Shawn Massey, CCIM, SCLS

Weekly CRE and Retail Article Round-Up – January 18, 2013

I hope you enjoy this weeks articles.
How can you sometimes say no to perfection in 2013, and turn less effort into better performance?
U.S. Commercial Real Estate Continues Recovery in Fourth Quarter of 2012, According to CBRE Group, Inc.
Technology is a wonderful thing…most of the time
City Hall basement file room yields images of the Memphis that might have been
Brinker chairman Doug Brooks on the casual-dining scene
Outbound Marketing
LEED Projects expected to represent 20 percent of all new construction in 2013 with retrofits leading the way.
How Big Is Wall Street’s Housing Bet? Pretty Big
Things to Look Out For in Your Next Commercial Lease
EDGE intends to put forth $100,000 for Airport incentives
Marriott Workspace On Demand.
The ABC of Architects: 26 Famous Buildings in 100 Seconds
How Bicycling Is Transforming Business
Net-Leased Retail Cap Rates Plummet
Flowers Foods buys Hostess bread brands for $390 million
Demand for trendy, affordable clothing fuels Dots growth in Memphis
By Peggy Reisser Winburne, Special to The Commercial Appeal
Vote Here For No Assignment Or Subletting Restrictions In Leases
Will Price-Matching Get Rid of Showrooming?
by Elaine Misonzhnik January 8th, 2013
Forecasts from six NY real estate experts
Weitzman’s forecast for 2013? Expect a retail evolution
Forbes Ranks Memphis 4th Happiest City to Work In
Retail Centers See Modest Growth
Bo Barron: What does 2013 have in store for CRE?
How Will Today’s Casual-Dining Consumers Change Tomorrow’s Concepts?

From the Desk of Al Taf

Consumer confidence waned last week
January 10, 2013 Washington, D.C. — The Bloomberg Consumer Comfort Index fell to minus 34.4 in the seven days ended Jan. 6 from minus 31.8 the prior period, the biggest one-week drop since August. Jobless claims increased by 4,000 to 371,000 in the week ended Jan. 5, according to Labor Department figures.

Report: December saw slowest spending growth in three years
January 10, 2013 Atlanta — Consumer spending reached a three-year low during the month of December, according to a report released Thursday by First Data Corp.

First Data’s SpendTrend tracks same-store consumer spending by credit, signature debit, PIN debit, EBT, closed-loop prepaid cards and checks at U.S. merchant locations.

ShopperTrak: December 2012
January 9, 2013 Holiday shopping reached its seasonal peak in December, driving a 36.6 percent retail foot traffic increase over November. Further, December 2012 continued a trend of year-over-year improvements in the number of shoppers visiting stores with a 1.2 percent increase in foot traffic when compared to the same month last year.

December 2012 offered an extra weekend of holiday shopping before Christmas. As a result, many consumers procrastinated in finishing their holiday shopping. However, the last few days before Christmas were very busy. ShopperTrak estimates that “Super Saturday,” Dec. 22, was the second-busiest foot traffic day of the holiday season. Only “Black Friday” (Nov. 23) was busier. Additionally, Sunday, Dec. 23, was the fourth-busiest traffic day.

Off-Price Retailers Making Inroads Against Department Stores
January 8, 2013, Off-price retailers including TJX Cos. (TJX) and Ross Stores Inc. (ROST) are making inroads into the traditional turf of department stores, a point driven home by strong sales during the holidays.

The off-price retailers, which also include Stein Mart Inc. (SMRT), are taking market share by offering virtually the same merchandise as department stores, but at lower prices. The off-price retailers generally do this by striking closeout or clearance deals with vendors. They aim to offer prices 20% to 60% below those of department and specialty stores.

Walmart Among Supermarket Chains Getting More In-Store Fast Food Outlets Soon
January 08, 2013, According to a recent report in Nation’s Restaurant News, growing fast food chains have set their sights on two big areas for franchises: supermarkets and convenience stores.

Huge quick service restaurant chains, such as McDonald’s, Pizza Hut and Starbucks, have a long history of partnering with their equivalents in the retail space, including Walmart and Target, to open up outposts within the confines of big supermarkets. This pattern looks likely to continue going forward.

Retail holiday hiring in 2012 reached highest level since 2006
January 7, 2013 New York — Hiring by the nation’s retailers this past holiday season was at the highest level in six years despite the uncertain economy, Superstorm Sandy and the presidential election, according to an analysis of government job data by Challenger, Gray & Christmas, Chicago, a leading outplacement consultancy.

