Economic Update — Grocery-Anchored Centers Maintain (Relative) Edge

Are grocery stores and grocery-anchored centers immune to the slings and arrows of outrageous economic fortune? Or at least better prepared to weather the recession by virtue of the fact that people have to eat? Maybe, maybe not. Earlier this week, Citigroup downgraded Kroger to “hold” and Safeway to “sell,” and share prices in those companies and other grocery specialists fell in response. The thinking is that imminent price wars among the major grocery chains are going to hurt the business, with the likes of Costco already cutting prices on staples such as milk and eggs. Still, retail space brokers are reporting leasing deals in grocery-anchored centers, though naturally they’re considerably harder to do than even a year ago. For example, at the Shoppes at Fairhope Village, a grocery-anchored center until construction in Fairhope, Ala., not far from Mobile, McConnell Training Systems, a personal training studio, has inked a deal for 2,500 square feet. The center, which measures 84,700 square feet, is anchored by a 54,300-square-foot Publix Super Market. “Well-located grocery-anchored shopping centers traditionally do well when it comes to leasing activity, and that’s still the case,” Doug Clyburn, a senior leasing agent for developer Regency Centers, told CPN. “For other retailers in the center–both current and prospective–a steady stream of shoppers provides an opportunity to attract new customers to their businesses, a comforting thought given the realities of today’s economic environment.” It was an ashes-and-sackcloth day on Capitol Hill on Wednesday. Sure, we’re lending (no, really!), an assortment of banking bosses, such as Bank of America’s Ken Lewis, told the House Financial Services Committee. Others said they were so sorry, so very sorry, about the whole situation, while others (such as Citigroup CEO Vikram Pandit) said they were foregoing salaries until the heat was off–that is, until their companies returned to profitability. Some members of Congress, and the public too, might suspect that the bankers’ contrition will last about as long as a credit-card teaser rate. Elsewhere in the halls of Congress, the conference committee working on the stimulus package agreed with unusual speed on a $789 billion bill, after removing some billions of earlier versions of it. Virtually everyone also has an opinion on whether it will “work” or not, but certainty is in as short supply as credit. On Wall Street, it was yo-yo day. Tuesday’s sharp drop wasn’t recouped, but things did trend upward in a volatile sort of way. The Dow Jones Industrial Average ended up 50.65 points, or up 0.64 percent. The S&P 500 was up 0.8 percent, and the Nasdaq gained 0.38 percent. The Mayor of Las Vegas is steamed at President Obama for suggesting that paying for meetings in Vegas might not represent the most productive use for federal bailout money. Recently the president said, “… you can’t go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer’s dime.” In a letter to Obama, Las Vegas Mayor Oscar Goodman said, “I… understand the need for accountability, but your comments are harmful to the meetings and convention industry as a whole and Las Vegas specifically.” Vegas has had troubles enough lately when it comes to its main industry, tourism. The number of visitors to the city dropped 4.4 percent in 2008 compared with a year earlier, according to the Las Vegas Convention and Visitors Authority, which has also reported steep decline in ’08 for hotel room rates, the number of conventions and meetings, and in the number of passengers using McCarran International Airport. No word from bookmakers on the odds of the president retracting his comments.