Monday, August 18, 2014

Preview: KeyPoint Report for Southern New Hampshire

While the 2014 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:

Vacancy Rate: The region continued its upward trend in retail inventory, reaching a level of 30.0 million square feet by the end of the year. This represents a gain of 283,500 square feet, or 1.0%, thanks in large part to Seabrook Commons, DDR’s first ground up development in New England. This 380,000-square-foot power center saw its initial tenant openings in June, highlighted by a new 189,567 square foot Walmart Supercenter (a relocation of its traditional format store in Seabrook).

There was a bump in the road, however: a sizeable increase in the vacancy rate during the year from 9.6% to 10.7%. Before you get too discouraged, there is a reasonable explanation for this increase. Stop & Shop’s decision to close all six stores it operated in Southern New Hampshire, creating 411,800 square feet of retail vacancy, reflects the lion’s share of incremental vacancy. While one of these locations was filled by Hannaford, the closing of two Shaw’s stores and a single Building 19 unit exacerbated the vacancy issue in the region. Hypothetically removing this vacant space from the region actually lowers the vacancy rate in Southern New Hampshire to 9.1%. Nevertheless, the reality is that this vacancy does exist and may present a lingering concern in the region for a considerable period. At the same time, given the toll that these vacancies have had on overall occupancy rates, the negative absorption rate in Southern New Hampshire of only 91,400 square feet should be somewhat encouraging.

Size Classifications: In assessing vacancy rates by store size, it was encouraging to see that other than the 50,000-99,999 square foot category, only one other size range experienced an increase vacancy. In fact, among the eight size breakdowns, four showed increased occupancy while two others remained stable. Stores between 5,000 and 24,999 square feet experienced the most improvement, with the vacancy rate of the 5,000-9,999 square foot segment declining by 140 basis points and a nearly 200 basis point decline in the 10,000-24,999 square foot range. The new Seabrook Commons development had much to do with this improvement. However, the 50,000-99,999 square foot category was clobbered by the aforementioned big box store closings, increasing the vacancy rate in that category from 11.4% to 13.3%.

Regional Submarket Rankings: There has been no change in the top ten largest regional markets, although Seabrook jumped ahead of Bedford during the year, also due to the Seabrook Commons effect. 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. These are the only cities or towns with inventory in excess of 2.0 million square feet, although Seabrook is edging closer to that threshold.

Southern New Hampshire Study Area
Town Rankings:  The year ended with Milford representing the sole newcomer to the top-five list of towns with the highest vacancy rates. A Stop & Shop closing was the cause. Manchester still leads the pack with a 22% vacancy rate. Seabrook, somewhat surprisingly, jumped into second place, largely a result of the vacant Walmart unit left behind by the relocation to Seabrook Commons. Nashua moved up three spots and is now among the five healthiest markets in the region. Bedford remains the top performer, followed now by Salem, Nashua, Amherst, and North Hampton.

Retailer Activity: Walmart is the largest contributor to new retail inventory in Southern New Hampshire this year, adding 98,700 square feet, the net change between its vacant traditional store and its relocated Supercenter store. Hannaford acquired the former Stop & Shop in Exeter, adding 65,200 square feet. Party City ranked third by acquiring four iParty stores, which added 40,000 square feet. Stop & Shop closed all six Southern New Hampshire locations, reducing its footprint by 411,800 square feet. Shaw’s closed stores in Seabrook and Manchester, contracting by 124,300 square feet, while the Building 19 liquidation resulted in the closing of its 72,300 square foot store in Manchester.

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@KeyPoint Partners.com


This KeyPoint Report examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during 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 nearly 260 million square feet of retail space and approximately 60,000 retail establishments. The KeyPoint Reports contain a summary and analysis of market trends and activity for each studied area.
the period from August, 2013 through July, 2014. The study area includes 39 cities and towns, representing more than 835 square miles and approximately 554,200 people (42% of the state population).  KeyPoint Partners’

Company News

Our Middleboro Office Has Moved: Our satellite office, formerly in Middleboro, MA, has moved to Colony Place in Plymouth, MA
New address: 174 Colony Place, Plymouth, MA  02360; New phone numbers: Tel: 508-747-3533, Fax: 508-747-3933; Our 24 hour emergency line remains the same: 1-800-895-0731

