Tuesday, December 31, 2013

Top 10 Retail Real Estate Stories of 2013

The passing year marked several turning points in the history of the retail real estate universe, from Starbucks' remarkably strong comeback to Barnes & Noble's gradual fall from grace to the increasing popularity of class-B assets. To re-live the highlights and lowlights of 2013, see below.

1. Retailers Cut Back on Store Opening Plans

Spooked by lackluster forecasts for holiday sales growth, U.S. retailers cut one- and two-year store opening plans in August, according to the National Retailer Demand Monthly report produced by RBC Capital Markets. The change involved less than 300 planned stores on a national basis.
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Home prices jump 13.6%

home prices chartThe closely-followed S&P/Case-Shiller home price index was up 13.6% compared to a year ago, the largest 12-month gain since early 2006, which was the height of the housing bubble. Prices have been improving at a faster annual rate every month for nearly two years. But with the prospect of rising mortgage rates, October prices were little changed from September.

"Housing data suggest that we may be close to the peak gains in prices," said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. He said prices are expected to rise further in 2014, but the annual gain is expected to be in the single digits rather than the rapid rise recorded for much of this year. . . . more

5 Retail surprises to watch for in 2014

Whether you’re investing in their stocks or working as a buyer, success in retail is all about seeing slightly into the future. Buyers need to be know what’s going to be hot in the next three months if they want to move product. Being too early or a little late are just euphemisms for being wrong and losing money.
 
No one knows this better than Brian Sozzi of Belus Capital who breaks out his crystal ball and tells us five things to expect to see in the retail industry over the next 12 months.. . . more

Designing for Outlet versus Traditional Stores

Many retailers today are looking to bolster profits by offering merchandise outside of traditional locations. Well-known brands such as Gap, J. Crew and Disney all have been on the outlet side of retail for several years. Opening an outlet store, with its lower overhead costs, may seem like an obvious decision. For an outlet to be successful, though, its marketing mission must be well understood from the start. Plus, there are the practical considerations of different space constraints, new merchandise and more. What are the key design issues in getting an outlet store right? . . . more

Bain Capital to buy Bob’s Discount Furniture

Bain Capital has agreed to purchase a majority stake in Bob’s Discount Furniture.

Bain Capital, a private investment firm with offices in Boston, has reached an agreement to buy a majority stake in Bob’s Discount Furniture for an undisclosed amount in the first quarter of 2014.

Headquartered in Manchester, Conn., Bob’s operates 47 furniture stores in the Northeast and Mid-Atlantic with an average of 30,000 square feet of space. There are 10 Bob’s stores in Massachusetts including Bellingham, Dedham, Lowell, Natick, Saugus, South Attleboro, Stoughton, West Springfield, Woburn and Worcester.. . . more

Monday, December 30, 2013

Amazon: 5 bold predictions for 2014

Amazon spent 2013 attempting to wow us and, for the most part, succeeded.

This year saw the debut of Amazon's Mayday customer service button -- the marquee feature for its newest line of Kindle Fire tablets -- the revival of the US Postal Service through Sunday delivery, and, of course, the frenzy of debate over autonomous flying robots serving as the next-generation of delivery men ahead of Cyber Monday.

Think Amazon out did itself in 2013? Well, get ready for even more eye-popping surprises in 2014.. . . more

Stratasys adds more MakerBot stores to feature 3-D printing

The success of its New York City store has led MakerBot’s new owner to open two more retail shops on the East Coast to showcase the company’s affordable 3-D printer technology.

MakerBot has sold its 3-D printers over the Internet for four years. But last year it opened its first store, in Brooklyn. When Stratasys bought MakerBot in August, it expanded the idea, surprising fans last month with new stores in Greenwich, Conn., and Boston.. . . more

Tile Shop opens third Boston-area store

The Tile Shop is launching its third retail store in the Boston metropolitan area. The new 15,805-sq.-ft. store will be located in the Worcester suburb of Shrewsbury, Mass.

The new store will join The Tile Shop’s other Boston area stores in Natick and Avon, Mass.. . . more

Conference Board: leading economic index up in November

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.8% in November to 98.3 (2004 = 100), following a 0.1% increase in October, and a 1% increase in September.

The 10 components of The Conference Board Leading Economic Index for the U.S. include average weekly hours, manufacturing; average weekly initial claims for unemployment insurance; manufacturers’ new orders, consumer goods and materials; ISM index of new orders; manufacturers' new orders, nondefense capital goods excluding aircraft orders; building permits, new private housing units; stock prices, 500 common stocks; Leading Credit Index; interest rate spread, 10-year Treasury bonds less federal funds; and average consumer expectations for business conditions.. . . more

Michaels prepares for IPO

Michaels Stores Inc., which has been privately held since 2006, is planning to launch an IPO in 2014. According to a regulatory filing with the Securities and Exchange Commission (SEC), private equity owners Bain Capital Partners and Blackstone Group will retain control of the retailer after the public stock sale.

