After a Strong 2016, Our Retail Tenant’s Outlook is Optimistic

Annual LMC Outlook Survey Reveals Growth Trend, Continued Evolution
Retailers in our 95-property, 13 million-square-foot shopping center portfolio are feeling good about the future. In fact, three quarters (74.5 percent) of respondents in our annual Retail Sentiment Outlook Survey of store managers are optimistic about their anticipated 2017 performance – the highest percentage in the January poll’s six-year history. As a regional leader in retail real estate, this is the kind of news we love to hear.

Survey Respondents Report Record Sales Performance in 2016; Bricks and Mortar Stores Continued to Attract Shoppers
According to our President Matthew K. Harding, the percentage of respondents reporting 2016 sales at the same or higher level (68.8 percent) was the highest in Outlook survey history. Our finding reflects a positive year for retail nationwide. According to the U.S. Department of Commerce, 2016 retail sales rose 3.3 percent over 2015; for context, 2015 retail sales were up 2.1 percent from 2014.

The holiday season yielded a record performance, too, with survey respondents reporting sales and shopper traffic at the same or higher level than last year. These were the strongest in survey history at 75.6 and 74.4, respectively. “Industry experts agree that the recent holiday season was good for retail, yet some have indicated e-commerce was the real winner over bricks and mortar,” Harding said. “From a ground-level perspective we are seeing a different story – one illustrating the ongoing relevance of physical stores in our portfolio, which is comprised mostly of open-air shopping centers.”

Supporting our findings, the International Council of Shopping Centers (ICSC) in its Post-Holiday Shopping Survey found consumers spent an average of $711 on gifts and seasonal items during the holidays – a 16 percent increase over 2015’s post-holiday survey results. Further, ICSC reported 91 percent of holiday shoppers spent at bricks-and-mortar locations.

Expansion Plans Are Heating Up:  A 2017 Retail Trend to Watch
When we asked survey participants about their companies’ expansion plans for 2017, more than one-third (35.1 percent) indicated their brand plans to open additional stores.

“Again, our findings may seem to counter current headlines reporting ongoing store closings by major retailers,” Harding said. “But in the 65 years we’ve been leasing and managing retail properties we have witnessed the ongoing transformation of retail. Ultimately, concepts come and go, creating opportunities for new and expanding players. Today is no different, and our tenants are proving this point.”

Qualified Job Candidates: Retail Is Facing a Growing Scarcity
The decline in unemployment and its impact on retail hiring also was addressed in the Outlook Survey. Only about one-quarter (23.6 percent) of respondents have seen changes in the hiring climate related to the tightening jobs market. Of that group, more than half (51.7 percent) indicated they are seeing fewer applications from qualified job candidates, and nearly half (46.6 percent) said they are experiencing demand for higher starting salaries.

Tenant Business Models Are Adapting to Impact of E-commerce
The e-commerce phenomenon – and its impact on bricks-and-mortar – has remained top-of-mind for us. As leaders in retail real estate we are continuing to gauge how our tenants are taking competitive action. In the 2017 Outlook Survey, we asked our tenants how they have adapted their business models in response to e-commerce’s growth.

Marking a notable jump from the last two times the question was asked, 55.2 percent of survey participants indicated they have adapted in some way. This compares to 38.2 percent of respondents in the 2016 Mid-Year Survey and 37.3 percent at mid-year 2015. Among that group, our retail tenants have:

  • Added in-store services and/or incentives (50.9 percent).
  • Added in-store pickup and returns options for purchases made online (37.9 percent).
  • Increased coordination between online and bricks-and-mortar operations (30.2 percent).
  • Added “experience” draws such as demonstrations, classes, performances or other in-store events (28.4 percent).
  • Altered store inventory, such as having fewer in-stock SKUs or larger quantities of popular items (25.0 percent).
  • Altered store prototype, such as reducing store size or increasing focus on showrooming (17.2 percent).

In turn, 57.5 percent of the respondents who have adapted in response to e-commerce say they have seen a benefit in terms of sales and/or in-store traffic. That percentage compares to 43.0 percent at mid-year 2016 and 52.1 percent at mid-year 2015.

“In our last two mid-year surveys, about one-third of tenants (32.9 percent and 30.9 percent) were unsure of whether their efforts were making a positive impact,” said Melissa Sievwright, vice president of marketing. “The number shrank to less than a quarter (24.4 percent) in the 2017 Outlook Survey, indicating that tenants are beginning to see more measurable results.

