Report: Regional malls on the upswing since 2010
Scads of national retail chains are seeing their concepts fade out, but regional malls are still firmly in the picture.
That’s the diagnosis put forth in a report titled “Why Mall Reuse is Just Beginning,” from the entrepreneur-driven real estate firm Transwestern. Some key data points include:
*Regional malls have had positive net absorption since 2010, with the only blip in absorption occurring in 2009, at the height of the recession.
*In 2016, the U.S. retail market experienced 105 million sq. ft. of net absorption, representing a growth in occupancy of around 1%.
*Mall occupancy across the U.S. was above 95% in December 2016, equating to 848 million sq. ft. of space.
*Mall productivity has remained relatively steady and rose 0.7% in the last year to $465 per square foot.
“While we’ve seen store closures increase in 2017, malls are, for the most part, attracting new tenants through strategic marketing and property enhancements,” said Nick Hernandez, managing director of retail at Transwestern. “And in cases where a retail mall no longer makes sense, we have seen many owners successfully adapt to the changes in their trade areas by repurposing the mall for another use.”
The bottom line, as most developers are eager to point out, is that malls occupy some of the most accessible, highly trafficked real estate in the land, and it’s not about to go fallow. Using market data analysis and re-seeding properties with office space, residences, and medical facilities “are allowing the regional mall that took off in the 1950s to evolve into a new type of gathering place,” said Transwestern’s Brian Landes, author of the report.
We have a problem in our industry of only giving partial information when making representations about what is going on in our business. The worst thing one can do is misrepresent things to oneself. We have done that all too often in our business. Occupancy is by no means a sole measure of success, just like tenant sales are not a measure of success either. The only measure of success is NOI growth. NOI forecasting is yielded from an understanding of tenant sales trends, tenant margins (the fact that they continue to compress and this is being ignored is an issue), the ability of the asset to accommodate new uses, and the changes in property expenses and ability to get them reimbursed by tenants. I will not comment on this other than to say that anyone in our business already knows the answers to these questions as it relates to malls in general.
Lidl opens its first round of U.S. stores
The wait is over.
German discount grocery retailer Lidl made its hotly-awaited debut in the United States on Thursday, opening the first 10 of 20 locations it plan to open over the summer. The chain expects to have 100 stores up and running within a year.
Six of the newly opened stores are in North Carolina, with locations in Greenville, Sanford, Rocky Mount, Wilson, Kinston, and Winston-Salem. Two stores are in Virginia, with one in Virginia Beach and the other in Hampton. And one is in South Carolina, in Spartanburg.
Lidl, which operates 10,000 stores in 27 countries, is known for its low prices. Prior to opening, the retailer said that shoppers could expect grocery prices that are up to 50% less than other supermarkets in the United States.
Lidl's U.S. stores have an average 20,000 sq.ft. footprint, with and only six aisles. The modern, warehouse-reminiscent design, with natural wood accents. The merchandise mix includes standard grocery items, along with an on-site European-styled bakery, cheeses, fresh and frozen seafood, wines, organic foods and gluten-free options. House brands make up about 90% of the inventory.
In addition, the stores feature an edited selection of non-food products that will rotate and appear in stores for a limited time.
To see Lild's opening deals, check out the company's first U.S. circular.
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U.K. sporting goods chain acquires two U.S. retailers
Sports Direct, the largest sporting goods retailer in the United Kingdom, has expanded its presence in the United States.
The company announced that it has completed its acquisition of Bob's Stores and Eastern Mountain Sports. It will initially operate a total of some 50 stores in the Northeast and five EMS outdoor adventure schools, along with e-commerce sites for both brands.
In April, Sports Direct received the approval of the Delaware Bankruptcy Court to acquire certain assets of Eastern Outfitters, owners of Bob's Stores and Eastern Mountain Sports. Eastern Outfitters filed for bankruptcy in February.
"Adding these reputable and established retailers to Sports Direct's portfolio of holdings in the U.S. will afford us a strong platform with which to rapidly expand our store and web presence, in this critically important market," stated a representative for Sports Direct, which operates almost 800 stores whcih across the UK, continental Europe and Asia.
Sports Direct said it plans to expand product lines in the acquired Bob's and EMS stores and websites, including the U.S. debut of an extensive portfolio of European brands. The company will honor gift cards and un-expired member rewards that pre-dated the acquisition, and will enhance the member rewards program by offering member-only offers.
In addition to operating retail stores, Sports Direct owns a portfolio of over 30 globally recognized brands, including Slazenger, Everlast, Lonsdale, Karrimor, No Fear and Kangol. It also has a stake in Finish Line.
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