Despite 'Green Shoots', Retail Real Estate Faces Huge Challenges, According to Colliers International's Spring 2009 Retail Report
Colliers' annual Streets of Gold list shows broad declines worldwide
BOSTON, May 14 /PRNewswire/ -- On the cusp of the International Council of Shopping Centers' (ICSC's) RECon retail real estate conference (May 17-20 in Las Vegas), Colliers International, the global real estate services firm, today issued its Spring 2009 Retail Report. Per Colliers' report, even though the apparent stabilization of the stock market has provided a bit of hope that the worst of the recession is behind us, the fact remains that significant pain is still in store for the retail sector.
Shopping center owners, investors and tenants alike have fallen victim to a severe reduction in retail spending, leaving store space vacant and same-store sales well below levels seen in recent years. Retailers have shown little interest in opening new outlets, and are instead waiting on the sidelines for economic conditions to improve and for a visible uptick on the jobs front.
In the meantime, a perfect storm has developed for retailers. The shrinking consumer dollar has essentially left the retail real estate marketplace overbuilt, and as a result, the retail sector is in the midst of one of the greatest contractions experienced in decades.
Most chains will continue the trend of shuttering underperforming locations that began in 2008; indeed, retailers closed more stores than they opened last year, and will do likewise in 2009
This fallout could spread to otherwise well-run retailers due to plunging sales
Urban retail continues to outperform suburban retail, but even rents in the most fashionable urban shopping districts have been on a downward trend
A number of markets now have retail vacancy clocking in above 12 percent
The strongest U.S. markets (vacancy-wise) share a common characteristic: development in these markets has been curtailed in recent years due to a lack of available land
In terms of occupancy growth, 36 of the top 42 U.S. markets recorded negative net absorption during Q1 2009
Neighborhood and community shopping centers are currently the most stable shopping center format
The collapse of anchor and junior anchor space users such as Mervyn's, Goody's and Circuit City sent vacancies sharply higher for regional malls and power centers
As for construction, developers are quickly putting projects on hold
Rents are, unsurprisingly, trending downward
General Growth Properties is the specter keeping landlords up at night. Large debt load coupled with inability to refinance equals massive worries for landlords
Retail REITs are facing one of the toughest environments ever, and will also look toward dispositions to raise capital
"On the bright side, this economy has not been without some winners," remarked Ross Moore, executive vice president of market & economic research for Colliers International. "Discounters such as Wal-Mart have been recording same-store sale increases, and drug stores have been one of the most active retail categories in recent years."
"Survival will be the name of the game in 2009, and even for stronger players, the emphasis will shift from store openings and expansion to streamlining operations," said Pat Duffy, chairman of Colliers Retail Services Group. "Contraction may be the harsh reality for most, but the strongest concepts will prevail, not only from the elimination of competition, but from the best tenant's market in decades."
STREETS OF GOLD (US Dollar/ Per Square Foot/ Per Year)
CITY STREET 2009 - RENT 2008 - RENT
(USD/SF/YEAR)(USD/SF/YEAR)
New York Fifth Avenue 1,400.00 1650.00
Paris Champs Elysees 859.00 1468.00
New York Madison Avenue 750.00 1100.00
London Bond Street 726.00 1393.00
Tokyo Ginza-Chuo Avenue 694.00 678.00
Dublin Grafton Street 656.00 954.00
Milan Quadrilatero della Moda 614.00 -
Zurich Bahnhofstrasse 566.00 615.00
London Oxford Street 529.00 878.00
Vienna Graben/Kohlmarkt 515.00 617.00
Stuttgart Konigstrasse 451.00 476.00
Berlin Alexanderplatz 442.00 -
Munich Kaufinger Str. / Neuhauser Str. 442.00 493.00
Athens Ermou Street 412.00 493.00
Los Angeles Rodeo Drive 400.00 540.00
San Francisco Union Square 400.00 490.00
Brisbane Queen Street Mall 382.00 510.00
Hamburg Spitaler Strasse 368.00 440.00
Milan Via Dante 368.00 -
Geneva Rue du Rhone 364.00 467.00