Between Oct. 1 and Dec. 31 retailers added 728,300 jobs, which was 10.3% more than the same-three month period in 2011. The retail jobs added for the holiday 2012 season were the strongest year-end hiring surge since 2006, when employment in the retail sector increased by 746,900.

Tax Changes Impact Retailers
January 7, 2013 WASHINGTON — Congress last week agreed to a last-minute deal to increase taxes on high earners to avoid the “fiscal cliff” of broader tax hikes and spending cuts. Under the new agreement, the tax rate for individuals with income of more than $400,000 and couples making more than $450,000 will increase to 39.6%, up from the current rate of 35%. Of particular concern to business owners, the rate of taxes on inherited wealth — the estate tax — will increase to 40%, from 35%, but the threshold for estates that are exempt remains at $5 million, rather than reverting to the previous level of $3.5 million. In addition, the payroll tax cut for consumers was allowed to expire, which could impact spending in the near term, said Andrew Harig, director of government relations, Food Marketing Institute. “We’re waiting to see what impact that has on consumer spending,” he said.

Retailers Post 4.5% Increase in December Sales
January 03, 2013 Many major American retailers were able to recover from a slow start to December shopping, according to monthly sales results reported on Thursday.

Despite early indications that the holiday season would be lackluster, the 17 apparel chains tracked by Thomson Reuters reported a 4.5 percent increase for December sales at stores open at least a year, exceeding the 3.3 percent gain analysts had expected.

Apparel Stores

Aéropostale posts lower-than-expected holiday sales, cuts outlook
January 10, 2013 New York — Aeropostale Inc. reported Thursday that sales for the nine-week holiday selling period ended Dec. 29 fell 6% to $645 million. Same-store sales, including e-commerce, dropped 8%.

The retailer has cut its earnings guidance for the fourth quarter.

Urban Outfitters reports holiday sales
January 10, 2013 Philadelphia — Urban Outfitters Inc. said Thursday its same-stores sales for the holiday season rose 9%, including its direct-to-consumer business. Excluding that unit, same-store sales fell 1%.

Total company net sales for November and December increased 15% to $666 million. Among Urban Outfitters’ brands, comparable sales increased 33% at Free People, 10% at Urban Outfitters and 5% at Anthropologie. Direct-to-consumer net sales increased by 38% for the period and wholesale segment net sales increased 21%.

Uniqlo spreads U.S. roots
January 9, 2013 NEW YORK — Value priced apparel and accessories retailer Uniqlo continues its U.S. expansion with the opening of two stores in the Northeast.

The global clothing retailer is strengthening its toehold on the Northeast with two new stores opening at Palisades Center in West Nyack, N.Y., and Westchester’s Ridge Hill in Yonkers, N.Y., by spring 2013.

Destination Maternity revenue dips in Q1
January 8, 2013 Philadelphia — Destination Maternity Corp. reported Tuesday that revenue for the first quarter edged down to $135.3 million, from $136.4 million in the year-ago period. The results fell within internal expectations of $132.5 million to $136.5 million.

Same-store sales rose 1.9%. The maternity apparel retailer said the decline in total revenue was due in large part to sales declines related to closing underperforming stores.

Discount Stores

Target’s December sales miss expectations
January 3, 2013 Target Corp.’s same-store sales were flat in December, falling short of prior forecasts.

Total sales for the five weeks ended Dec. 29 came in at $10.21 billion, up 0.8 percent from $10.14 billion in the comparable period last year. But Steinhafel said the company still expects its adjusted fourth-quarter earnings to “meet or somewhat exceed” the low end of the company’s prior guidance of $1.64 to $1.74.

Drug Stores

Walgreens December sales fall 4%
January 4, 2013 Deerfield, Ill. — Walgreens reported Friday that sales for the month of December dipped 4% to $6.71 billion, from $6.99 billion in the year-ago period.

Total front-end sales fell 1.3% and same-store front-end sales decreased 2.3%. Total same-store sales fell 6.1% in December.
Home Improvement & Office Products

Tuesday Morning sales rise in Q2
January 8, 2013 Dallas — Tuesday Morning Corp. reported Tuesday that sales for the quarter ended Dec. 31 rose 4.5% to $285.3 million, compared with $273.1 million in the year-ago quarter.

Same-store sales increased 5.6%. Tuesday Morning also reported that beginning with this second quarter sales report it will no longer provide net income estimates with sales figures, but will instead consolidate that information in its earnings reports.


How ‘fiscal cliff’ deal impacts small restaurateurs, franchisees
January 9, 2013, While the restaurant industry breathed a collective sigh of relief when the White House and Congress just narrowly avoided plunging the country over the “fiscal cliff” in December, not everyone is thrilled with all aspects of the deal.

