Thursday, August 18, 2016

Preview : So. NH 10-Year Retail Category Special Section

In earlier Special Sections we’ve explored long-term changes in the Grocery and Restaurant categories. This year we’ve analyzed 10 years of data on occupancy changes in all retail tenant categories in Southern New Hampshire, and as we saw in Eastern Massachusetts, the social values, shopping habits, and lifestyle choices of shoppers in this region have clearly influenced the retail real estate landscape.

The 2011 entry of Ulta Beauty into the region lifted Beauty Supplies and Cosmetics to the top of the square footage growth chart during the past decade, with space in that category increasing by a whopping 177%.

Another category showing phenomenal growth was Variety Stores, which grew by 133%; Dollar General and Dollar Tree both entered the region, driving this merchandise segment into second place. And even with the recent demise of Sports Authority, Sporting Goods managed to add 50% to its space inventory. This was attributable to the opening of  three new Dick’s stores, and the fact that Sports Authority opened and closed two of its four units during this time frame.

The liquidation of several chains, including Circuit City, Tweeter, and Cambridge Sound Works, as well as some Radio Shack closings, had a hand in reducing Electronics Stores space by 50%, the most of any category. Furniture Stores also experienced a significant decline, currently occupying 31% less space now than in 2006. Office Supplies was marginally better, with category space reducing by 29%. Although Staples store count remained stable in the region, square footage was reduced by more than 50,000 square feet as the company opted for smaller stores.

Beauty Supplies and Cosmetics not only led the pack in percentage gain by total space, but also in store count with a gain of 78%. Medical and Dental Services came in second with a gain of 30%, as non-retail users become a more viable option when canvassing for shopping center replacement tenants. Drinking Places increased by 29% during the past decade.

At the opposite end of the chart, Electronics Stores experienced the largest setback with a reduced store count of 54%. Gift Shops and Florists were far behind, experiencing store count declines of 34% and 33%, respectively. These categories, which are comprised largely of independent, mom-and-pop operators, have struggled to remain in business during the past decade.

The chart below tracks percentage changes in expansion and contraction by major retail tenant categories from 2006 through 2016 by square footage.


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

The 2016 KeyPoint Report for Southern New Hampshire will be available very soon.

The 2016 KeyPoint Report for Eastern Massachusetts/Greater Boston is available now at KeyPointPartners.com (click on Research Reports).



KEYPOINT PARTNERS COMPANY NEWS

New Business: The leasing team added the following retail leasing assignments: Red Rock Plaza, 1385 South Washington Street, North Attleboro, MA; 308 Walnut Street, Newtonville, MA; and 145-165 Rhode Island Avenue, Fall River, MA. Senior Leasing Associate Michael Branton is handling. With these latest assignments, the current leasing portolio consists of 78 retail properties totaling almost 7.5 million s/f in 4 states. The leasing team  has completed transactions totaling nearly 56,000 s/f in June and July at shopping centers in MA and CT, new leases and renewals, with such tenants as Outback Steakhouse, Spirit Halloween, Santander Bank, GNC, CVS, Lady Grace, Angelo’s Coal Fired Pizza, and others.

NATIONAL NEWS

US retail sales were flat in July, a potential stumbling block for an economy that has relied on healthy consumer spending to propel growth. Sales climbed 0.8% in June, revised up from an earlier estimate of 0.6% growth. From a year earlier, total retail sales were up 2.3%. Sales at auto and parts dealers rose 1.1% in July. Among retailers reporting monthly comp-store sales, L Brands was up 2.0%, Gap was down 4.0%, and Costco was down 2%. See our sales reports below...Newly formed entity Ahold Delhaize  revealed a new logo combining the crown and lion iconography of its respective partners. The new visual identity was revealed as part of a new website for the company, which completed their $29 billion merger. Ahold Delhaize will operate 2,000 US stores under the Stop & Shop, Giant, bfresh, Martin’s, Hannaford and Food Lion banners, as well as the Peapod e-commerce brand.