Michaels, which currently operates 1,259 stores in the U.S., and Canada, said in the filing it expects new stores and an e-commerce site it plans to launch in 2014 will produce growth. The retailer’s current site does not allow transactions. It expects to open 40-50 new stores during 2014 and opened 54 stores averaging 19,000 sq. ft. during the nine months ended Nov. 2, 2013.. . . more

NAR predicts modest growth in commercial real estate markets for ’14

Commercial real estate leasing patterns are showing steady but modest growth, according to the National Association of Realtors.

Retail vacancy rates are forecast to decline to 9.9 percent in the fourth quarter of 2014, down from 10.4 percent in the fourth quarter of 2013.

Average retail rents should increase 1.4 percent in 2013 and 2.2 percent next year. Net absorption of retail space is projected at 11.0 million square feet in 2013 and 18.1 million next year, NAR said.. . . more

Thursday, December 26, 2013

Is Best Buy's 'Showrooming' Campaign Working?

Best Buy's showrooming strategy is likely paying off through increased store traffic but more could be done to encourage shoppers to actually buy its products, new research based on social-media data suggests.

Best Buy in late October launched its first specific showrooming campaign via a spate of ads featuring actors Will Arnett, Maya Rudolph, Jason Schwartzman and LL Cool J. At the time, the company said it hoped to show consumers there is a better way to research and buy electronics via its "low price guarantee" and the ability to order online and pick up in store.. . . more

Are we all shopping like men this holiday season?

 - Thinkstock photoCall it surgical shopping, researched shopping or, perhaps, masculine shopping — however you term it, both genders have shown increased certainty about what they intend to buy before they hit the mall this holiday season.

In-store visits decreased more than 20 percent since early December versus the same period a year ago, according to data from Chicago-based ShopperTrak, which electronically tracks foot traffic in more than 60,000 stores around the globe.. . . more

Retailers Counting on After Christmas Sales to Escape Doldrums

PHOTO: A general view of the Christmas Tree at  Macys Center City, Dec. 20, 2013, in Philadelphia.While the days leading up to Dec. 25 were the disappointing Christmas present under the tree for retailers this year, many are hoping post-Christmas sales will entice frugal shoppers.

The best things to buy immediately after Christmas include apparel and Christmas decorations, according to DealNews. Sales from Banana Republic, Club Monaco, GAP and French Connection are expected to be among the most aggressive, with extra discounts from 30 to 50 percent on top of prices cut by 75 percent already.  . . . more

Dollar stores to open more new locations in 2014

Dollar stores to open more new locations in 2014 photoShowing that many Americans are still pinching pennies, the largest dollar store chains are planning to open more new stores nationwide in 2014 than they have since the economic recession started.

Dollar General Corp., which operates 11,061 stores in 40 states, wants to open 700 more of its yellow stores in the coming year. Plans are to also remodel or relocate another 525, said company spokesman Dan MacDonald.. . . more

Consumption looks constrained in 2014

Factors including the permanency of the 2013 payroll tax increase, uneven job creation and uncertainty caused by the autumn partial government shutdown are expected to continue constraining consumer spending in 2014. According to a new economic insight report from Sterne Agee, lower gas prices, a lingering wealth effect from home price appreciation and record highs in equities helped boost holiday spending, but will not be enough to counteract a trend toward weak consumption that has been in place since the beginning of this year.

Sterne Agee analysis shows consumer spending declined from 2.3% in first quarter 2013 to 1.8% in the second quarter, and gained just two-tenths to 2% by the third quarter.. . . more

Class-action lawsuits stack up against Target

In the wake of Target’s massive data breach first revealed on Thursday, three class-action lawsuits have been filed against the retailer, seeking more than $5 million in damages.

Target confirmed that the data theft involving 40 million credit and debit card holders’ accounts occurred over a 19-day period that stretched from Nov. 27 to Dec. 15, three of Target’s busiest shopping weeks of the year.. . . more

Sherman Plaza in Saugus faces foreclosure auction

Sherman Plaza faces the foreclosure auction block on Thursday, Jan. 9 at 1 p.m.Sherman Plaza, the 75,000-square-foot strip mall anchored by Savers, DSW and AutoZone on Route 1 in Saugus, Mass., is on the auction block, according to a legal notice.

The property's four-acre strip mall and 254 parking spaces at 1160-1170 Broadway will be auctioned on site by Paul Saperstein Co., a Holbrook-based auctioneer, on Thursday, Jan. 9, at 1 p.m. A deposit of $250,000 will be required at auction, with the balance due in 30 days.. . . more

Hannaford announcement the latest positive development in Exeter

Top PhotoHannaford Supermarkets will be opening a new store in Exeter this spring,  purchasing the lease rights of the vacant former Stop & Shop on Portsmouth Avenue.