“We’re pleased to see a deal reached on the fiscal cliff,” said Rob Green, president of the National Council of Chain Restaurants. “But we’re not out of the woods yet.” While the Taxpayer Relief Act of 2012 ensured that about 98 percent of Americans and 97 percent of small businesses would not see their income taxes rise in 2013, some restaurateurs will not be so fortunate.
First Watch Restaurants to Expand in Tennessee, Kentucky and North Carolina
January 7th, 2013 Knoxville, TN, Award-winning Breakfast, Brunch and Lunch restaurant First Watch has signed a multi-unit franchise agreement with Knoxville-based Capstone Concepts, LLC to open eight restaurants over the next five years in Knoxville, Chattanooga, Bristol, Kingsport, Johnson City, Asheville, N.C., and Bowling Green, Ky. Capstone currently owns and operates restaurants in Knoxville, North Carolina and Kentucky.

The first restaurant is expected to open in Knoxville in the first half of 2013. Each of the restaurants will employ approximately 25 people. Day-to-day operations for the First Watch restaurants will be handled by Capstone Concepts Chief Operating Officer James Geib, who has been with Capstone for three years and has almost 30 years of restaurant experience, including the management of 144 Arby’s restaurants located in three states.

Sonic: Five-day part strategy drove 1Q profit
January 4, 2013 Sonic Corp. executives credited a robust product pipeline, which has just debuted a line of grilled cheese sandwiches, and renewed emphasis on its five-daypart strategy for improved profits in its first quarter.

Sonic said profit rose 12 percent in the quarter ended Nov. 30 at the Oklahoma City-based drive-in chain, with the company earning $6.1 million, or 11 cents per share, compared to $5.5 million, or 9 cents per share, in the prior-year quarter. Revenue dropped to $126 million from $128.3 million, partially due to refranchising of some company-owned units.

Restaurant Chains Turning to C-stores to Drive Growth
January 04, 2013 — With retail real estate commanding a premium today, restaurant chains have sought out new ways to expand their businesses. Partnering with convenience stores is one of the top solutions they discovered.

Both Huddle House and Fazoli’s are two restaurant chains that have already successfully teamed up with c-stores and travel centers. Last year, Huddle House, especially known for its breakfast foods, franchised two of its quick-service restaurants (QSRs) within Pilot Flying J travel centers. The rollout was so successful that the QSR expanded to additional Pilot Flying J travel centers in North Dakota and Pennsylvania.

Starbucks completes Teavana acquisition
January 3, 2013, Starbucks Corp. completed its acquisition of Atlanta-based Teavana Holdings Inc. this week, “promising to reinvent the way the world enjoys tea,” wrote Jeff Hansberry, Starbucks president of channel development and emerging brands, in a blog posted Monday.

The $620 million cash transaction was first revealed in November. The move makes the more than 300-unit Teavana retail chain a wholly-owned subsidiary of Seattle-based Starbucks.

Dollar Stores, Warehouse Club & Other Retailers

QuikTrip Goes Full Throttle in Growing Store Count
January 07, 2013, TULSA, Okla. — At the start of 2012, QuikTrip Corp. announced it would open more stores during the year than ever before. The convenience store chain did that – and more.

The Tulsa-Okla.-based retailer is currently in 11 states and operates 639 c-stores, with no signs of slowing down any time soon. During its last fiscal year, which ended April 2012, the chain added 46 stores — all new builds — and it plans to add even more by this April, Mike Thornbrugh, QuikTrip’s manager of public and government affairs, told CSNews Online.

Record expansion for Kum & Go
January 7, 2013 West Des Moines, Iowa — Convenience-store operator Kum & Go. opened 43 stores in nine states — more than double its previous record of 21 new stores in 2009 — in 2012, for a total of 430 stores in 11 states. The company plans to continue its growth strategy in the coming years.

Ulta Beauty holiday sales up 23.2%
January 7, 2013 Bolingbrook, Ill. — Ulta Beauty reported that its holiday revenue grew 23.2% as sales “strongly” rebounded the weekend before Christmas.

Total sales for the seven-week holiday period were $475.6 million, compared with $386 million in the year-ago period. Same-store sales increased 7.4%, on top of a 12.6% increase during the same period in the prior year.

Finish Line posts unexpected loss in Q3
January 4, 2013 Indianapolis — Finish Line Inc. reported Friday a loss of $107,000 for the quarter ended Dec. 1, compared with a profit of $5.55 million in the year-ago period. The unexpected swing, said the company, was due in part to a lukewarm response to Finish Line’s new online store.

