Market Information

Marcus & Millichap Research Reports - Retail

[click image to download pdf]

May 2011 National Retail Outlook

Although consumption has fully recovered, even surpassing pre-recession levels, purchasing behavior has changed significantly. National chains and discount retailers have benefited most, leaving local businesses in a weakened state. As a result, the recovery has not been enjoyed equally by all retail centers. Top-tier malls and infill shopping centers have fared best while outlying centers that chased rooftops have been slow to fill. Likewise, sales of retail centers have favored the best assets while weaker properties have languished. With construction at record lows and employment growing, albeit more slowly than hoped, retail operations will continue to strengthen through the remainder of the year.

2011 National Single-Tenant Retail Outlook

Recent retail sales, excluding autos and gas, outperformed industry expectations by rising slightly above their prerecession peak, signaling growing consumer confi dence heading into 2011. The correction in consumer spending has largely run its course, and the resumption of private-sector job gains, along with the fi rst-time homebuyer tax credit, boosted year-over-year retail spending, especially for big-ticket items.With the economy strengthening and payrolls forecast to expand in the coming months, consumer confi dence with continue to grow, supporting a more substantial uptick in retail spending through the holiday season.

2011 Investment Outlook: Commercial Real Estate

The Great Recession exacted an expensive toll on the commercial real estate sector. Vacancies approached or exceeded prior cyclical highs as 8.4 million jobs were lost, and sales volume plunged 85 percent from peak. Despite much hype regarding the lackluster recovery, expectations should be more realistic about what it will take to repair the damage of a recession so different from the typical downturn and much more severe than the worst contractions since the 1930s. The economy has come a long way from what seemed like a freefall, with core retail sales, corporate earnings and initial unemployment claims back to pre-recession levels and private-sector job growth totaling 1.2 million.

2010 DFW 3rd Quarter Retail Market Update

While the Dallas/Fort Worth economy remains in better shape than most markets, years of speculative building and the lingering impact of the recession will delay vacancy improvements until 2011. As of the second quarter, nearly 32 million square feet of retail space stood vacant in the Metroplex, almost equivalent to the amount of new product brought online over the last five years. As buyers and sellers have realigned their pricing expectations, more multi-tenant investors have returned to the market and sales activity has begun to improve. Demand for the surplus of newly built assets in outlying areas remains constrained, however, due to investors' uncertainty over where falling rents will bottom. Single-tenant assets will remain the focal point for many buyers, though as the number of quality properties on the market remains light, sale-leasebacks will begin to make up a large share of transactions and help buoy sales.

2010 DFW 2nd Quarter Retail Market Update

The Dallas/Fort Worth retail market has begun to emerge from the relatively brief, albeit sharp, local recession, with vacancy projected to stabilize by year end and rent growth anticipated to resume in early 2011. Rent renegotiations have largely dissipated, though new leases are being signed at 2004 effective rent levels. Nonetheless, an impressive economic and demographic outlook has attracted expanding retailers to the Metroplex.

2010 National Retail Outlook

The economic recovery continues to make headway, with GDP posting its third consecutive increase during the first quarter. Although the headline rate of growth reflects a deceleration from late 2009, underlying shifts among the contributing components provide cause for optimism. This report discusses these positive signs of growth that affect the retail sector of commercial real estate.

2010 National Retail Report

The Great Recession has given way to cautious optimism for 2010 and expectations for more robust growth in 2011 and 2012. Most indicators suggest the economy has achieved neutral status, if not one of modust growth. Last year was among one of the worst for retail property owners, as the economic shock led to soaring store closures, tenant bankruptcies, and lease renegotiations. The worst of the crisis has passed; however, retail fundamentals will soften in 2010 before bottoming.

2010 Economic and Retail Overview

Unprecedented government stimulus and intervention prevented the worst-case scenario for the U.S. economy and helped bring the Great Recession to an end. Housing market weakness and job losses, albeit at drastically reduced levels, however, continue to challenge the onset of a sustainable expansion cycle. Economic headwinds, including elevated unemployment and high levels of consumer and public debt, will persist throughout the first half of 2010. Tight credit markets will damper the possibility of a surge in spending this year, even if consumer sentiment steadily increased. Risks of another recession will linger as a result, but a growing number of indicators discussed in this report point to a choppy muted recovery as the most likely scenario.

2010 National Real Estate Investor Outlook

After a quiet year of investment sales, buyers are preparing to forge ahead with acquisitions in 2010. Two-thirds of investors (65%) responded to the 6th Annual Investment Survey plan to boost their investment in commercial real estate over the next 12 months. That figure is up from 56% in the third quarter and 51% a year ago. The exclusive survey is produced jointly by National Real Estate Investor and Marcus & Millichap. This report will examine the challenges and benefits of investing in commercial property over the next year.

2009 National Retail Report

The retail sector is in the midst of a perfect storm caused by the housing crash, frozen credit markets and overbuilding. Job losses accelerated to extreme levels beginning in September 2008, further pressuring consumers and retailers. The excess spending of 2003-2007 has shifted to extraordinary caution on the part of consumers and businesses, wiping out numerous retailers and forcing many into survival mode. In turn, retail real estate is feeling the pain. Unprecedented government intervention will eventually help to restore confidence and capital flows, but progress will be slow and fragmented.

2009 Real Estate Investor Outlook

The recent financial strife may add to the woes of an already lackluster investment market. Commercial and apartment property sales during the first 10 months of 2008 totaled $121 billion less than one-fourth of the $502.6 billion in properties that traded hands during all of 2007, according to New York based Real Capital Analytics. The research firm tracks deals in excess of $5 million. That being said, 51% of survey respondents expect to increase commercial real estate investment in the next year, while 37% expect to maintain the status quo in the coming year, and only 11% anticipate a decrease.

MARCUS & MILLICHAP

INDUSTRY

Our mission is to be the leader in the sale of retail investment properties. We achieve this through having a complete understanding of our market, all its properties as well as the motivations, goals and objectives of every client we may represent, so they may create and preserve their wealth.

Our primary focus is multi-tenant shopping centers in Dallas/Fort Worth (DFW) and throughout Texas as well as single-tenant (STNL) properties throughout the southwestern United States. We offer an extensive inventory of exclusively listed multi-tenant shopping centers and single-tenant net leased (STNL) investments, that may be double-net (NN), triple-net (NNN), absolute-net or ground-lease assets.

Many of our Sellers consist of developers, owners, investors and/or lenders of commercial retail properties that need to sell a particular investment or portfolio of assets. Our Buyers are local and out-of-state investors that need to fill a 1031 exchange requirement or who want to invest equity in commercial real estate.

IN THE NEWS

DFW DEVELOPMENTS

INDUSTRY