of $50 billion to consumers in the fourth quarter of last year. But where will all those dollars go? Retailers have high hopes for a first-quarter surge and the retail real estate industry is optimistic about what’s next.

Retail sales for November, just four months into the gas price decline, saw a gain of 0.4 percent. December brought some good news with non-store holiday sales (indicator of online purchases) growing 6.8 percent according to the National Retail Federation. Restaurants and bars enjoyed a gain of 0.8 percent over their November performance, while food and beverage stores, pharmacies and other health and personal care stores reaped higher sales. Full year figures for consumer spending show retail sales rising 4 percent for the year. Considering the massive savings in energy, some wonder if the numbers could have been higher.

Steve Barr, retail and consumer sector leader at PricewaterhouseCoopers, suggests that the picture might have been even better except for the “the conflicted consumer” factor. These are the cautious shoppers who may still have been struggling to balance cost of living expenses with recent gas savings. But with the added factor of the strengthening national economy and continued low energy costs, this conflicted consumer may soon feel much less conflict.

Consumer Confidence Is Gaining Traction Fueling Retailers Optimism

“It’s a no-brainer. It’s going to be a better year for the consumer in 2015,” predicts Paula Campbell Roberts, consumer analyst at Morgan Stanley, citing the $80 billion dollars in savings from lower gas prices projected for Q1 of 2015. Terry Lundgren, Macy’s CEO and Chairman, agrees. Addressing the National Retail Federation earlier this month, he said, “I think we’re in a place right now where consumption can return back to what we’ve seen in the past.” So with an additional $550 to $750 in their wallets during the coming year, Americans may be about to go on a long-delayed shopping spree.

Younger Demographic and Lower-to- Middle Income Households To Benefit Most

Households with lower-to-middle disposable incomes will feel the biggest economic boost from cheaper gasoline. This includes members of the large 18-34 demographic, who are inclined to spend even when their budgets are tight. This group may lead the anticipated retail spending surge. In a recent National Association of Convenience Stores Survey, a third of the 18-34 year old respondents said they would use their gas savings to make more discretionary purchases beginning in January.

Rising Wages and Employment Help Brighten the Retail Outlook

The American Automobile Association, whose Daily Fuel Gauge recently reported gasoline at $2.08 per gallon, predicts that low prices will remain stable for the first half of this year, with a moderate rise post-summer. The price-per-gallon is expected to remain under $3.00. That mid-year uptick in gas prices should be offset by rising wages and declining unemployment in a recovering national economy.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, sums it up. “Consumers real disposable cash flows are surging, confidence is high and rising and the labor market is recovering at an astonishing rate.” That’s good news all around, especially for retail real estate.

 

Blink Fitness Opens at Clifton Plaza in Clifton, N.J.

Retail Real Estate Trend Predicted Earlier This Year Is Materializing Fast

Blink Fitness recently celebrated the grand opening of its newest New Jersey location at our Levin-managed Clifton Plaza in Clifton. The affordable fitness chain occupies 15,000 square feet of newly constructed retail space at the 80,000-square-foot shopping center.

Fitness Centers Boost Health of Members and Retail Real Estate Companies

Early this year, the business media – including Forbes, industry bloggers and even the ICSC – predicted that fitness venues in shopping centers would be among the top retail real estate trends for 2014. They were on the money, especially with Blink. The off-price brand is on the move across our tri-state area, offering health-conscious members a low-cost workout.

Managers of retail real estate benefit too, when tenants like Blink move in. Fitness centers deliver the sought-after “experience” component that gives shopping venues an edge over online merchants. And fitness is one of the few businesses that can be relied on to draw steady traffic, even in an increasingly online-oriented world. Traffic from gym goers is decidedly steady, with 44 percent of members going to work out at least 100 times per year. Fitness centers are open to members every day of the week, with 4 to 7 p.m. as prime time, delivering potential customers to adjacent tenants, especially those offering services or merchandise related to health, fitness and lifestyle.

Fitness centers like Blink Fitness appeal to shopping center management for an additional reason and an important one. Their model does not require the expensive build-outs that their high-end cousins need in order to accommodate pools, saunas, steam rooms and other spa-style amenities.