Days before the Hannaford announcement was made, the Zoning Board of Adjustment approved a proposed microbrewery on Epping Road and the Green Bean's expansion and new restaurant plan.. . . more

Tuesday, December 24, 2013

Retailers blend stores, e-commerce to snag holiday stragglers

Black Friday customers make purchases at a Disney store at the Glendale Galleria in Glendale, CaliforniaRetailers are trying new ways to win over Christmas procrastinators.

Brick-and-mortar chains seeking ways to improve this season's soft sales made it easier for last-minute consumers to finish their shopping on Christmas Eve. More customers this year will be able to pick up in stores on Tuesday, the last shopping day before Christmas, orders placed online.. . . more

Are malls becoming extinct?

While the financial media are wringing their hands about a year-over-year decline in Black Friday retail sales at America’s shopping malls this holiday season, few are mentioning a yet gloomier reality: Many of the malls themselves will soon be shutting down.

According to one estimate, 10 percent of the nation’s 1,000 enclosed malls will fail by 2022. Many are currently struggling with vacancy rates of 35 percent to 50 percent. Malls are one more reflection of an increasingly bifurcated economy. Prosperous malls are doing better, while struggling malls (which is to say, most of them) are doing worse.. . . more

What Costco can teach you about cash

131218213455-2013-ceo-stands-costco-620xaEvery business can learn an important lesson from Costco. The fast-growing warehouse retailer did $103 billion in sales in the fiscal year ending in September, with pre-tax earnings of $3 billion. Membership fees brought in $2.3 billion -- equal to about 75% of its profit.

That influx of cash helps the company pay for new stores, where it looks to get about a 15% cash-on-cash return on investment in building them. And renewals show no signs of slowing down. "Our membership renewal rates have gone up each year and now exceed 90%," notes CFO and executive vice president Richard Galanti. That's not surprising, given that Costco only charges customers a markup on its products of about 11%. . . . more

Retail sales slide for third consecutive week

Retailers felt the pinch of early promotions and a strong November last week, as in-store holiday sales and foot traffic that included the usually busy “Super Saturday” dropped a third straight week.

Sales fell 3.1 percent for the week from the same period last year while traffic plummeted 21.2 percent. Sales and traffic on Super Saturday — the last Saturday before Christmas, typically one of the busiest of the season — fell 0.7 percent and 18.1 percent, respectively.
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These Five Retailers Need A Christmas Miracle Or Face A Risky 2014

It’ll come as no surprise to retail watchers that Barnes &Noble is in trouble, with Amazon continuing its decimation of the brick and mortar book world. But it’s not the only main street stalwart limping into 2014 by any means.

Independent agency Rapid Ratings measures the financial health of companies using public filings, assessing their efficiency based on 62 weighted data points from profitability to cash flow.. . . more

Linear Retail buys Route 9 property in Framingham

Photo courtesy of Linear Retail.Linear Retail Properties LLC, a Burlington-based firm that owns, develops, and operates retail properties in New England, said it paid $2.4 million to buy a 5,274 square foot retail property in Framingham.Located near the entrance to a Jordan’s Furniture store and near both the Natick Mall and Shoppers World, the property is full leased with two tenants --- Stardust Jewelers and the Chinese Mirch restaurant, the firm said.
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Monday, December 23, 2013

Revere would receive $33m down payment, $25m to $30m a year, under Mohegan Sun proposal

Connecticut casino giant Mohegan Sun would pay the City of Revere $33 million upfront, as well as annual payments of at least $25 million to $30 million under a deal announced today for a gambling resort at the Suffolk Downs racetrack.

The deal is expected to go before Revere voters for a referendum vote in about 60 days.. . . more

Despite Tapering, Fed Remains ‘Dovish’

Hessam Nadji, managing director, research and advisory services at Marcus & Millichap Real Estate Investment Services predicts that the Fed’s announcement this past Wednesday will have “little immediate impact” on CRE investments. “Although the rates on the 10-year Treasury will likely drift upward, cap rates for most commercial assets will remain contained as spreads tighten for both the competitive lending institutions and buyers,” he writes.

Only properties "with very low cap rates, such as premium net leased assets or top tier apartments in prime markets, face a potential lift in cap rates in the short term,” writes Nadji. That being said, he sees “nominal” movement at most for these “best-in-class properties with ultra-thin spreads.”. . . more

Survey Results Show “Black Friday” Entrenched as Seasonal Retail Ritual

Despite some early negative reaction to stores opening on Thanksgiving, shoppers ultimately embraced the idea of an extended “Black Friday” and came out for a full weekend of spending -- according to the Christmas & Holiday Shopping Forecast released this week by America's Research Group and Inmar. Survey results show almost three-quarters of shoppers spent part of at least one day of the weekend in stores.

While unplanned purchases were not uncommon, the majority of shoppers came to the stores having done their homework. Pre-trip planning by those surveyed included 78 percent having looked at inserts in the Thanksgiving Day newspaper -- with 93 percent of these shoppers finding the inserts helpful. Of those who viewed inserts, 58 percent took them to the store.. . . more