Jim Makens Forecast 2010

8/14/2019 Jim Makens Forecast 2010

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2010 Retail Forecast

Jim Makens

The Makens Company


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A year of opportunity

2009


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Landlords will have to pay higher finish-out dollars to secureleasesShopping Centers that are poorly leased will go back to

lendersOverall retail vacancy will increase, Convenience Centersand Power Centers being the most impacted, Lifestyle andNeighborhood centers will fare the bestGrocery Stores will start to expand again 2009 will be abuying opportunity for underperforming Shopping CentersTODs (Transportation Oriented Districts) begin to emergeMany high end retailers will close locations

2009 Predictions


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Expect deep discounts

Trading down

Less credit, more cashConsumers are saving more

Low consumer confidence and tight credit translates

to less, more frugal spendingMany consumers out of work

Changing Consumer


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In 2009 consumer spending accounted for70% of total U.S. GDPExpect deep discounts

Trading downLess credit, more cash

Consumers are saving moreLow consumer confidence and tight credittranslates to less, more frugal spendingMany consumers out of work

Changing RetailerChanging Consumer


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In 2009 consumer spending accounted for70% of total U.S. GDPExpect deep discounts

Trading downLess credit, more cashConsumers are saving more

Low consumer confidence and tight credittranslates to less, more frugal spendingMany consumers out of work

Changing Consumer


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Changing Retailer

Cater to younger (16-28) agegroup

Use of direct mail couponsValue retailers move up

Reduced expansion, unprofitablestore closings, footprintshrinkage, rent re-negotiating


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Fort Worth area Grocery MarketShares*

2006% 2007% 2008% 2009% 2008 to 2009

Wal-Mart** 34.92 37.77 38.42 39.50 +1.08

Kroger 16.47 15.30 15.61 15.74 +0.13

Albertsons 12.34 10.69 8.64 8.54 -0.10

Tom Thumb 11.42 10.78 10.75 10.36 - 0.39

Others 24.85 25.46 26.58 25.86 - 0.72

*Source Shelby Report

** Includes SuperCenter and Neighborhood Grocery

%Loss/Gain


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x Since 2004 Wal-Mart has been the No. 1seller of groceries in Dallas Fort Worth2009 global net sales were $403B, up from$371B in 2008 ($87 million dollars a dayincrease)DFW still has the largest concentration ofstores of any major metropolitan area in theU.S.Wal- Marts grocery market share is 39.5%

up 1.02% from 2008

Wal-Mart


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AldiAnticipated 40+ DFW stores

Tom Thumb completes remodels

Kroger goes bigger

HEB comes through the back door

Grocery Expansion


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Power Centers

Lifestyle CentersNeighborhood CentersConvenience Centers

Categories of Retail Centers


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150,000 600,000 sf1 3 Major anchors of 125,000-

150,000 sfSeveral Junior anchors of 20,000 sfSmall shop space (about 15% of

anchor space)Several pad sites

Power Centers


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0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

20051Q

20052Q

20053Q

20054Q

20061Q

20062Q

20063Q

20064Q

20071Q

20072Q

20073Q

20074Q

20081Q

20082Q

20083Q

20084Q

20091Q

20092Q

20093Q

QTD

TARRANT Co DALLAS/COLLIN/DENTON CO

Power Center - Vacancies

NATIONAL


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150,000 to 600,000+ sq. ft.

Retail center as the focal point

Often includes a municipal building

High density residential and/or office

Entertainment may be a component

Pedestrian friendly

Lifestyle Centers

hl k


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Southlake Town Square

FM 1709 (Southlake Blvd.) @ Carroll St., Southlake

1.2 Million sq. ft GLA Theatre, City Hall, townhomes

97% Occupancy Level Model Development


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Built 1928 Redeveloped to Lifestyle 470,000 sq. ft. Retail 240 Residential Units

93% leased Spurred 7th

Street revival

M Pl


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Museum PlaceMuseum Place

11 Acres 130,000 s.f. Office 1,050,000 s.f. 500 Residential Units

170,000 s.f. Retail Hotel

W 7 h


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West 7th

1.1 Million s.f. Residential 350,000 s.f. Retail

Office Restaurants

The Shops at SOSEVEN


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The Shops at SOSEVEN

South of Montgomery Place & north of Lancaster Blvd.Phase III

60,000 Retail 45 Townhomes Apartments 20,000 Office 62 Condos/Lofts Hotel


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SEQ I-35 @ Heritage Trace, north Fort Worth 200 Acre development Phase II 250,000 s.f. Retail

Pioneering Lifestyle 70,000 s.f. Office

Alliance Town Center


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Lifestyle Center - Net Absorption

(800,000)

(600,000)

(400,000)

(200,000)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

20051Q

20052Q

20053Q

20054Q

20061Q

20062Q

20063Q

20064Q

20071Q

20072Q

20073Q

20074Q

20081Q

20082Q

20083Q

20084Q

20091Q

20092Q

20093Q

QTD

TARRANT CO DALLAS/COLLIN/DENTON CO


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Lifestyle Center - Vacancies

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

20051Q

20052Q

20053Q

20054Q

20061Q

20062Q

20063Q

20064Q

20071Q

20072Q

20073Q

20074Q

20081Q

20082Q

20083Q

20084Q

20091Q

20092Q

20093Q

QTD

TARRANT CO DALLAS/COLLIN/DENTON CO NATIONAL


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30,000 to 150,000 sf including the anchor

Three to fifteen acres of land

Supermarket anchor with gas station

2-3 additional pad sites

Retail shop space of 25,000 to 40,000 sf

Neighborhood Centers


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0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

20051Q

20052Q

20053Q

20054Q

20061Q

20062Q

20063Q

20064Q

20071Q

20072Q

20073Q

20074Q

20081Q

20082Q

20083Q

20084Q

20091Q

20092Q

20093Q

QTD

Tarrant Co Dallas/Collin/Denton Co

Tarrant Start 11.1%, peak 15%, end 12.5%DCD Start 10.9%, peak 14.3%, end 13.1% Natl 10.4%

National

Neighborhood Center - Vacancies


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Not anchored

Locate near larger anchored centers

Follow residential growth

Many mom & pop tenants & medicalprofessionals

Convenience Centers


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Convenience Center - Net Absorption

(300,000)

(200,000)

(100,000)

0

100,000

200,000

300,000

400,000

500,000

2005

1Q

2005

2Q

2005

3Q

2005

4Q

2006

1Q

2006

2Q

2006

3Q

2006

4Q

2007

1Q

2007

2Q

2007

3Q

2007

4Q

2008

1Q

2008

2Q

2008

3Q

2008

4Q

2009

1Q

2009

2Q

2009

3Q

QTD

TARRANT CO DALLAS/COLLIN/DENTON CO


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Convenience Center - Vacancies

National


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Changing Consumer2009 All Retail Vacancy

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2008 4Q 2009 1Q 2009 2Q 2009 3Q QTD

Tarrant Co Dal/Col/Den Co Nat'l


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CRE sale prices fall CAP rates rise

Rents continue to fall

Occupancy fallsFinish-out costs to Landlord continue to remain high

NO new construction except grocery anchoredcenters

Assets that sell early in 2010 will bring higher pricesthan later in 2010.

2010 Predictions

Documents

Jim Makens Forecast 2010