Thursday, June 25, 2015

Southern New Hampshire Report Preview

While the 2015 KeyPoint Report for Southern New Hampshire, based on our proprietary  GRIID™ retail database, is in production, we will again share some of the early results:

Inventory and Vacancy Rate: The retail inventory in Southern New Hampshire reached a level of 29.9 million square feet in 2015. This represents a modest gain of 44,113 square feet or 0.1%. Seabrook was again in the forefront of new development with the opening of Seabrook Crossing, a 145,000 square foot shopping center anchored by Hobby Lobby, only its second store in the state. This new center is located opposite last year’s showcase development in the region, the 380,000 square foot Seabrook Commons power center.
At the same time, vacant space in the region declined by more than 200,000 square feet, partially absorbed by replacement tenants and partially convertion of retail to non-retail uses. Notable is the Goodwill store that occupies the entire 64,000 square foot Stop & Shop vacancy in Hudson, 22,800 square feet of which is allocated to the Goodwill store, and a “Buy-the-Pound” warehouse outlet, only the second of its kind for this thrift chain. The balance of the space serves as a donation and distribution center. Another former Stop & Shop space in Manchester will be partially absorbed by PriceRite, the chain’s first New Hampshire store. A YMCA facility in Plaistow is another non-retail use that took over a 55,000 square foot vacancy most recently occupied by Rockingham Athletic Club. As a result, the vacancy rate in the region declined from 10.4% to 9.6% throughout the year, a healthy sign that the retail environment continues to stabilize.

Size Classifications: Looking at vacancy rates by store size, it was encouraging to see the 50,000-99,999 square foot category experience the greatest improvement with a significant drop in the vacancy rate to 10.0%, primarily attributable to the occupancy of two vacant Stop & Shop stores and a vacant health club facility in Plaistow. Only two categories experienced higher vacancy rates this year, 10,000-24,999 square feet and 25,000-49,999 square feet. Some of the more notable stores that were closed in this size range include Mill Stores in Nashua, Off Broadway Shoe in Salem, Staples in North Hampton, Michael’s in Manchester, and Bob’s Discount Furniture in Seabrook.

Regional Submarket Rankings: There has been no change in the top ten largest regional markets: Nashua continues to rank first with 6.2 million square feet of inventory; Manchester follows at 5.4 million square feet; and Salem is a distant third at 3.9 million square feet. Seabrook inched across the 2.0 million square foot threshold this year with the addition of the 145,000 square foot Seabrook Crossing. Among towns with at least 500,000 square feet of retail space, Bedford and Salem remain ranked 1-2 in lowest vacancy rate at 3.7% and 3.9%, respectively.  Amherst is next in line at 4.2%, jumping ahead of Nashua this year. Seabrook had the highest vacancy rate in the region at 16.7%. Somewhat a victim of its own success, the town has suffered the past two years as the former 139,100 square foot Walmart store at Seacoast Shopping Center continues to sit idle following a store relocation to Seabrook Commons. The vacant Shaw’s building at Seacoast Shopping Center also remains unoccupied.  Manchester remains in second place in the ranking at 16.3%. North Hampton is new to the top five this year as a result of several store closings at Lafayette Crossing including Famous Footwear, Staples, and Dress Barn.

Retailer Activity: O’Reilly Auto Parts led the way in incremental space in Southern New Hampshire by way of its acquisition of VIP. This may be somewhat misleading, however, since VIP continues to operate a store-within-a-store at all six O’Reilly locations in the region. Ocean State Job Lot ends the year in second place with new stores in Nashua and Milford. Hobby Lobby follows with a new Seabrook store. In terms of new store count, O’Reilly also ranks on top with six units, followed by Aroma Joe’s coffee shops and Eastern Bank, each with three new locations.

Staples closed its North Hampton store and reduced the size of its Manchester location, resulting in the largest space contraction in the region. O’Neil Cinema sold its operating interest at its Londonderry location to Carmike, placing it in second. Mill Stores and Off Broadway Shoe follow. Radio Shack closed five stores, the most in the region.  The complete report contains much more detailed information on these categories and more, and will be available soon at KeyPointpartners.com.

Bob Sheehan, Vice President of Research
BSheehan@KeyPointPartners.com

This KeyPoint Report examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during the period from June 2014 to June 2015. The study area includes 39 cities and towns, representing more than 835 square miles and approximately 550,300 permanent residents (42% of the state population).  KeyPoint Partners’ GRIID™ database maintains detailed information on virtually all retail properties in three key regions: Eastern Massachusetts, Southern New Hampshire and Greater Hartford, Connecticut. These markets encompass approximately 44% of all retail space in New England. GRIID™ has information on approximately 263 million square feet of retail space and approximately 59,800 retail establishments. The KeyPoint Reports contain a summary and analysis of retail market trends and activity for each studied market area.