New Business: The Leasing Team has added a new assignment in Connecticut: Crosspointe Plaza is a 94,000 s/f retail center with tenants Family Dollar and Gamestop, among others. VP of Leasing Don Mace is handling the assignment. The Property Management team has been awarded contracts for 16 Boston retail properties by Linear Retail. The properties, which include four Newbury Street locations, total more than 104,000 s/f. KPP currently manages 38 retail properties throughout New England for Linear, ranging from small suburban properties to grocery-anchored shopping centers. With the 16 new assignments, KeyPoint Partners will manage a total of 54 properties for Linear Retail totaling nearly 1,330,000 s/f. Employee News: Christine McNeilly has joined KeyPoint Partners as an Assistant Property Manager in the new Plymouth Office (see above). Christine came to KPP from Saxon Partners, where she was part of the management team at Colony Place.

National News

July comparable-store sales posted a year-over-year gain of 7.1% based on the ICSC’s final tally of 11 retail chains. July is clearance month for summer merchandise and the start of the back to school shopping season (late in the month). Back to school shopping appears to be off to a good start, but the bulk of the shopping will be in August, according to the ICSC. L Brands was up 6.0%, Gap was up 2.0%, Rite Aid was up 4.6%, Walgreen’s rose 1.1%, and Costco gained 5.0%. See our sales report below...Supervalu Inc. has suffered a data breach at many of its stores that may have resulted in theft of customer payment card data from June 22 through July 17, 2014. There is no indication yet that customer data has been used.

Accelerating News

Sherwin-Williams will open 80 to 90 new stores during fiscal 2014...Moe’s Southwest Grill signed 120 new franchise deals in the first six months of 2014, and continues its expansion with new restaurants in Baltimore, Boston, Chicago, Cincinnati, Houston, Pittsburgh, and Salt Lake City. This growth is fueled by existing franchise partners as well as new partnerships...Ross Dress for Less will opened 2 new stores in Kansas City, part of the retailer’s 2014 expansion program, totaling approximately 75 new locations...European discount fashion chain Primark plans to open a store in Boston toward the end of 2015, have 10 stores in the northeast by Easter 2016, and build out from there...Ross Stores  is opening 23 Ross units and seven dd’s Discounts stores in 17 states, part of the plan to open a total of 75 Ross and 20 dd’s this year. With these new stores, Ross has 1,194 Ross  stores in 34 states,  and  144 dd's Discounts locations in 13 states. Ross ultimately plans up to 2,000 Ross and 500 dd’s locations.. Dollar Tree, Inc. and Family Dollar Stores, Inc. have entered into a merger agreement under which Dollar Tree would acquire Family Dollar in a cash and stock transaction.  With the acquisition, Dollar Tree would become a leading discount retailer in North America, with over 13,000 stores in 48 states and five Canadian Provinces, sales of over $18 billion, and more than 145,000 associates. Dollar Tree currently operates 5,080 stores in 48 states and Canada. Family Dollar has 8,200 stores in rural and urban settings across 46 states. However, Dollar General has offered a competing $8.95 billion bid. Dollar General is willing to divest up to 700 of its stores in order to get the necessary approvals for the transaction....Urban Outfitters plans to open between 35 and 40 new stores during the current year, including 12 new Urban Outfitters stores, 15 new Anthropologie stores, and 12 new Free People stores....Wegmans Food Markets plans to add 10 new stores in the Northeast and Mid-Atlantic regions over the next year or two including 4 stores in Virginia, 2 each in Massachusetts and New Jersey, and one each in Pennsylvania and Maryland. The first of the new stores will open this fall in Burlington, MA. Two others are scheduled to open in 2015 in Alexandria, VA and Westwood, MA. Wegmans currently has 84 stores in New York, Pennsylvania, New Jersey, Virginia, Maryland and Massachusetts...Equinox Fitness Clubs has agreed to pay $110 million for a portfolio of properties in Boston and other US cities from an affiliate of Millennium Partners. The transaction marks the completion of a broader deal to transition ownership of health club properties to Equinox from Millennium. The clubs include Sports Club/LA properties in Boston, New York, Miami, San Francisco and Washington DC, as well as the Reebok Sports Club in New York City. With the six newly acquired properties, Equinox will operate 73 clubs nationally...Tumi Holdings, Inc. plans to open 20 to 25 new Tumi stores in 2014...Sprouts Farmers Market will open 14 stores in the third quarter for a total of 24 new stores in 2014...Vitamin Shoppe will open approximately 60 new stores in 2014...Canadian restaurant chain Tim Hortons has signed a franchise agreement to open 25 Tim Hortons restaurants in New Jersey and on Staten Island over the next 10 years. Tim Hortons has 3,630 locations, with 866 shops in the US...The Wet Seal Inc. is launching its new Wet Seal + Plus banner, aimed at plus-sized girls, with 30 new US stores opening this month...Multichannel equestrian products retailer Dover Saddlery is planning to open 4 to 6 retail stores in 2014. Dover currently has 24 US stores...Native Foods Cafe, a vegan-fast-casual restaurant, plans to open its first East Coast store next month in DC. A second location is projected to open in mid-October, and the company has signed two leases in VA. The chain has 20 locations, mostly in California...CST Brands Inc., one of North America’s largest independent retailers of motor fuels and convenience store merchandise, has opened 12 new US stores and two stores in Canada. The company expects to build 30 new stores in the US and eight in Canada during 2014. CST Brands operates 1,900 locations throughout the Southwestern US and Eastern Canada...Burger 21 has executed its first franchise agreement in Michigan, under which a debut restaurant in Ann Arbor will open in summer 2015. Additionally, the company signed two franchise agreements for units in Ocala, Florida, and Raleigh, North Carolina. The new deals are part of the fast-casual concept's growth strategy to expand its presence in new and existing markets nationwide. To date, Burger 21 has 13 open locations and 25 franchised restaurants in development.

