Thursday, September 22, 2016

PREVIEW: The KeyPoint Report for Greater Hartford, CT



With the releases of The KeyPoint Reports on Eastern Massachusetts/Greater Boston and Southern New Hampshire behind us, it’s time to move on to the report for Greater Hartford, Connecticut, based on our proprietary GRIID™ retail database. As with the other reports, our modus operandi is to share some of the regional highlights while the complete version is still “baking”. In Greater Hartford, the 2016 retail market traveled further down the road to stability:

Retail Inventory and Vacancy: Total retail space in Greater Hartford currently totals 37.6 million square feet, a modest increase of 380,800 square feet from last year - in today’s environment, limiting new development should be regarded as a good thing. Most of the incremental gain can be attributed to the new 156,000 square foot Costco in Farmington.

At the same time the region added 445,400 square feet of vacant space, increasing the vacancy rate from 10.1% to 11.1%, which is higher than the 11.0% level experienced in 2014. As a result, absorption in the region turned negative this year by 169,300 square feet. NOTE: The other regions we study, Eastern Massachusetts/Greater Boston and Southern New Hampshire, also experienced a rise in vacancy rates this year.

Size Classifications: During 2016 the only retail size category to show a significant reduction in the vacancy rate was the 5,000-9,999 square foot range, from 12.4% to 11.3%. Macy’s closing in Enfield caused the 100,000-199,999 square foot bracket to jump up to a 5.8% vacancy rate after showing full occupancy last year. After experiencing the highest vacancy rates a year ago, the rates for two categories under 5,000 square feet went even higher this year; small independent retailers are largely to blame. However, the largest increase in vacancy rate occurred in the 50,000-99,999 square foot range, with Macy’s again playing a role with the closing of a second Enfield unit.

Town Rankings: The top ten among Greater Hartford towns, based on square feet of retail space supply, remains unchanged. It should be no surprise that the top three towns are Manchester, West Hartford, and Enfield, all regional retail hubs serving Greater Hartford. Manchester dominates the region with 5.4 million square feet of retail space; West Hartford comes in a distant second with 3.0 million square feet. However, it should be noted that the 1.3 million square foot Westfarms regional mall, which straddles the West Hartford/Farmington line, has a Farmington address but is very much rooted in the West Hartford retail hub. Consequently, West Hartford is effectively a 4.0 million square foot market.

Regarding vacancy, lowest rates were found in Rocky Hill, Newington, and Plainville, all below 6.0%. Rocky Hill was the only town below 5.0%. Farmington and West Hartford complete the top five. Among towns with the highest vacancy rates, only East Windsor was above the 20% level, an improvement from last year when three towns were above that threshold. Vacant Walmart and Showcase Cinema buildings are primarily responsible for the considerably high rate in East Windsor. East Hartford, Berlin, New Britain, and Hartford fill out the top five.

Retailer Activity: The largest retail development in Greater Hartford last year was the opening of a new 156,000 square foot Costco in New Britain. By acquiring Sleepy’s, Mattress Firm entered the Greater Hartford region and now occupies 99,600 square feet, putting them in second place. Ashley Furniture Homestore opened a 42,600 square foot store in Newington in the space formerly occupied by T-Bowl Lanes bowling alley to round out the top three retailers adding square footage in the region. In the ranking of retailers by added stores, Mattress Firm is at the top with 16 recently acquired units. Advance Auto Parts netted four stores via the Carquest acquisition. O’Reilly Auto Parts and Sport Clips followed, each adding three new units.

As previously mentioned, Macy’s closed two stores in Enfield at Enfield Mall totaling 237,700 square feet, the largest contraction of space in the region. The acquisition by Mattress Firm removed 116,100 square feet of Sleepy’s store space from the region. Walmart closed its only Neighborhood Market location in the region, a 59,700 square foot store in West Hartford. Among retailers reducing store count in the region, Sleepy’s led the way with 19 locations. Carquest Auto Parts contracted by five stores as a result of the Advance Auto Parts acquisition. Radio Shack also reduced its store count by three units.