The 2015 KeyPoint Report for
Eastern Massachusetts/Greater Boston is available now at KeyPointPartners.com - click on Research Reports

Company News


Visit us at the ICSC New England in Boston, Booth #510
For an appointment email KSmith@KeyPointPartners.com
or call 781.418.6242

New Tenant Rep Business: KeyPoint Partners will represent Gentle Dental as the company seeks multiple retail locations throughout New England. VP of Leasing Rob Grady and Senior Associate Michael Branton are handling the assignment. Gentle Dental currently has 29 locations in MA and Southern NH. New Leasing business: Cobb Corner Plaza, a two-section shopping center on the town line between Canton and Stoughton, MA. VP of Leasing Don Mace is handling the assignment....New Employee: Todd Bodeau joined the Burlington office as a Property Manager Todd had been at InLand American Retail Management, LLC.

National Industry News

May sales at stores open at least a year rose just 0.6% vs. a year earlier, according to Retail Metrics. The soft showing in May follows a weak 0.5% rise in March and a 0.8% decline in April. Among retailers reporting monthly comp-store sales, L Brands was up 5%, Gap was down 1.0%, Rite Aid was up 2.1%, and Costco was up 2%. See our sales report below.

Accelerating News

Ahold and Delhaize intend to combine their businesses. The combined company will be known as Ahold Delhaize with a base of more than 6,500 stores. In the US, Ahold operates the Stop & Shop, Giant, and Giant/Martin’s banners primarily in the Northeast, as well as online shopping service Peapod. Delhaize operates the Food Lion and Hannaford banners in the Southeast and Northeast...Ulta Beauty plans to open 100 net new stores....Lobster roll concept Luke’s Lobster, which has locations in New York City, Philadelphia, and Washington, DC, will expand to Chicago  and Boston later in the year...An affiliate of Roark Capital Group, a private equity firm, has acquired Pet Supermarket from Charles E. West, Jr., the company's founder. Pet Supermarket operates 155 pet specialty retail stores in 11 states...Five Below expects to open a total of 70 new stores during 2015, on top of opening 62 stores in 2014...During the fiscal year, The Fresh Market expects to open approximately 19 new stores, with 2 opening in the first quarter; 5-6 in the second quarter; and 11-12 in the second half...Krispy Kreme has signed agreements to open 11 shops in Arkansas, Montana, Illinois and Kentucky in the next several years...Kohl's will test a new outlet store concept, Off-Aisle by Kohl's, in New Jersey this month offering discounts on returned merchandise up to 90% off...In the second quarter, New York & Co. will open approximately 2 new outlet stores, remodel 4 existing locations, and close 3 stores, ending the quarter with 503 stores, including 76 outlet stores...Dollar General Corporation opened its 12,000th store, in Juliette, Georgia. Dollar General anticipates opening 730 new stores in 2015 and plans to remodel or relocate an additional 875 stores...During the current fiscal year, Destination XL intends to open approximately 32 DXL retail and 8 DXL outlet stores. It also plans to close approximately 42 Casual Male XL and 3 Rochester Clothing stores...Dollar Tree reached an agreement to sell private equity firm Sycamore Partners a divestiture package of 330 Family Dollar Stores locations, contingent on the completion of Dollar Tree’s acquisition of Family Dollar.  Sycamore Partners intends to operate the 330 stores under the Dollar Express banner...7-Eleven Inc. opened a convenience store in the pre-security/arrivals sections of Los Angeles International Airport, its first US in-terminal location. 7-Eleven plans to open a 2 more in-terminal airport stores in the Dallas/Fort Worth International Airport....Zumiez Inc. intends to open approximately 57 new stores in fiscal 2015...Online diamond and jewelry retailer Blue Nile has opened its first store, in Garden City, NY. The 325 s/f space has only a few cases of product. Associates are equipped with tablets on which they can show customers the full selection of goods and assist them in making a purchase. Merchandise can be ordered and picked up at the store...During the second quarter of fiscal 2015, Christopher & Banks expects to open 1 new Missy, Petite, Women (MPW) and 14 new outlet stores, close 1 CB store, and convert 7 others to MPW stores...Burlington Stores Inc. plans to open 25 stores during fiscal 2015...Mattress Firm plans to open 220-240 new stores during the fiscal year...Hudson’s Bay Co. Inc. plans to open 12-14 Off 5th stores and one Saks store in fiscal 2015...Shoe Carnival plans to begin opening a small-market store concept at approximately 5,000 s/f. or half the size of a current Shoe Carnival store, in the next six to nine months, followed by consistent expansion over the next several years. Shoe Carnival operates 402 stores in 34 states and Puerto Rico...Wendy’s will add 16 units to its 6,500-store system in 2016, a small start on its way to building 1,000 new stores in North America by the end of 2020...Target will sell its pharmacy business to CVS Health for $1.9 billion and rebrand its nearly 1,700 prescription departments as CVS/pharmacy. CVS Health also will acquire Target’s 80 clinic locations and rebrand them as MinuteClinic, moving the company closer to its goal of operating 1,500 clinics by 2017. The companies also announced plans to develop five to 10 small, flexible format stores during the next two years that will be branded as Target Express and contain a CVS Health pharmacy...Ollie’s Bargain Outlet filed for an initial public offering. Ollie’s operates 181 US stores, expects to open 25- 30 stores in fiscal 2015, and sees the potential for more than 950 locations across the country.

