ReCon Pros Say Recovery a Year Away: Survey

Sixty percent of retailers, investors, developers and lenders expect the market to take more than 12 months to regain pricing equilibrium, according to a survey by Jones Lang LaSalle of attendees at the International Council of Shopping Centers’ conference in Las Vegas. And 120 respondents saw full recovery in 14 months. Of the retailers surveyed, which on average represent 1,073 stores, 61 percent expect to add retail locations this year, while 27 percent indicated no change expected, and 12.1 percent expect store closings. Of those expecting increases, the largest percentage, 24 percent, have between 5 and 10 new locations earmarked for 2008. Addressing sales expectations for 2008 compared with last year, 55 percent of retailers expect same-store sales to either stay flat or rise by up to 5 percent. Approximately 15 percent expected sales to drop and 30 percent expect sales will stay flat. Turning to investment expectations, 95 percent of investors and developers surveyed expect cap rates to rise from the market peaks of mid- 2007, with the average movement projected to rise an average of one percent. When questioned about the amount of equity capital planned for retail investment compared with 2007 levels, 37 percent indicated their amount of retail investment would not change this year, while 22 percent indicated an increase of up to 20 percent flowing into the sector. The survey also found that business strategies have been adapted due to concerns of an economic recession. Approximately 35 percent said they would exercise cost containment measures while 17 percent are cutting back on expansion plans. An even larger percentage of respondents, 25 percent, are increasing investment on distressed properties and another 25 percent are increasing their marketing activities to attract greater deal volume this year.