Sales in the quarter climbed 5.2% to $296.6 million, missing Wall Street’s expected $296 million in revenue, and same-store sales rose 3.6%.

From the ICSC

Vacancy rates down in fourth quarter at U.S. centers
Vacancy rates at U.S. malls and strip centers eased in the fourth quarter, according to research firm Reis, which tracks the top 77 U.S. markets. The vacancy rate at malls declined to 8.6 percent, off one-tenth of a percentage point from the previous quarter, Reis reports. The mall vacancy rate has now declined for the five consecutive quarters since an industry 12-year high of 9.4 percent in the third quarter of 2011, according to Reis. At strip centers, meanwhile, vacancies fell back to 10.7 percent in the fourth quarter, from 10.8 percent in the third. The average asking rent at malls increased by 0.2 percent in the fourth quarter, to $39.31 per square foot yearly, up from the previous quarter. This is the sixth straight quarterly increase. At strip centers, the average asking rent rose by 0.2 percent to $19.08 per square foot yearly, the fourth consecutive quarterly increase.

Supervalu sells five chains to landlords for $3.3 billion
Minneapolis-based Supervalu is selling its Acme, Albertsons, Jewel-Osco, Shaw’s and Star Market supermarkets and its Osco and Sav-on in-store pharmacies for $3.3 billion. The buyer is a group of investors led by Cerberus Capital Management and including landlords Kimco Realty, Klaff Realty, Lubert-Adler Partners and Schottenstein Real Estate Group. The sale includes nearly 900 stores, and the price comprises $100 million in cash and the assumption of some $3.2 billion in debt. Kimco says it is paying in $76.5 million for a 15 percent stake. “We are excited about adding to our successful investment in Albertsons which will reunite all of the Albertsons stores,” said Kimco CEO David Henry in a press release. Kimco and Cerberus teamed up to buy nearly 700 Albertsons stores in 2006.
Supervalu is left with a wholesale food distribution business, the 1,300-store Save-A-Lot chain, and the regional Cub, Farm Fresh, Hornbacher’s, Shoppers and Shop ’n Save supermarket chains. After the deal closes, grocery retail veteran Sam Duncan will become president and CEO of Supervalu, replacing current Chairman, President and CEO Wayne Sales. Duncan says Supervalu will be stronger because it can focus on the fast-growing hard-discount supermarket business exemplified by the Sav-A-Lot chain.

Target fights showrooming with price-match policy
In a bid to curb “showrooming,” Target announced that it would match the online prices of its major competitors year-round. The Minneapolis-based chain launched the policy this holiday season and has decided to extend it permanently. “Guests can confidently shop at Target every day for the best value in retail,” said Gregg Steinhafel, the company’s chairman, president and CEO, in a press release. “We know that our guests often compare prices online.”
If a shopper buys a qualifying item at a Target and then finds that same item for less in the following week’s Target circular or within seven days on,,, or, or in a local competitor’s printed ad, Target will match that price. Observers say they expect other retailers, especially Best Buy, will follow suit. “At some point, every major retailer is going to have to price-match, or customers will just make a profession out of showrooming,” wrote Andrew Marder, a columnist for The Motley Fool. “By being the first to adopt the price-match, Target gets all sorts of positive customer vibes, and should reap the rewards from that goodwill.”
But others question whether the program will help the chains make serious inroads against online competitors. Larry Dignan, a columnist at technology website CNET, says the policy is too complicated, because it requires customers to do their homework in order to get a deal. “For online price matching to really work, information systems would be lined up across multiple sales channels and adjust pricing on the fly,” Dignan wrote. “Simply put, showrooming will continue until you trust physical retailers will automatically match online prices without any work on your end.”

Mandee owner hopes to emerge from Chapter 11 stronger
Totowa, N.J.–based Big M, owner of the Afaze, Annie Sez and Mandee apparel chains, filed for Chapter 11 bankruptcy protection in New Jersey. The company said it plans to continue operating its stores and to emerge stronger after restructuring. The company closed 27 stores last year in an effort to trim losses, but Hurricane Sandy forced the shutting of most of Big M’s stores in New Jersey, New York and Connecticut for more than a week. Three stores were dark for a month while the company sought to repair damage from the storm. A court filing reports that Big M owes creditors upwards of $100 million and has depleted its resources just getting the damaged stores running again. Big M also says it has yet to receive funds from its insurer, owing to a dispute. The company reported about $192 million in revenue for 2012 and about $15 million in total debt. Salus Capital Partners has committed some $13 million in credit to help the retailer restructure. Big M operates 129 stores across eight states. The 84-unit Mandee chain sells off-price clothing for young women, while the 35-store Annie Sez and the 10-unit Afaze chains cater to older women.