Bob Sheehan, Vice President of Research
BSheehan@KeyPoint Partners.com

The KeyPoint Report examines the retail real estate marketplace for Greater Hartford, Connecticut, with a focus on changes between August 2014 and July 2015. This report provides an analysis of changes in the region’s retail activity and examines supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories.

The Greater Hartford market includes 26 cities and towns and represents more than 835 square miles. The complete report contains much more detailed information on these categories and more, and will be available soon at KeyPointpartners.com.

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 nearly 262 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.



KeyPoint Partners Company News

New Business: The leasing team added the following retail leasing assignments: An additional Shaw’s Disposition property: the 68,337 s/f former Kmart at 1465 Woodbury Avenue in Portsmouth, NH; Buttonwoods Plaza, a 60,000+ s/f center in Warwick, RI anchored by Ocean State Job Lot, with 10,486 s/f available. VP of Leasing Don Mace is handling the assignment; Shoppes at Long Pond, 55-69 Long Pond Road, Plymouth, MA ( managed by KPP) VP of Leasing Rob Grady and Sr. Associate Michael Branton are handling...VP of Research Bob Sheehan appeared on the New Hampshire’s Business segment hosted by Fred Kocher on WMUR TV, New Hampshire’s ABC station to talk about our 2016 KeyPoint Report on Southern New Hampshire: VIDEO

National Retail News

Sales at US retailers declined 0.3% in August, Commerce Department figures showed. Core sales, which exclude such categories as autos, gasoline stations and building materials, declined 0.1%. Purchases at auto dealers dropped 0.9% and those at service stations fell 0.8%. Purchases fell 1.4% on building materials, sporting goods, books and music. Food and beverage spending was up 0.3% and clothing gained 0.7%. Among retailers still reporting monthly same-store sales, L Brands was up 2.0%, Gap was down 3.0%, and Costco was up 2%. See our sales reports below.

