Real estate market shows signs of recovery in 2010
Chicago Despite lingering economic stress that continues to curb consumer spending and affect the retail sector, recent evidence within the investment sales community indicates the retail real estate market has hit bottom and is showing increasing signs of recovery in 2010, according to the Jones Lang LaSalle 2010 Spring State of the Retail Market report.
The number of significant retail bankruptcies that grew to 13 in 2009 has slowed in the new year, and occupancy costs have dropped with market rents stabilizing at 25% to 50% below the peak in 2006. In the company’s Mid-Year State of the Retail Market report, it found that retail cap rates have fallen slightly, and will continue to experience downward momentum in the next 18-36 months as credit markets thaw, retail sales improve, vacancy rates decline and rents slowly increase.
During the past two years, retail property transaction volume has fallen more than 80%, with just 239 sales of multi-tenant shopping centers in excess of 80,000 sq. ft. of leasing transactions completed in 2009. A mere $7.2 billion in strip-center and $4.3 billion in mall and other (including urban retail, mixed-use properties, single tenant, etc.) investment sales were completed in 2009. The 2009 sales figures represent a decline of 32% and 57%, respectively, compared with year-end 2008.
“The lull of retail sector transactions in 2009 allowed both buyers and sellers the chance to regroup, survey the landscape, and prepare for future acquisition and disposition activity,” said Kris Cooper, managing director of Jones Lang LaSalle’s retail investment sales business. “New retail buyers are entering the market now including private investors and financial institutions. They’re seeking core at 7.5 to 8.25 cap rates on well capitalized assets and non-core at 9% to 10% or higher.”
Cooper also added that some opportunistic buyers are relieving troubled owners with a quick close to take the asset off their books, but that’s in exchange for purchasing the asset at 10% to 12%or higher.
“Meanwhile, attractive core retail properties are actually generating better pricing due to the availability of cheaper debt and lack of core product,” Cooper said.
Hibbett reports strong Q1, raises outlook
BIRMINGHAM, Ala. Hibbett Sports reported that net sales for the first quarter ended May 1 increased 17% to $184.5 million compared with $157.7 million for the first quarter ended May 2, 2009. Comparable-store sales increased 14.5%.
Net income for the first quarter of Fiscal 2011 increased 58.9% to $17.3 million compared with $10.9 million for the first quarter of fiscal 2010. Earnings per diluted share increased 56.8% to 59 cents compared with 38 cents for the first quarter of fiscal 2010.
Jeff Rosenthal, president and CEO, stated, “The strong sales trend we experienced in the fourth quarter of last year continued throughout the first quarter of this year and into the second quarter. Our overall positive sales performance was driven by double-digit increases in footwear and apparel. The broad-based improvement and exceptional operating margin give us confidence in our optimistic outlook for the remainder of the year.”
The company increased its earnings guidance for fiscal 2011 to a range of $1.35 to $1.50 per diluted share based on mid- to high-single-digit increases in comparable-store sales for the full year.
Target prepares for hurricane season
MINNEAPOLIS Target announced that it will serve as a destination for consumers looking to prepare for hurricane season during National Hurricane Preparedness Week, May 23 to 29.
Target pointed to the number of services it offers including a 24-hour daily command center that monitors global events that could impact its customers and associates. The retailer also said its stores will remain open as long as possible during an emergency to help communities get the supplies they need and holds merchandise in its distribution centers in advance of hurricane season so that it can get supplies to stores as quickly as possible.
“We want our guests to know that before and after a crisis, communities can count on Target,” says Brad Brekke, VP Target assets protection.