Financial planners are a hot new tenant category
Financial-services firms are not exclusively for the wealthy, the economically sophisticated, or the entrepreneurial. In fact, in an effort to draw the mainstream client, increasing numbers of these firms are setting up shop in shopping centers. America’s Retirement Store, for one, opened its first such unit in February, at The Promenade Shops at Centerra, a lifestyle center developed by Poag & McEwen in Loveland, Colo. America’s Retirement Store is a subsidiary of Presidential Brokerage, a Colorado-based provider of traditional financial services. Presidential is targeting small-business owners and professionals with investment portfolios worth between $250,000 and $1 million, as well as concentrating on the everyday folk who comprise an underserved market, according to CEO John DuPriest. “The major firms are mainly looking for clients in the top three or five income percentiles,” DuPriest said. “We think there are opportunities 30 or 40 percentiles below that.” Visitors to America’s Retirement Store receive materials and view presentations on such topics as investing, Social Security and estate planning. One IRA presentation last year drew about 600 attendees.
Many traditional financial planners might decry what they see as the commoditization of their industry, but major firms are entering shopping centers nonetheless. Charles Schwab operates two mall-based stores: one at Front Range Village, in Fort Collins, Colo.; and the other at Clay Terrace, in Indianapolis. Edward Jones has three: at The Avenue Webb Gin, outside Atlanta; at Wolf Ranch Town Center, in Georgetown, Texas; and at The

Shops at La Cantera, in San Antonio.
Financial advisers typically operate in traditional office spaces, of course, or perhaps in smaller strip centers. But as competition heats up to serve the baby boomers now at or near retirement age, planners are testing out new ways to reach them. Because visitors to a mall tend to be in a fairly upbeat mood and are there to buy things, malls may be the very best places for financial-advisory firms to build brand awareness and expand clientele, observers say. “They are not only recruiting and retaining customers,” said John Bemis, executive vice president of retail in the Atlanta office of Jones Lang LaSalle, “they are also raising the profile of a customer base that may not be paying attention to financial-planning commercials.”
South Beach Tristar Capital sold a 53,260-square-foot portfolio of stores in Miami Beach, Fla.’s South Beach district for $139 million to Terranova Corp. and Acadia Realty Trust.
Glimcher Realty Trust bought the 173,220-square-foot University Park Village, in Fort Worth, Texas, from an undisclosed seller for $105 million. Tenants include Anthropologie, Apple and J.Crew.
Regency Centers paid a private partnership $81 million for the 149,000-square-foot Uptown District Shopping Center, in San Diego.
DDR bought the 434,000-square-foot Poyner Place, in Raleigh, N.C., from RCG Ventures for $45 million.
California-based Read Investments bought the 85,000-square-foot Mission Oaks Shopping Center, in Atascadero, Calif., from an undisclosed seller for $12 million. Anchors are Big 5 Sporting Goods, Big Lots, Dollar Tree and Grocery Outlet.
Prestige Properties & Development bought the 22,000-square-foot Charter Oak Commons, in Waterford, Conn., from Cheesecake Cos. for $9.4 million. Eastern Mountain Sports, Jared Jewelers and Miracle Ear are among the tenants.
An affiliate of Festival Development Corp., of Los Angeles, paid $9.25 million for Encinitas (Calif.) Village Square 1, a 25,800-square-foot strip center. The seller was Encinitas Village Square 1 Ltd.
San Diego–based Capstone Advisors purchased the 41,400-square-foot Heritage Court, in Indio, Calif., out of foreclosure for $4.75 million. The tenants there include Anytime Fitness, Fantastic Sam’s and Subway.
Southgate Mall LLC, an affiliate of CCA Acquisition Co. and Kornwasser Shopping Center Properties, paid $4.12 million for Southgate Mall, a 209,000-square-foot property in Yuma, Ariz. The seller was MidFirst Bank.