This retail real estate trend toward low-cost fitness centers in convenient locations, which began during the recent economic slowdown, shows no signs of stopping. Health club memberships stand at more than 41 million and the demographics are expanding beyond the traditional 18-34 age group to include the fast-growing 50-plus population, who have embraced exercise as the key to weight management and longevity. Blink Fitness, which is in an aggressive expansion mode, typifies this trend.

Fast-growing Fitness Chain Joins a Stellar Tenant Line-up at Clifton Plaza

With more than 36 locations now open across the tri-state area and memberships starting as low as $15 per month, Blink Fitness is on target to achieve its corporate goal of creating healthier communities by giving virtually everyone the opportunity to incorporate fitness into their daily routine. Blink gyms are clean and modern with top-of-the-line cardiovascular and strength-training machines, easy-to-use, self-guided workout menus and a friendly, supportive staff.

The Blink Fitness brand is a perfect fit with other tenants at Clifton Plaza. Co-anchoring the shopping center is a 24,000-square-foot Big Lots and a 14,000-square-foot Dollar Tree. National and regional tenants include Work ‘N Gear, GameStop, Radio Shack, Angel Tip Nails & Spa, Bruno’s Pizza, Sally Beauty Supply, Valley National Bank, and a recently opened Dunkin’ Donuts.

For more on the growth of fitness centers, check out these recent articles in Sourcing Journal and National Retail Tenants Association (NRTA) online.

Retail Real Estate Trends: In-Store Restaurants and Hip Hybrids are On the Rise

High-End Cuisine and Artisanal Coffee Draw Customers, Boost Sales

The grand department stores of yesteryear – Marshall Field’s, Hudson’s, Wanamaker’s and others – always featured a “tea room” where elegant ladies could enjoy refreshments during shopping sprees. Over the decades, in-store food service has changed, along with shopping styles, but it’s never gone away. Today, Starbucks keeps Target shoppers caffeinated, McDonalds fortifies bargain-hunters at Wal-Mart and Ikea continues to serve up Swedish meatballs and other Nordic favorites. At the higher end of the shopping spectrum, Nordstrom operates multiple restaurants throughout its chain, boasting a total of seven different food service concepts and 200 eateries and coffee bars in its properties. Still, new food-related retail real estate trends keep emerging –and they’re definitely not your grandmother’s tea room.

Department Stores, Branded Shops Build Traffic with Quality Food and Drink

When Fodor’s, the venerable publisher of travel information, starts listing the 10 best in-store restaurants, it’s a sign that store-based dining has reached both a critical mass and a quality high-point. On the retail real estate NYC scene, big name chefs like David Burke preside at Bloomingdale’s. Hip restaurant brand Momofoku Milk Bar operates out of Soho’s Band of Outsiders boutique – right in the front window. Lord & Taylor shoppers can take a break at branches of Sarabeth’s. Ralph Lauren recently joined in with a main level coffee bar (featuring Lauren’s own brand of beans) and a full-service restaurant upstairs at its Fifth Avenue flagship. Among the latest to join the in-store food trend is Urban Outfitters, who opened a three-floor venue on Herald Square in June –the largest in their 400-store chain. A main floor feature is an outpost of Intelligentsia Coffee of Chicago, “designed to serve an ocean of coffee to thousands of passers-by each day.”

At Tommy Bahama’s “Lifestyle” Stores Food and Drink Reinforce the Brand

A brand-oriented take on the in-store food service trend in retail real estate is Tommy Bahama’s Island concept. The resort-themed menswear company has launched 13 “Island” stores, where shoppers find an immersive environment that includes tropical cocktails and menus, a perfect backdrop to the brand’s beach-y fashions and accessories. Tommy Bahama reports that its “Island” stores, located in such venues as The Woodlands Mall in Dallas, Corona del Mar Plaza in Newport Beach, and Scottsdale’s Kierlands Commons, generate two and a half times the sales per square foot as their other 97 locations.

