NYC retail report: Fifth Avenue is city’s retail powerhouse
New York City — A report released Wednesday by the Real Estate Board of New York found that New York City’s retail market is continuing to perform well in its traditionally strong retail corridors and primarily residential neighborhoods.
According to REBNY’s Fall 2011 Retail Report, Fifth Avenue has seen the greatest increases in asking rents and demand. Traditionally, Fifth Avenue between 49th and 59th streets experience a competitive market, as they did this period with a 17% increase in the asking rents to $2,633 per sq. ft. since spring 2011 and 11% since fall 2010.
However, said the report, due to such high interest in this corridor, the adjoining corridor of Fifth Ave. between 42nd and 49th streets has seen substantial increases from spillover demand with a 31% uptick to $675 per sq. ft. since spring 2011 and 35% since the same time last year, due in part to the addition of major international retailers such as Swatch, Michael Kors and Dolce & Gabbana.
Herald Square and the Flatiron District have also enjoyed the strength of the Fifth Ave. corridor with asking rents increasing 15% and 9%, respectively, since fall 2010. Recent additions to Herald Square include Spanish retailer Mango, and L’Occitane and a pop-up Uniqlo store have opened in the Flatiron Fifth Avenue Corridor.
The Third Avenue corridor between 60th and 72nd streets and the Madison Avenue corridor between 57th and 72nd streets have attracted interest from big-name fashion retailers with asking rents rising by 4% and 8%, respectively. Anthropologie and Uniqlo recently joined the Third Avenue corridor, and Tory Burch and Bottega Veneta made the move to Madison.
“Tourists continue to visit New York City, and particularly areas such as Fifth Avenue, a world-renowned shopping destination,” said Steven Spinola, REBNY president. “Even in tough economic times, these areas will perform well and will increase demand for adjoining areas, creating a spillover effect.”
Neighborhoods that are mostly residential saw strong upticks in asking rents from stiff competition. According to report findings, the East 86th Street corridor has seen a renaissance with the arrival of a Fairway supermarket driving demand with a 36% increase since fall 2010 and 20% since the spring.
Outside the corridors there is still a limited demand for space. The average asking rent for all available space in Manhattan has declined. The average Manhattan asking rent for all space is $112 – down 3% since spring 2011 and 5% since fall 2010.
BDO survey: U.S. retailers forecast 2.9% increase in total holiday sales
Chicago — Results of a survey released Wednesday by BDO USA found that chief marketing officers at leading U.S. retailers expect a modest 2.9% increase in total holiday sales this year.
This is a less optimistic point of view compared to the projected 3.5% increase in 2010 (and the actual 5.2% increase reported by the National Retail Federation). Overall, 41% of CMOs expect an increase, down from 2010 (52%) and 2009 (47%). However, CMOs at the top 100 largest retailers included in the sample are more optimistic, with 67% expecting an increase in overall holiday sales.
Survey findings showed that retailers also fear another year of excessive discounting and markdowns to clear inventory. While 23% say they have increased inventory purchases for the holidays, the vast majority (65%) say their inventory purchases have stayed about the same compared to 2010. Overall, CMOs expect inventory levels to be up by less than 1% (0.7%) – a far cry from the 2.8% increase projected in 2010. Most CMOs (52%) also say they’re making no change in SKUs. Overall CMOs project SKUs to be down slightly (-0.2%), meaning less variety for consumers.
“With a weak jobs outlook and the economy still in flux, most retailers are not expecting big sales increases this holiday season,” said Doug Hart, partner in the Retail and Consumer Product Practice at BDO USA. “However, larger retailers appear to be more confident that their greater purchasing power and resources will allow them to be more competitive in this environment. Across the board retailers are dialing back the recent trend of expanding merchandise offerings, and are instead looking for a signal of recovering consumer spending before making big inventory investments.”
Some of the major findings of the BDO Retail Compass Survey of CMOs include: holiday same-store sales are projected to increase 2%. More than half (54%) of retail CMOs project flat same-store sales, and just 37% expect an increase.
The majority – 58% — of CMS say that consumer electronics will be the strongest performing category this holiday season, followed by toys (16%), apparel (11%), home goods (10%) and lifestyle goods (5%).
Of retailers who sell gift cards, 57% expect an increase in gift card sales this holiday season, a notable jump from 2010 (47%) and 2009 (32%).
U.S. households to spend $497 on holiday gifts
New York City — The Conference Board reported Wednesday that U.S. households are expected to spend an average of $497 on gifts this holiday season. Just 7% of consumers said they plan to spend more on holiday gifts this year, while approximately 40% plan on spending less than last year.
“As the holiday season approaches, we once again find consumers in a frugal mood,” says Lynn Franco, director of The Conference Board Consumer Research Center. “With the overwhelming majority of consumers expecting to spend the same or less than they did last year, it’s not surprising that they expect a large share of their purchases to be on sale or discounted.”
Consumers will be heading to the malls and online searching for bargains. Four out of 10 holiday shoppers say they expect more than half of their purchases to be on sale or discounted. An additional three out of 10 expect a quarter to half of their purchases to be discounted, according to the survey findings.
Close to two-thirds of consumers expect to purchase a portion of their holiday gifts online, with about 15% saying more than half of their gifts will be purchased online.
The survey of holiday gift spending intentions was conducted for The Conference Board by Nielsen.