Honolulu Kalakaua Avenue 360.00 360.00
Moscow Tverskaya 349.00 765.00
Melbourne Bourke Street Mall 334.00 446.00
Sydney Pitt Street Mall 334.00 446.00
Dusseldorf Konigsallee 331.00 352.00
Copenhagen Stroget 329.00 -
Singapore Orchard Road 324.00 367.00
Rome Via Condotti 307.00 367.00
Belgrade Kneza Mihaila Street 295.00 352.00
Madrid Preciados 295.00 335.00
Prague Na Prikope 265.00 388.00
Amsterdam Kalverstraat 264.00 316.00
Glasgow Buchanan Street 264.00 -
Manchester Market Street 257.00 370.00
Chicago Michigan Avenue, North 250.00 250.00
Shanghai Nanjing Road West 245.00 -
Montreal Ste-Catherine 240.00 300.00
Edinburgh Princes Street 237.00 -
Leeds Commercial Street/Briggate 237.00 370.00
Delhi Khan Market 230.00 -
Helsinki Aleksanterinkatu 228.00 264.00
Perth Hay Street and Murray Street
Malls 227.00 276.00
Toronto Bloor Street 224.00 260.00
St. Petersburg Nevsky Prospect 223.00 705.00
Istanbul Abdi Ipekci 223.00 335.00
Zagreb Ilica Street 221.00 264.00
Budapest Vaci utca 221.00 282.00
Kyiv Khreschatyk Street 201.00 468.00
Beijing Mall at CWTC 196.00 156.00
Vancouver Robson Street 192.00 210.00
Boston Newbury Street 185.00 185.00
Sofia Vitosha 177.00 230.00
Adelaide Rundle Mall 175.00 191.00
Stockholm Biblioteksgatan 167.00 235.00
Eindhoven Demer 166.00 -
Bucharest Magheru, Victoriei Blvds 162.00 282.00
Rotterdam Lijnbaan 160.00 -
Oslo Bogstadveien 159.00 -
The Hague Spuistraat 153.00 -
Utrecht Oude Gracht 153.00 -
Warsaw Nowy Swiat 147.00 159.00
Las Vegas Las Vegas Boulevard 140.00 140.00
Washington M Street, NW 140.00 145.00
Ho Chi Minh City Dong Khoi Street/Le Loi Street 139.00 -
Wellington Lambton Quay 136.00 162.00
Bristol Broadmead 132.00 -
Podgorica Street of Freedom 125.00 106.00
Bogata Andino 125.00 156.00
Philadelphia Walnut Street 120.00 120.00
West Palm Beach Worth Avenue 120.00 -
Buenos Aires Peatonal Florida 116.00 120.00
Hong Kong Russell Street, Causeway Bay 111.00 -
Lisbon Avenida da Liberdade 110.00 -
Dubai Sheikh Zayed Road 110.00 71.00
Abu Dhabi Hamdan Street 103.00 -
Houston Westheimer 100.00 120.00
Auckland Queen Street 94.00 148.00
Miami Lincoln Road 94.00 130.00
Sao Paulo Oscar Freire 87.00 89.00
San Diego Prospect/Girard 87.00 100.00
Tel Aviv Ibn Gvirol 85.00 89.00
Calgary 17th Avenue SW 80.00 100.00
San Jose/ Santana Row
Silicon Valley 80.00 100.00
Dallas/Ft. Mockingbird Lane / Preston
Worth Road 70.00 70.00
Lima Jiron de La Union 67.00 -
Bratislava Michalska 66.00 -
Walnut Creek Mt. Diablo Blvd/Broadway Plaza 60.00 -
Tirana Myslym Shyri 59.00 70.00
Vilnius Didzioji St. 59.00 123.00
Bangalore Brigade Road 58.00 97.00
Mexico City Mazaryk 56.00 78.00
Tampa Dale Mabry Hwy 55.00 -
Atlanta Peachtree Street 50.00 50.00
Tallinn Viru Street 49.00 88.00
Riyadh King Fahad Road 48.00 -
Santiago Alonso de Cordova 48.00 -
Hartford Memorial Drive, West Hartford 48.00 -
Charleston King Street 45.00 50.00
Columbus Easton Town Center 45.00 45.00
St. Louis Brentwood 45.00 51.00
Kaunas Laisves Alley 44.00 62.00
Phoenix Kierland/Scottsdale Road 43.00 45.00
Denver 2nd Avenue - Cherry Creek North 42.00 55.00
Cape Town St Georges Mall 40.00 36.00
Durban West Street 40.00 48.00
Cincinnati Kenwood 40.00 40.00
Seattle 5th Avenue 40.00 41.00
Christchurch Cashel street 39.00 59.00
Halifax Spring Garden Road 38.00 45.00
Ft. Lauderdale Las Olas Boulevard 38.00 40.00
Nashville Hillsboro Pike 38.00 40.00
Riga Kr. Barona Street 37.00 163.00
Klaipeda H.Manto St. 37.00 44.00
Greenville Woodruff Road 37.00 31.00
Stockton Pacific Ave 36.00 42.00
Cleveland Cedar Road 35.00 40.00
Kansas City JC Nichols Parkway 35.00 45.00
Milwaukee Bluemound Road 35.00 35.00
Orlando Sand Lake Corridor 34.00 35.00
Reno South Virginia Street 33.00 42.00
Sacramento Galleria Boulevard Roseville 32.00 33.00
Edmonton Whyte Avenue 30.00 38.00
Bakersfield Ming Avenue 30.00 36.00
Minneapolis 50th and France 30.00 38.00
Pretoria "City Center" 29.00 -
Saskatoon 21st St. E. 22.00 28.00
Boise Milwaukee Street 22.00 40.00
Johannesburg Pretoria 21.00 27.00
Indianapolis 82nd Street 20.00 24.00
Columbia Devine Street 18.00 15.00
About Colliers
Colliers International is a global affiliation of independently owned commercial real estate firms. The organization's 12,749 employees span the world in 294 offices in 61 countries. On a worldwide basis, Colliers manages more than 1.1 billion square feet and has revenue of $US 1.6 billion. For more information, visit http://www.colliers.com.