At Hip Hybrids, Store and Restaurant Merge for a Single Customer Experience

Saturday’s Surf may have launched the hybrid trend in NYC retail real estate. The five-year-old Soho-based boutique (now with three additional locations) offers surfboards, accessories and a full line of surf-inspired menswear. Its artisanal coffee bar is integrated into the selling floor. Co-founder Josh Rosen, who is expanding into new markets, insists that coffee is so essential to his business that any new leases must permit beverage service. Management at Shinola, a Detroit-based merchandiser of watches, bikes and accessories with shops in NOHO and Tribeca, second Rosen’s sentiment. “Sights, sounds, and smells of a café bring a no-fuss feeling to a luxury goods store,” they said in a recent statement.

Custom-brewed coffee, along with craft beers, is fueling the success of lifestyle retailers on the West Coast, who, like Saturday’s Surf and Shinola, merge merchandise and refreshments in a single space. In Portland, Velo Cult, which purveys bikes and all things bike-related, relies on the “nerdiest black coffee around” and a menu of local beers, along with live music and film screenings, to pack their “man cave” venue. Seattle-based Chrome Industries, designer and manufacturer of bike-related clothing, footwear, bags and accessories, has six “HUBS” or stores in San Francisco, Seattle, Portland, Chicago and recently New York City. San Francisco’s famed Blue Bottle Coffee is the go-to beverage and like Velo Cult, music and screenings are key parts of the mix.

What’s this latest in-store eating and drinking trend all about? Beyond attracting and satisfying the customer, there’s doubtlessly the recognition that in-store amenities like high-quality coffee and unique menu options enhance the shopping experience beyond just browsing and buying. Shopping centers with a rich tenant mix have picked up on this retail real estate trend, just as urban stores and boutiques have. Here’s a powerful competitive edge that online can’t match.

Outlook on Holiday Retail Sales is Optimistic

But Analysts Present a Mixed Picture of How Robust the Increase Will Be

After a tepid back-to-school season and with Black Friday just weeks away, all eyes in retail, including retail real estate, are fixed on analysts’ predictions for 2014 holiday spending. The majority of the announcements are cause for good cheer, with major forecasts from such sources as the bellwether National Retail Federation (NRF), pointing to healthy increases over the 2013 season. The question seems to be not whether there will be a spike in sales, but how much of a rise we can expect.

In General, a Bright but Mixed Picture of Crucial Retail Holiday Season

The National Retail Federation predicts that 2014 holiday sales will increase 4.1 percent for a total of $616.9 billion. That’s a full percentage point ahead of 2013’s gain and well above the ten-year average annual rise of 2.9 percent. Jack Kleinhenz, the trade organization’s chief economist, cites increases in employment, disposable income and the number of shopping days in this year’s calendar among the contributing factors. But don’t pop the champagne corks prematurely. The Wall Street Journal observed that the NRF’s forecasts have failed to match actual sales for the past six years. Other major retail analysts, however, mirror the NRF’s outlook for the upcoming season.

In September, Deloitte predicted a rise of 4 to 4.5 percent in holiday sales, which would be the biggest increase in at least three years. Alison Paul, Deloitte’s vice chairman and retail distribution section leader, said in a widely quoted interview that there is “a psychological glow of people generally feeling better about the economy” as a result of increased employment and rising personal income.

AlixPartners delivered an even more optimistic vision of the holiday ahead, predicting an increase in sales of as much as 4.9 percent. Like Deloitte and the NRF, they cited the improving economy, including falling gas prices and unemployment rates, as the reasons why shoppers can be expected to open their wallets wider this year.

Prosper Spending Score, based on their recent consumer survey, sees an 8 percent leap from 2013’s levels. The engine driving their outlook is feedback from upper-income households ($75,000+ per year) who maintain a spending score that is 13.2 percent higher than the overall average. Of interest to the retail real estate market is Prosper Spending Score’s predictions about the performance of individual retailers. According to their consumer research on 150 retailers, Gap, Amazon, Macy’s and Nordstrom are among those expected to be top holiday performers.

PricewaterhouseCoopers Says Cash-Strapped Consumers Point to Sales Drop

The sole dissenter among the major analysts is PricewaterhouseCoopers, who has predicted that average household holiday spending will drop by 6.9 percent from last year’s levels for an average outlay of $684 in 2014. Their projection is based on a poll of 2,200 U.S. consumers, who, in spite of a stable level of inflation, cited concerns over rising costs in food, transportation, housing and health care as motivators to cut their holiday spending. “The consumer doesn’t believe the economy has necessarily improved,” said Thom Blischok, chief retail strategist of PwC’s Strategy& unit (formerly Booz & Co).