Decelerating News

Gap will close 175 of its 675 Gap stores in North America, of which about 140 will close in the current fiscal year that will end in January. ..Gymboree Corp. plans to close 30-40 stores and open 12 new stores during the fiscal year.

New England Industry News

Uno Restaurant Holdings will open additional locations of Uno DuĂ© Go, its quick-service version, over the next 3-5 years. The plan is to add a new UDG location or 2 every 12 to 18 months, starting with another location in Boston. Uno has 139 company-owned and franchised restaurants mostly in Massachusetts and the Northeast...7-Eleven, the Dallas-based company with nearly 10,500 stores in North America, has purchased local convenience chain Tedeschi Food Shops. Terms of the deal were not disclosed. Tedeschi operates 182 stores in Massachusetts and New Hampshire. 7-Eleven operates 164 locations in those states...Which Wich, a Dallas-based sandwich chain that opened a location in Somerville’s Assembly Row this year, has plans to bring up to 40 more restaurants to Greater Boston and the western suburbs. Which Wich has 352 stores, of which 349 are franchised. The chain will open a franchise in New Bedford by the end of the year, and is looking to open between 30 and 40 MA restaurants in the next 3-5 years. Which Wich is slated to open 100 US locations annually from 2016 to 2020...The parent company of Pizzeria Regina is filing for Chapter 11 bankruptcy, but the New England pizza chain will survive even though it will close a few locations. Boston Restaurant Associates Inc. entered bankruptcy proceedings in order to get out of several leases for restaurants in outlying malls with weak food court foot traffic. Four of the company's restaurants closed and will not reopen. Pizzeria Regina was founded in 1926 and has 17 locations throughout MA and CT...Hollywood Express in Porter Square, Cambridge will close its doors for good on June 30. Along with Video Underground in Jamaica Plain, it is one of the final independent video stores in Boston...Checkers Drive-In Restaurants Inc. is eyeing Boston for its first Massachusetts location and aims to open up to 50 drive-thru burger joints across the Commonwealth. Checkers plans to identify 3-5 franchise partners and open 5-10 restaurants in Greater Boston in 2016, with a goal of between 40 and 50 MA restaurants at a clip of 5-10 per year...Primark, a Dublin-based retailer of Irish fashion products, plans 3 stores in Massachusetts, including one in Burlington. Primark plans its first US store for Boston's Downtown Crossing in September. Primark will lease 73,000 S/F from Sears on the second level of the Burlington Mall. Occupancy will take place by year's end. It also has a deal to lease 71,000 s/f from Sears at the South Shore Mall in Braintree. Primark has 246 stores in 9 countries...Equity Office Properties filed a notification form with the Boston Redevelopment Authority to rebuild the courtyard at 500 Boylston Street in Boston's Back Bay into a six-story building with three floors each of retail and office space totaling 79,300 s/f. If approved, some 50,000 s/f of 500 Boylston's current office space would be converted into retail in addition to the proposed 47,600 s/f of retail to be built atop the courtyard. Ground could break on the project in early 2016 with an estimated 15-month completion date...McCormick & Schmick's has closed its Park Plaza Hotel location.

May Retail Sales Report





























Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 

Commerce Department Monthly Sales

Retail sales rose 1.2% in May, 1% excluding auto sales, according to the Commerce Department.  Excluding both fuel and auto, retail sales rose 0.7% last month, beating expectations of 0.5%. Sales increased 2.7% year over year, and over the last quarter were are up 2.1% for the quarter year over year.

Source: U.S. Department of Commerce - commerce.gov

Treasury Yields


















Treasury Yield Sources:  federalreserve.gov; ustreas.gov

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had declined in April, increased moderately in May. The Index now stands at 95.4 (1985=100), up from 94.3 in April. The Present Situation Index increased from 105.1 last month to 108.1 in May. The Expectations Index edged down to 86.9 from 87.1 in April.

Source: The Conference Board - www.conference-board.org

Purchasing Managers Index

Manufacturing expanded in May as the PMI® registered 52.8 percent, an increase of 1.3 percentage points over the April reading of 51.5 percent, indicating growth in manufacturing for the 29th consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business - www.ism.ws