Marcus & Millichap: Improving retail real estate outlook
Calabasas, Calif. — Broader regional economic growth and improved consumer and retailer finances bode well for retail real estate investments in well-located properties, according to “The Retail Outlook” from Marcus & Millichap Research Services’ second quarter 2013 mid-year outlook for the national retail market and U.S. economy.
The second quarter 2013 mid-year analysis, The Retail Outlook observes that retailers that survived the recession have honed their business models and balance sheets. As a result, retail closings in the first quarter of 2013 fell 70% compared to the same period last year, despite the continuing growth of e-commerce, which is generally thought to shrink store footprints and reduce demand for retail space.
Limited growth in space is helping support property values. The Outlook puts new supplies at 10% to 25% of the long-term average. Significant new construction activity has been occurring in only a few pockets, including Houston, Chicago and Dallas-Fort Worth, with the focus on single-tenant properties and power centers.
While strip and neighborhood centers continue to struggle, the national vacancy rate for shopping centers has fallen from 11.2% to 10.7% over the past year.
Rents are still falling nationally, but coastal markets are seeing strong rent growth.
As the economy continues to recover and job growth begins to strengthen, The Outlook forecasts net absorption of retail space of 79.7 million sq. ft. in 2013 compared to 55 million sq. ft. in new supply. If that materializes, the national vacancy rate for all retail will decline 40 basis points to 7.7% and push the national average asking rents up 1.8% to $16.06 per sq. ft.
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Sears Canada executes landlord transactions on two stores
Toronto — Sears Canada Inc. will enter into a series of transactions related to two stores within shopping centers co-owned by Oxford Properties Group and Alberta Investment Management Corporation that give the co-owners the right to require Sears Canada to vacate the properties by March 2014. The transactions, valued at $191 million, affect stores at the Yorkdale Shopping Centre in Toronto and at Square One Shopping Centre in Mississauga.
In addition to the agreement on the two stores, Sears has also agreed to sell an option relating to a third store located at Scarborough Town Centre to the co-owners for financial consideration of $1 million. The co-owners have five years to exercise the option on this property at a fixed total cost of $53 million. All three transactions are expected to be finalized on June 24.
"When transactions such as this become available, we must evaluate the trading value other possible release of these properties is a way to increase the total value of Sears Canada’s holdings,” said Calvin MacDonald, president and CEO of Sears Canada. “In this case, we were presented with an opportunity that gives us a significant financial benefit without changing our plans to improve the business and make Sears more relevant to Canadians.”
Sears said that any employees whose jobs are affected by any store closings will be offered other jobs with Sears Canada in the greater Toronto area.
I'm curious , how does closing 2 of your stores in MAJOR shopping malls in the GTA area make Sears more relevant to Canadians. It may improve your business by closing unprofitable stores but I don't understand the "more relevant" part of the statement. I would think it would make Sears less relevant to Canadians especially southern Ontario Canadians
Lululemon to open men’s stores
New York — Women’s yoga and activewear retailer Lululemon plans to open freestanding stores for men by 2016, outgoing company CEO Christine Day said during a presentation at a William Blair & Co. conference in Chicago. Day recently announced her plans to retire from the company once a successor is named.
Lululemon already sells select men’s items, including golf polo shirts and underwear in its existing stores. Men’s apparel currently accounts for a “mid- to high-teen” percentage of the company’s sales mix, Betty Chen, a San Francisco-based analyst for Wedbush Securities, told Bloomberg.
Men’s same-store sales have been higher than the rest of the business “in general,” John Currie, CFO, said on Lululemon’s earnings conference call June 10.
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