There’s Agreement on One Thing: Online Looks Bigger Than Ever

The forecasters seem to be of a single mind about one thing for the 2014 holiday season: online will continue to be the star performer. Deloitte projects a spike of as much as 14 percent in online and mail-order sales, while Shop.org predicts an increase of between 8 and 11 percent. That’s good news not only for online retailers but for shipping companies like UPS, who is expecting to hire as many as 95,000 temporary employees. Total seasonal retail hiring is anticipated to range from 725,000 to 800,000.

But online shopping isn’t the only role electronic devices will play. Digital interactions will influence 50 percent of in-store sales as savvy shoppers research products and compare prices via their computers and mobile devices. Retailers are responding by optimizing their websites for mobile platforms and supplying their sales associates with tablets for in-store customer support.

Gift cards will continue to be top sellers and the most popular gift category will be electronics. Apparel sales may lag except among those retailers with a trendy inventory supported by a strong web presence.

Despite Solid Outlook, NRF Advises Retailers to be Cautious

The most wonderful time of the year may be about to arrive, but retailers are still advised to be aware of consumers’ continued price sensitivity. “Recognizing the need to keep household budgets in line, we expect shoppers will be extremely price sensitive as they have been for quite some time,” said NRF President and CEO Matthew Shay. “The lagging economy, though improving, is still top of mind for many Americans.” He advises retailers to respond by “differentiating themselves and touting price, value and exclusivity.” Promotions, though perhaps not as prevalent or as deep as last year, will continue to play a role.

What do Retailers Think About Holiday 2014? Levin Survey Looks for Answers

Levin Management is one of the retail real estate companies that conducts regular surveys of tenants in their shopping centers. Our annual Pre-Holiday Retail Sentiment Survey is currently in progress and we expect to release the feedback in mid-November. Key findings will be published here.

Recently Renovated Hamilton Plaza Reaches Full Occupancy

Hamilton Plz  Hamilton, NJ Levin Properties
America’s Best Contacts and Eyeglasses Inks Lease for 4,500 Square Feet

Levin-managed Hamilton Plaza (Hamilton Township, N.J.) has notched a major milestone in commercial retail leasing, achieving 100 percent occupancy with the lease of America’s Best Contacts and Eyeglasses. Currently in an aggressive expansion mode, the 350-store chain of discount eyewear and eye care stores, was attracted to Hamilton Plaza’s access to a growing and affluent residential population in Mercer County. Located at the intersection of Route 33 and White Horse-Hamilton Square Road, the 175,000-square-foot shopping center boasts an average daily traffic count of 47,000 vehicles. The population within a five-mile radius of this prime retail real estate site is 177,000, with an average household income of $87,000.

A Mix of Top Retail Real Estate Tenants Creates a Shopping Destination
In addition to its high-traffic location and expanding population, Hamilton Plaza offered this latest tenant a strong position among a diverse mix of popular national retailers, services and restaurants. America’s Best Contacts and Eyeglasses will join A.C. Moore, Sleepy’s, Petco, Dollar Tree, Hallmark, Radio Shack, Let’s YO!, Moe’s Southwest Grill, Texas Roadhouse, and other leading brand names that make up the retail line-up at Hamilton Plaza. The shopping center is anchored by an 80,000-square-foot ShopRite.

A Multi-Million Dollar Renovation, a Premier Property Management Team
We have worked hard to make Hamilton Plaza one of the top retail destinations in Mercer County, undertaking a mega renovation that transformed this property into a fully modernized shopping center. Our experts in property management services and construction management oversaw the replacement of building façades and outdated pylon signs, reconfiguration of the parking lots, new landscaping and the addition of two new pad sites and a 10,000-square-foot end cap. Hamilton Plaza has the potential for further expansion, thanks to a 3,075-square-foot proposed pad site, which has been approved for drive-thru.

Look for news and observations from Levin executives in upcoming posts here at Retail Property InSites. Please join us and share your comments about our posts or about your own management experiences and challenges in retail real estate.