“This is very good news in an environment requiring retailers to continually reinvent themselves,” she added. “We anticipate continued changes as our tenants strive to establish the best mix of services and incentives, and elevate and personalize the shopping experience to draw customers into their stores.”

Investors in Retail Real Estate Are Seeking Expert Advice

Levin Expands Its Third-Party Services to Meet Growing Demand

By Joseph Lowry, SVP-Leasing and Acquisitions

A paradigm shift is underway in retail and in the retail real estate industry. One result is a surge in the demand for third-party services. In the last 28 months, our investment advisory practice took on over 21 new retail leasing and management assignments. We’re cheered by the strong economic momentum both nationally and regionally, but the flip side is that negotiations are getting tougher as investors look for that illusive ironclad deal. It’s a climate in which investors need guidance from leaders in commercial retail real estate. Here are some of our observations on the current state of this dynamic market, plus a quick look at how we’re assisting our investor clients.

Game Changers for Tenants: Online, Mergers and New Competitors
First, let’s look at the tenant side of retail real estate today. The evolution of online shopping undeniably has spurred changes for bricks-and-mortar stores. Merger activity is creating growth in scale for some retailers, but at the same time, consolidation is closing many locations. Preferred anchor categories, like supermarkets, are feeling the heat as discount and high-end grocers challenge their mid-level counterparts and drug, dollar and big-box department stores incorporate food into their inventory. Investors looking for shopping centers need to focus on the quality of every property they consider.

Top-Quality Retail Investment Property is a Scarce Commodity Today
Flight to quality is the hallmark of today’s commercial real estate market. Hundreds of millions of dollars in capital are chasing a limited supply of core institutional-grade properties. As a result, we’re working on more and more deals involving value-add or core-plus properties. And we’re finding that more buyers are willing to look at these asset classes than previously.

Six Factors That Must Be Analyzed Before Investing in a Commercial Property
Whether a property is institutional grade, value-add or core-plus, whether it’s broker-listed or an off-market deal, certain key factors need expert evaluation. These include an analysis of capital requirements, operating statements, rent rolls, debt levels, the condition of the property, and the state of the local market. Savvy investors are relying more and more on third-party providers who can bring a granular level of knowledge to the assessment process.

Retail real estate companies, like Levin, that maintain full in-house capabilities in leasing, accounting, property management, construction management and marketing are best positioned to assist investors in evaluating properties. Our years of hands-on experience in construction management is especially valuable in identifying physical conditions that represent future risk. Our regional focus is also of significant worth, providing strong brokerage connections and up-to-the-minute awareness of both listed – and unlisted – retail real estate investment opportunities.

Levin’s Support Extends Beyond Closing
After closing, many of our clients turn to us to develop and execute a successful operational strategy, assuring maximized property value throughout the entire investment cycle. In fact, a number of the assignments we’ve won in the past two years involve recently traded properties – for both new and repeat clients. These organizations look to us to establish, maintain and improve competitive positioning for their assets.

Today’s commercial retail real estate market holds tremendous opportunities for well-informed investors. Levin’s decades-long experience, encompassing every facet of the industry, makes us a valuable partner throughout the transaction phase and beyond.

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.

Now’s the Time to Expand and Renovate in Retail Real Estate

Improvements are Key to Attracting Tenants, Shoppers and Investors

Current market conditions present a strong incentive to evaluate the repositioning of a retail property. Most important, financing rates are – at least for now – at historic lows. The number of tenants looking for space is increasing and construction pricing remains competitive. Whether it’s a full redevelopment or a simple cosmetic “facelift,” investing capital in retail real estate assets can help gain that competitive edge needed to attract tenants, consumers and, ultimately, investors.

Levin Turns Spotlight on Its Construction Management Services

Levin Management is spearheading expansion efforts and renovations at several shopping centers. This multi-venue initiative includes adding square footage at St. Georges Crossing in Woodbridge, N.J., where we will be building 23,000 square feet of space for TJ Maxx on a newly acquired adjacent parcel of land. Similarly, at Mid-Town Plaza in Middletown, Pa., we have orchestrated the purchase of an adjacent parcel to accommodate the construction of a 7,381-square-foot AutoZone.

Additionally, at Clifton Plaza in Clifton, N.J., we are delivering a 15,000-square-foot newly built building for Blink Fitness. And, at Twin City Shopping Center in Jersey City, N.J., we completed a full renovation to enhance that property’s curb appeal.

