Colliers: Retail Not Yet Out of the Woods
- Mar 23, 2010
March 23, 2010
By Allison Landa, News Editor
While retail vacancies will stabilize in many markets, the retail world can’t yet breathe a sigh of relief. That’s according to Colliers International’s 2010 Retail Trends and Opportunities report, which terms that stabilization as the “Not So Fast” recovery.
“Despite the encouraging economic news that marked the latter half of 2009, there has been little in the way of good news on the job front,” Colliers national retail research director Garrick Brown wrote, adding that the U.S. lost more than four million jobs in 2009, adding to the 3.1. million jobs lost in 2008. “And although the hemorrhaging has slowed considerably, It is not over. In fact, as we entered 2010, the most recent announcements of job cuts have come from retailers.”
Those retailers include WalMart, which is eliminating 11,200 jobs; Home Depot, which is slashing 1,000 positions; Macy’s, which is cutting 1,500 jobs; and Borders, which plans to cut 124 employees.
The report forecasts that consumer spending will remain constrained so long as the unemployment rate is above the eight percent range – and this is expected to be the case for the next three to four years.
However, the report was not without its optimistic side. One of the bright spots came in form of pop-ups, or temporary retail space. “The entry of trendier retailers into the pop-up game has bolstered landlords’ willingness to do very short-term leases,” Brown noted.
Additionally, Colliers found that cheaper rents have translated into more urban activity, with many retailers previously priced out of expensive markets are uncovering storefront opportunities. This is particularly the case in New York City, where street-front rents have tumbled by as much as 40 percent.
Discount stores have also received a boost from the recession. Dollar-store chains such as Dollar General, Family Dollar and Dollar Tree were predicted to emerge as the strongest growth sector in retail over the course of the year.
There was also hope for restaurants, particularly of the quick-service and casual stripe. “As part of the new frugality, fast-food and fast casual operators with lower price points have fared better and will be in expansion mode through 2010,” Brown wrote.
Creative use of empty big-box space was found to be on the rise, with theaters, libraries, and indoor go-kart facilities taking the place of former retailers such as Circuit City and Mervyn’s. The commercial real estate lexicon has expanded to include the phrases “ghost boxes” and “black hole space” for such big-box spaces.