Edward Lampert, whose ESL Investments hedge fund owns 50 percent of Sears Holdings Corp., is now CEO of Sears following the departure of Louis D’Ambrosio. D’Ambrosio left the company for family health reasons. Lampert engineered the merger of Sears and Kmart in 2005.
Dirk Montgomery is Ascena Retail Group’s new CFO, as well as executive vice president. He succeeds Armand Correia, who retired after 21 years with the company. Montgomery was executive vice president and chief value-chain officer of restaurant conglomerate Bloomin’ Brands.
The Wet Seal named John Goodman CEO, five months after firing Susan McGalla amid pressure from one of the company’s biggest shareholders to stem a slide in sales. Goodman has worked for Gap Inc., Levi Strauss & Co., Mervyns and Sears Holdings Corp.
Wal-Mart Stores appointed Lev Khasis president and chief executive of new formats for Walmart International. Khasis, a native of Russia who joined Wal-Mart in 2011 as a senior vice president, will focus on developing new concepts.
Nordstrom will open a Nordstrom Rack off-price store in Atlanta across the street from an existing full-line Nordstrom store. The Seattle-based chain said it would open the Rack store at Kimco Realty’s Perimeter Expo power center in the fall. The proximal shopping center with the existing Nordstrom is General Growth Properties’ Perimeter Mall, which the cha\
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January 8, 2013 By James Kobzeff
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It’s so much more than density

From the desk of Garrick Brown
January 2013
Welcome to our January newsletter,
Here we go again, a new year, new goals, new aspirations, maybe even a few resolutions. I like Januarys. For me it is a time of refocus and reevaluation of where I am in life.
2012 was a challenging year globally. The euro took a beating as did the US dollar. The recession/depression continued its hold on commerce around the world. Businesses continued to fail in record numbers, several countries instituted VAT (value added tax) to their countries commerce structure which sent an already fragile economy underground to the point many businesses have closed as the consumer’s are not accustomed to a tax or simply can’t afford the purchases any longer.

With all of these sometimes depressing and downright scary news events, what does 2013 bring and how can I ensure I am not a victim? There were many success stories that came directly out of these tough economic times. I want one of 2013’s success stories to be about YOU!

That, being said, I thought I’d jump start 2013 with some positive stories and thoughts. Things that you can make uniquely yours – today. Afterall, we do have a choice in how our lives turn out. Were you happy with 2012 or would you like to see 2013 be a banner year for your business and for you personally?
Keep in mind that although 2012 did have many challenges and the news wasn’t always bad or depressing. Remember always that you have a choice as to how life’s events impacts you. No one else does.
Read on as we dedicate this first edition of the year to “new beginnings”.
Please enjoy the stories and articles and of course, don’t forget to pass this along to others to share. Knowledge is too precious not to share.
– Donn Carr, President/Principal Carr Management Group
The Simple Art Of Hiding In Plain Sight.
Bodega 2.0: A Business for Healthy, Walkable Cities?
How to Invest in Vacant Land and Win Big
6 Warning Signs of a Bad Franchise
Are you listening in on corporate sustainability conversations?
Wal-Mart to Open its Smallest Store Yet
Sanford to be interim director of Memphis Regional Design Center
Investors Strip Malls Off Shopping Lists
Deloitte’s View on Global Retail
The 3 Benefits of a Well Done Prospecting Letter
Wall Street Analysts Bet On Real Estate