Last September, HomeGoods at The Shoppes at Flemington held its grand opening. Levin’s leasing representative Jake Frantzman negotiated the transaction, which included construction of a new 22,000-square-foot building for the home fashions retailer. In addition to providing full-service management and creating marketing events for the center, Levin served as construction manager for development of the new retail space. Levin also directed the process to secure the land development appraisals for the project.

HomeGoods at Flemington is a great example of the broad scope of services that Levin provides, from securing a tenant and assisting in lease negotiations to providing the land development approval and construction expertise required to get a project designed, built and delivered on time. Levin’s property management group coordinated with the construction department to ensure that construction of this new building had little, if any, impact on the center’s existing retailers. All of these in-house resources are invaluable throughout the leasing process.

At a time when expansion in commercial retail real estate is driving stellar results, our construction management capabilities are serving our portfolio properties well. We have a long track record of successfully managing the design and construction of real estate projects from start to finish, and a reputation for completing them on time and on budget. Our construction management capabilities cover every aspect of construction project management from fitting out individual tenant spaces, to handling shopping center renovations of any scope, to overseeing property expansions and full redevelopments. Levin will be building on these capabilities in the coming months as the appetite for expansion and renovation continues to grow.

 

 

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.

Summertime and Retail Real Estate is Heating Up

Levin Welcomes Five New Tenants

Brisk activity continues in retail commercial real estate as we settle into Summer 2014. Levin-managed properties in high-growth communities in New Jersey and revived areas on Long Island have landed long-term leases with five retail businesses, assuring our continued leadership position among retail leasing companies in the Northeast.

dd’s Discounts Opens First Store in the Garden State
dd’s Discounts has joined the mix of retailers, restaurants and services at Capitol Plaza in Ewing, N.J. A nationwide chain, the in-season apparel and home fashions merchandiser is the first of this Ross Stores’ division to open in New Jersey. An aggressive discounter, dd’s Discounts enjoys a strong following among shoppers in the Northeast region. Ross Stores, which is on track to open 20 new dd’s Discounts this year, was attracted by Capitol Plaza’s heavily trafficked location and solid marketplace demographics. The new store will occupy 20,000 square feet.

Located on busy Olden Avenue at Route 26 in Ewing, Capitol Plaza tenants include Forman Mills, Marshall’s, Save-A-Lot Supermarket, American Furniture, Planet Fitness, Footlocker, GNC, and the newly expanded Jersey College, now occupying 30,500 square feet. Over 247,000 people, with an average HH income of $77,000, reside within the five-mile radius of the shopping center, providing a daily traffic count of 51,000 vehicles.

Bayshore Plaza in Barnegat Now 100 Percent Occupied
Levin-managed Bayshore Plaza reached the retail real estate leasing milestone of full occupancy with new tenants Luigi’s Ristorante and Brick Oven Pizza and Greensleeves Boutique. Luigi’s will occupy 2,400 square feet of space and Greensleeves Boutique, 4,200 in the 59,000-square-foot shopping center. Current tenants include McDonald’s, AT&T Wireless, Hollywood Tans, Hudson City Savings Bank and anchor Big Lots.

Luigi Viterbo and his partners were drawn to the strong growth in affluent households in the Barnegat area, as well as to Bayshore Plaza’s location on busy Route 9. Population within five miles of the shopping center is 50,000 with average HH income at $84,000.

Similar interest in location and marketplace demographics led Allies, Inc. of Hamilton, N.J., to choose Bayshore Plaza for the site of their fourth Greensleeves Boutique. The non-profit organization’s stores, all of whose proceeds benefit people with disabilities, offer gently worn fashions, vintage wear and “upcycled” art and home decor. The staff includes persons with disabilities, who receive training and education at each site.

Revival of Patchogue, N.Y. Sparks Surge in Retail Leasing
Patchogue, a 2.2 square mile village of 160,000 in Suffolk County Long Island’s South Shore, is in the midst of a transformation and our Levin-managed shopping center at 35-71 Ocean Avenue is benefitting with two new leases. Driven by New Village, a $100-million mixed-use development, which will offer 291 apartment units, Patchogue is on its way to becoming a dining, arts and entertainment hub. Levin’s shopping center is just a half-block from the site of New Village, which is now under construction.

New tenants at our recently renovated 23,000-square-foot retail center, who are ready to capitalize on the positive changes in the area, are 360 Taiko Sushi & Lounge and Jeans Fashion. 360 Taiko Sushi & Lounge will occupy 4,900 square feet of space offering Pan-Asian cuisine. Jeans Fashion has leased 2,500 square feet.

Look for news and observations from Levin Management and its 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, observations and challenges in retail real estate.