ACCELERATING NEWS

Target will open a 42,367 s/f 2-level store in Manhattan’s East Village...PizzaRev announced a franchise agreement to develop the chain throughout the northern part of Louisiana. There are more than 200 PizzaRev locations in various stages of development across the country. The brand currently operates 42 corporate and franchise locations in 11 states...Versa Capital Management has formed a new holding company, called Eastern Outfitters, which will continue the restructured operations of Eastern Mountain Sports (EMS) and Bob’s Stores. The news comes several months after Vestis Retail Group LLC, an entity of Versa that operated Bob’s, EMS and Sport Chalet, filed for Chapter 11. The company subsequently shut down Sport Chalet. EMS and Bob’s will now operate as business units of Eastern Outfitters. Other retailers in Versa’s portfolio include Avenue Stores, The Wet Seal and Black Angus Steakhouses...Chipotle’s burger concept, Tasty Made, will make its debut in Lancaster, OH this fall. The new concept will specialize in burgers, fries, and milkshakes...Dollar General bought 41 former Walmart Express stores in 11 states. The company will relocate 40 of its existing Dollar General stores into these new, slightly-larger locations by October. The retailer will also operate gas stations in 37 of the locations.  In January, Wal-Mart Stores Inc. shut down all 102 of its Walmart Express stores, part of an effort to shutter 269 underperforming stores worldwide and 154 in the US...GameStop Corp. acquired 507 AT&T wireless stores in 26 states as part of a plan to diversify... Steinhoff International Holdings will acquire Mattress Firm, the largest mattress retailer in the US, whose assets include Sleepy’s. Steinhoff is an integrated retailer that manufactures, sources and sells furniture, household goods and clothing in Europe, Africa and Australia. It operates more than 40 brands in 30 countries. The acquisition is expected to create the largest multi-brand mattress retail distribution network in the world. Mattress Firm operates more than 3,500 stores in 48 states. The acquisition is expected to close by or around the end of the third calendar quarter, subject to regulatory approvals... Abercrombie & Fitch has been developing a new prototype. The chain will unveil its new look early next year, at Polaris Fashion Place, in Columbus, OH, with a new aesthetic and updated merchandise selections...Dick’s Sporting Goods will open six stores this fall in the Houston area, up from the five it had previously announced...Fazoli’s, fast casual Italian chain, announced the signing of nine multi-unit and single-unit franchise agreements to develop 22 new restaurants nationwide. Fazoli’s has nearly 220 restaurants in 24 states..Domino’s Pizza celebrated the grand opening of its 13,000th store in the world, located outside of Seattle... Flying Tiger Copenhagen is expanding its US footprint. The discounter Danish-designed goods is set to open its fourth NYC location. Flying Tiger opened its first store in 1995, in Copenhagen. In 2015, the retailer opened more than two new stores every week. It currently operates more than 650 stores in 28 countries...Fast casual restaurant Newk’s Eatery is expanding into Virginia with a development agreement to open 10 locations in Fairfax and Arlington counties over the next 6 years.  Newk’s currently operates and franchises more than 100 units in 13 states...Children’s salon Snip-its will open 16 CA locations in the next five years. The chain currently has 63 locations in the US, including 3 in California... Blaze Pizza, the fastest-growing restaurant chain in 2015, according to research group Technomic, has expanded to 150 locations, with 350 more slated to open by 2020...Buffalo Wings & Rings has grown to 70 franchises across the globe. In 2016, the brand opened new franchises in South Dakota and Texas, and has signed franchise agreements for up to 5 more locations before year’s end. Another 8- 10 locations are expected in 2017...Mission BBQ will open a location in King of Prussia, PA. The company has five PA restaurants, and will open at least two more next year...Jinya Ramen Bar has 12 franchised restaurants in California, Texas, Washington, Chicago Las Vegas, and Canada. 10 more will open before the end of the year...TJX increased its store count by 14 stores in the quarter, bringing its total store count to 3,675 locations...Skechers opened a flagship store at the new World Trade Center in Manhattan. With 1,545 stores worldwide, Skechers anticipates more than 1,600 locations by year end....Tuesday Morning opened an updated prototype at two Texas locations. The format feature new fixtures, flooring, improved lighting and a redesigned layout, as well as an expanded assortment of goods. Since January 1, Tuesday Morning has opened 8 new locations and relocated or expanded 34 stores. The company plans to upgrade more than 35 additional locations by year-end...Michaels purchased the rights to Hancock Fabrics’ brand and intellectual property for $1.3 million from US Bankruptcy Court in Delaware. Hancock was in the process of closing 70 stores when it filed for bankruptcy in February. Unable to locate a buyer for the remaining 185 units, it shuttered them in April. Michaels has 1,300 locations.

DECELERATING NEWS

Fired Up Inc., operator of casual dining chain Johnny Carino’s Italian, filed for its second bankruptcy in three years this week and is looking for a buyer. Carino’s has been closing locations in recent years, and currently owns 36 company stores and franchises another 48...Office Depot Inc. will close about 300 more stores in the next three years to help cut annual costs by $250-million by the end of 2018. The company had closed 400 stores by the end of the second quarter...Macy’s Inc. announced that it will close 100 full-line namesake stores. Macy’s said it plans to concentrate resources on its best-performing locations. The majority of the 100 stores will close in early 2017, with the balance closing as leases expire or are amended or waived. Macy’s will announce the locations of the stores to be shuttered at a later date. Over the past six years (2010 through 2016 to date), approximately 90 Macy’s stores have been closed and 13 new Macy’s stores have been opened. In addition, six new Macy’s Backstage off-price locations opened in fall 2015. Macy’s currently operates about 880 stores under the names of Macy’s, Bloomingdale’s, Bloomingdale’s Outlet, Macy’s Backstage and Bluemercury, including 728 Macy’s stores... Ruby Tuesday Inc. will close about 95 underperforming restaurants, 15% of its company-owned restaurants, by September. At the end of the fourth quarter, Ruby Tuesday had 646 company-owned restaurants.

NEW ENGLAND NEWS

NAI Entertainment Holdings LLC, an affiliate of National Amusements, has sold off a Home Depot store in West Roxbury for $34 million...Del Frisco’s Grille will open a 3rd MA location at Westwood’s University Station next year... American Realty Advisors acquired the shops at University Station in Westwood for $206 million. Wegmans anchors the retail portion of University Station. Other tenants include Nordstrom Rack, Marshalls and PetSmart. The property is situated across the street from the  Amtrak/MBTA commuter rail station, which transports 1.3 million travelers annually. New England Development will continue to serve as the management and leasing agent for the retail center.

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

US retail sales were flat in July, the Commerce Department said. Sales had climbed 0.8% in June, revised up from an earlier estimate of 0.6% growth.

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 increased in June, was relatively unchanged in July. The Index now stands at 97.3 (1985=100), compared to 97.4 in June. The Present Situation Index increased from 116.6 to 118.3, while the Expectations Index edged down to 83.3 from 84.6 in June.

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

PURCHASING MANAGERS INDEX

Manufacturing expanded in July as the PMI® registered 52.6 percent, a decrease of 0.6 percentage point from the June reading of 53.2 percent, indicating growth in manufacturing for the fifth 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