From the DESK of the ICSC
REITs hit new heights in 2012
U.S. REITS rallied last year, outshining other vehicles and even their own past performance, thanks to healthy fundamentals, increased acquisition activity and development, and access to inexpensive debt, according to SNL Financial. Total REIT returns for the year averaged 20.2 percent, up from 8.3 percent in 2011 and roughly 4 percentage points higher than the S&P 500 for 2012.
Industrial REITs were strongest, at 32.2 percent. Regional mall REITs furnished a 28.6 percent return, while shopping center REITs returned 26.3 percent. Manufactured homes and multifamily properties brought up the rear, with returns of 7.1 percent and 6.4 percent, respectively.
The spread between the SNL Financial U.S. REIT index and 10-year U.S. Treasuries ended at 163 basis points in favor of REITs, with U.S. REITs yielding 3.41 percent.
Last year 76 U.S. REITs announced dividend increases, up from 49 in 2011. Health care REITs posted the highest dividend yield among U.S. REITs, at 4.73 percent. Other sectors that exceeded the U.S. REIT average included shopping centers, manufactured homes and office REITs, with yields of 3.92 percent, 3.85 percent, and 3.53 percent, respectively. SNL says 2013 will be a “yield plus growth” year, with REITs possibly returning 9 percent to 12 percent.
Walmart to stock more U.S.-made goods, hire veterans
Wal-Mart Stores announced some new initiatives in its long-standing efforts at good corporate citizenship in the U.S. The company says it plans to source more of its merchandise domestically, to help military veterans find jobs when they return home and also to help more part-time employees become full-timers with benefits.
“We want all of our associates to find the career opportunities they want with Walmart,” said Bill Simon, Walmart U.S. president and CEO, at a conference this week. “We will make sure part-time associates have full visibility into full-time job openings in their stores and nearby stores, and that they always have first shot at those jobs. We will also bring more transparency to our scheduling system so part-time workers can choose more hours for themselves.”
Walmart says its flagship and Sam’s Club stores will be purchasing an additional $50 billion worth of U.S.-made products over the next 10 years. The company also says it will boost U.S. manufacturing on two fronts: by increasing what it already buys here, in such categories as sporting goods, apparel basics, storage products, games, and paper products; and by helping to bring back to the U.S. production of textiles, furniture and high-end appliances. Walmart has formed a team to oversee this effort, and the company will be making longer-term purchase agreements.
Beginning Memorial Day, Walmart will offer a job to any honorably discharged veteran during his or her first 12 months off active duty. Most of these will be jobs in Walmart stores and clubs, and some will be at distribution centers or in the home office. The company expects to hire about 100,000 veterans over the next five years.
“Hiring a veteran can be one of the best business decisions you make,” said Simon. “Veterans have a record of performance under pressure. They’re quick learners and team players. They are leaders, with discipline, training and a passion for service. There is a seriousness and sense of purpose that the military instills, and we need it today more than ever.”
The announcement won praises from Matthew Shay, president and CEO of the National Retail Federation. “Walmart is challenging the industry to follow their lead,” he said in a press release, “and I have every reason to believe that retailers — the industry responsible for one out of every four jobs — will respond accordingly.”
Toy sales jumped 18 percent this holiday season: Report
Strong year-end sales helped the U.S. toy industry close 2012 on an even footing with 2011, according to NPD Group. Many Americans waited until the last two weeks of December to shop for holiday toys, the research firm says. For those two weeks, dollar sales rose 18 percent and unit sales climbed 10 percent versus the year-ago comparable period. Dollar sales for the month exceeded $5 billion for the first time in three years and were up 1.3 percent from a year ago. This was the second consecutive December that saw revenue growth for the toy sector — dollar sales for December 2011 were up 1.5 percent over December 2010.
For the year overall, U.S. toy sales totaled $16.5 billion, off a tad from $16.6 billion for 2011. “Like other sectors, toys took a hit in November, caused by waning consumer confidence, concern about fiscal policy and Superstorm Sandy,” said Russ Crupnick, an NPD senior vice president, in a press release. “Events like these prevented toys from experiencing a better year. The good news is when consumers did break out of their cocoon in late December they flocked to the toys section at their favorite retailers.”
Among the year’s top sellers were Barbie, Disney Princess, Hot Wheels, Monster High and Star Wars toys. “The ‘toy story’ for 2012 was filled with concern about declining birthrates, economic uncertainty and competition from consumer electronics, and those are all real issues for the toy industry,” said Crupnick. “But, in the end, consumers proved that toys are still important and relevant as play options, and that they are willing to pay extra for products that deliver on play value.”
DDR ramps up investment in Puerto Rico
DDR Corp. says it will spend more money than originally planned upgrading its properties in Puerto Rico to take advantage of demand for space there. The firm, which is expanding and redeveloping four of its 15 properties on the island, says it will probably invest some $90 million overall — about $40 million more than initially expected.
“Increased demand for quality retail space in this supply-constrained market has created unique value-add opportunities in many of our most productive assets,” said Paul Freddo, DDR’s senior executive vice president of leasing and development, in a press release. “By executing our strategic redevelopment plan, we are creating attractive opportunities for our key domestic tenants to establish or expand their presence on the island.”
DDR says it will add 137,000 square feet to its 690,000-square-foot Plaza del Sol by the fall of 2014 and redevelop its 680,000-square-foot Plaza del Norte to accommodate new tenants.
DDR is not alone with such activity in Puerto Rico. Taubman Centers broke ground in September on what it calls Puerto Rico’s first luxury mall: the 650,000-square-foot Mall of San Juan. This $450 million project, developed with locally based New Century Development, will be home to the Caribbean’s first Nordstrom and Saks Fifth Avenue stores. Mall of San Juan is set to open late next year.
Puerto Rico’s economy is still in a recession that began in 2006. Its 13 percent unemployment rate is higher than that of any U.S. state, though recently inagurated Gov. Alejandro Padilla says he plans to address the problem, in part by hiring a former Procter & Gamble executive to head the tourism office. The island’s appeal as a vacation destination for cash-strapped tourists from the mainland U.S., Canada and Italy is growing fast. According to travel-services website Expedia, travel to Puerto Rico in the fourth quarter grew 40 percent from the comparable quarter in 2011.
Cypress Equities Real Estate Investment Management and Sarofim Realty Advisors sold Deptford (N.J.) Landing, a 517,000-square-foot power center, to RioCan Real Estate Investment Trust for $64 million.
HD Harmon Square LLC bought The Shoppes at Harmon Square, a 36,270-square-foot center in Las Vegas, from Gaslamp Holdings for $11.5 million. Kiss Monster Mini Golf anchors the center, which is across the street from Hard Rock Hotel.
The Crown Co., of Dobson, N.C., sold a 54,500-square-foot stand-alone Walmart Neighborhood Market in Cary, N.C., to an entity related to Cole Capital, of Phoenix, for $8.6 million.
Magnolia Bakery opened a shop in Doha, Qatar, the company’s largest so far. The New York City cupcake chain now operates nine shops, including this latest, five in New York City and one each in Chicago, Los Angeles, and Dubai, United Arab Emirates.
Krispy Kreme Doughnut Corp. announced plans to double its U.S. presence to some 400 shops by 2017. The chain says company-owned shops are to open mainly in the Southeast, and franchise units will be opening in other regions. Overseas the company continues with a plan announced a year ago to boost shop count from the current 500 to about 900 by 2017, including shops in India, Mexico and Russia. Meanwhile, Dunkin’ Brands says it will expand by nearly 25 percent this year. The chain will open roughly 350 shops and enter Southern California in 2015 through franchise deals. Dunkin’ Brands left California a decade ago, but now says it intends to have 1,000 shops in that state. The company opened nearly 300 shops last year. It currently operates about 7,200 shops in the U.S. and roughly 3,100 abroad.
Ivanhoé Cambridge says it will spend some $87 million expanding and redeveloping its Vaughan (Ontario) Mills, near Toronto. The company will add 150,000 square feet to accommodate 50 additional tenants, bringing the total to 1.1 million square feet. Vaughan Mills, which opened in 2004, features a mix of factory outlets and speciality stores. Construction is slated to begin in the spring.
Macerich is teaming up with National Geographic Kids magazine to provide entertaining and educational materials and activities for the landlord’s Kids Club programs at about 40 of its U.S. shopping centers.
PayPal has arranged for 23 retailers to accept its electronic-payment service in their stores. PayPal is now accepted in some 18,000 retail locations. Among its retailer partners are Abercrombie & Fitch, Dollar General, Home Depot, JCPenney and Toys ‘R’ Us. The company also announced that Jamba Juice is testing a PayPal platform that allows customers to order ahead, select a pick-up time and pay in advance by smartphone.
Malls and commercial buildings in Kuala Lumpur will now have to reserve 7 percent of their parking space for the exclusive use of women in the wake of a series of crimes in parking lots. Several shopping centers have stepped up security and introduced free shuttle services.
Canadian retail sales grew at a slow 1.6 percent in December, according to the MasterCard research division. That is less than half the 4.3 percent growth for last December. Online purchases by Canadians jumped 26 percent during the period, MasterCard reports. Online sales still account for a relatively small part of total sales — 6.6 percent — but the segment has grown by about 20 percent year on year for 15 months straight.