Decelerating News

Aaron’s Inc. will close 44 underperforming stores in the third quarter of fiscal 2014. Aaron’s currently has more than 2,130 company-operated and franchised stores in 48 states and Canada...Footwear maker Crocs Inc. will close, or convert to third-party operators, 75 to 100 Crocs-branded retail stores. Crocs has 624 stores worldwide...Office Depot said it will close 165 stores during 2014 — up from the 150 estimated earlier this year — but stuck with a total count of 400 store closures through 2016.

New England News

Eastside Marketplace, an upscale supermarket in Providence, RI has been sold to a subsidiary of Ahold USA. Eastside Marketplace employees and management team will remain in place, running the business as Eastside Marketplace...The building that once housed Filene’s Basement on Needham Street in Newton has three tenants lined up. The building encompasses 36,988 s/f of retail space and a three-story garage at 215-227 Needham Street Jonathan’s Restaurant, which closed last April, will become a Five Guys Burgers and Fries. The space next to that is slated to become a Men’s Wearhouse, and PetSmart is slated to to open in December. All leases were negotiated by KeyPoint Partners, and KPP will sell the property via Auction.com...Kiko Milano, a cosmetics brand from Italy, will open its fourth US location in New Haven's 1 Broadway retail district at York St. and Broadway...The independent members of Market Basket’s board of directors have issued their third statement, asking everyone to come to an agreement to rebuild the chain. The statement echoes many of the sentiments of earlier statements which implored workers to return to the chain’s 71 stores and invited Arthur T. Demoulas to play a non-CEO role in stabilizing Market Basket as he continued negotiations to buy it. Massachusetts and New Hampshire governors Deval Patrick and Maggie Hassan have stepped in to the ongoing negotiations over the long-drawn-out Market Basket dispute that has put a multibillion-dollar company and tens of thousands of jobs at risk in both states, in an attempt to broker a deal between the warring Demoulas family factions. According to a statement, “the governors are encouraged that a resolution may be within reach.”..Legal Sea Foods will close its 8,500 s/f Prudential Center location in January as Boston Properties prepares to expand the Pru complex, although Legal will likely reopen in a new location there once construction is done. Last month, Boston Properties won approval to add 16,000 s/f of retail space to the Shops at Prudential Center.

July 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

The Commerce Department said retail sales were virtually unchanged from June, ending five months of increases that have been getting smaller since March. Excluding motor vehicles and parts, retail sales rose 0.1%. Motor vehicles and parts sales fell 0.2%, pulling down the overall results.

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 improved in June, increased in July. The Index now stands at 90.9 (1985=100), up from 86.4 in June. The Present Situation Index increased to 88.3 from 86.3, while the Expectations Index rose to 92.7 from 86.4 in June.

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

Purchasing Managers Index

Manufacturing expanded in July as the PMI® registered 57.1 percent, an increase of 1.8 percentage points when compared to June's reading of 55.3 percent. July's PMI reading of 57.1 is the highest reading since April 2011 when the PMI® registered 58.9 percent. 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