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Shawn joined the Memphis Office of The Shopping Center Group in 2003 and became a partner in 2008 to focus on shopping center leasing and tenant representation. He has a Bachelor of Business Administration and an MBA in finance and real estate from The University of Memphis. Prior to joining The Shopping Center Group, Shawn was a Senior Project Manager for Cingular Wireless (AT&T) and was responsible for real estate development management, construction and implementation for wireless antenna and tower infrastructure for Tennessee and Mississippi. He is adjunct professor at The University of Memphis where he teaches the masters level class in real estate development and sustainability. In 2013 in will be working with Homburg Academy and University teaching on-line commercial real estate classes internationally. He holds both the CCIM and SCLS designations. Shawn engages in tenant representation, third party leasing/sales, investment sale and development consulting in the retail sector.

He is the co-founder and Chairman of the Board for the Memphis Business Academy charter schools (K-12th grade) in the Frayser area of Memphis. He is currently the 2013 vice-president of the Memphis CCIM chapter, 2013 Secretary/Treasurer of the MAAR Education foundation. He has serve on various charitable organizations boards in Memphis including Habitat For Humanity, the Binghamton Development CDC Retail Committee and Youth Visions. He is a member of Christ United Methodist Church. His wife is Price Phillips and he has two children Amanda and Matthew.

For all your retail real estate needs (tenant representation, landlord representation and property, investment & land sales) I hope that you will choose The Shopping Center Group and me to represent you and your business. We understand that representation is a privilege and that you have a choice!

The opinions expressed in this post are entirely my own. They should not be considered the opinion of The Shopping Center Group, LLC in which I am associated.

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