Accelerating Retail News

Aldi is building a divisional headquarters and distribution center in VA. Aldi has opened 7 stores in the Richmond region in the past year, and plans at least 2 more this year. Aldi has 32 stores in VA, and plans to open up to 60 more across the state in the next 5 years... Bob’s Discount Furniture will expand into St. Louis with two new showrooms, and add two Chicago stores, during the first quarter. Bob’s operates 73 stores...Cato Corporation opened 1 store and relocated 2 stores in the second quarter.  The Company now expects to open 12 new stores during 2016, down from an estimated 23 stores.  As of July 30, the Company operated 1,373 stores in 33 states....Tops Friendly Markets opened 6 stores last month in NY and MA that it recently acquired from Stop & Shop and Hannaford Supermarkets...West Elm opened its 100th store, at Empire Stores, in Brooklyn, NY, the first tenant to open in the restored 19th-century coffee warehouse. West Elm will open a location in Wayland Square, Providence, RI this month, and another that will anchor the Downtown Palm Springs (CA) Revitalization Project....5 Frank’s Auto Supermarket stores in PA have become part of national chain O’Reilly Auto Parts. As of June 30, O’Reilly Auto Parts had 4,660 locations in 44 state...Cookware chain Southern Season was sold at auction last month to Calvert Retail LP. Calvert owns 6 Kitchen & Company stores and 2 Reading China & Glass stores. Southern Season filed for chapter 11 bankruptcy protection on June 24...Modell’s Sporting Goods opened two stores in metro New York last month, bringing its total store count to 156 locations. The openings include Modell’s 11th location in Brooklyn, and a store in in Mount Kisco...DSW Inc. will open 21 stores nationwide between August and October. The footwear retailer currently operates 482 stores in 42 states...Sears is launching an in-store shop concept, called Showcase at Sears, which will feature 10 European and Latin American men’s, women’s and children’s apparel brands,most available for the first time in the US. The concept will initially launch in 5 New York-area stores this fall. Sears is building 10,000 to 15,000 s/f Showcase boutiques in each location...Ben’s Soft Pretzels plans to bring 15 new eateries to the Milwaukee area by 2021. The growth is part of a national expansion effort with more than 20 stores in development for 2016 and a master license agreement to open inside every newly constructed Meijer location. It has a similar master lease agreement with Wal-Mart to open a pretzel bakery in any open Walmart store tenant space. Ben’s Soft Pretzels has more than 75 locations in 8 states...Amazon Books has confirmed plans for a 7,200 s/f store in Chicago. Amazon Books opened its first store last fall in Seattle, and plans a store in San Diego this summer, 1 in Portland, OR later this year, and one at Legacy Place in Dedham, MA - no opening date has been announced...True Food Kitchen will open its first Northern CA location in Palo Alto next month. True Food Kitchen has 12 locations in Arizona, California, Colorado, Texas, Georgia and Virginia, with 4 more planned throughout the country in 2016...Nordstrom has entered into a deal with J. Crew to sell an assortment of J.Crew apparel in 16 select full-line Nordstrom stores and on its website this month. In 2015, Nordstrom entered into an arrangement with J. Crew’s Madewell brand. The collection was recently expanded to 20 additional stores, and is now available at 76 Nordstrom locations and at Nordstrom.com...Five Below opened a store in Lower Macungie Township, PA  this month, the company’s 500th store and its 59th in PA... Boston’s Restaurant & Sports Bar is on its way to its goal of 100 locations by 2019 with several recent openings and franchise signings, including a deal for 2 units in El Paso, TX and recent openings in Arizona, Michigan, Maryland, and Virginia. Boston’s  has 29 locations in 22 states...Fantastic Sams has been approved for a franchisee lending program through The Bancorp Bank which provides start-up funding for franchisees, as well as expansion and remodel funding for existing franchisees. Fantastic Sams has more than 1,100 locations...Mooyah Burgers, Fries & Shakes opened its 100th restaurant this month, a franchised unit in Tuscaloosa, AL... J. Crew plans to open 36 new stores this year, including 3 flagship J. Crew retail locations, 23 factory stores and 10 Madewell stores...Crown & Ivy, the private label brand launched by Belk in 2014, is opening its first standalone store in Raleigh, NC.  Private equity firm Sycamore Partners bought Belk last year...Roark Capital Group has acquired a majority stake in Jimmy John’s Sandwiches. Terms of the deal were not disclosed. The sandwich chain joins a list of concepts controlled by Roark Capital: CKE Restaurants, Arby’s, and Naf Naf Grill. Once the Jimmy John’s deal is completed, Roark Capital will have acquired 56 franchised or multi-unit brands with 25,000 locations...Petco will open 13 new Petco stores across the country and relocate 1 store in September. The company will also transition 31 existing Unleashed by Petco stores to smaller format Petco stores this month... Aeropostale Inc. won court permission to sell its assets to buyers led by Simon Property Group Inc. and General Growth Properties Inc. The group prevailed at auction with a $243 million bid and a plan to keep open at least 229 stores...American Finance Trust Inc. (AFIN) acquired all outstanding common stock of American Realty Capital/Retail Centers of America Inc. (RCA) for approximately $1.4 billion. The merger creates a retail REIT with an enterprise value of approximately $3.9 billion. The combined company will retain the AFIN name and continue to be led by AFIN’s management team. The combined portfolio includes 494 properties totaling 20.8 million s/f of single-tenant net lease, power center, and lifestyle center assets...Amazon opened 21 pop-up electronics stores in 12 states.

Decelerating Retail News

Perry Ellis will close 15 underperforming stores over the next 18 months as it shifts its focus to e-commerce...The owner of sports bar chains Fox & Hound and Champps closed 25 locations, as the company received a lifeline from Kelly Investment Group that will enable it to operate through an expected auction next month.  Last Call’s bankruptcy is its second since 2013. Going into the bankruptcy, Fox and Hound had 48 locations, Bailey’s had 9 and Champps 23. Last Call now operates 37 Fox & Hound locations, four Bailey’s and 14 Champps.

New England Retail News

The biggest New Hampshire State Liquor Store ever opened in Nashua last month. The 33,000 s/f store offers over 7,000 kinds of wine and hard liquor...Electric car maker Tesla Motors already has a store at Prudential Center in Boston, but plans to move to newer space on the ground floor of the new tower at 888 Boylston St. by the end of the year.. Cosi, the Boston-based restaurant chain, fired its CEO amid declining sales, continuing losses and a declining share price. The company has 76-company-owned and 31 franchisee-owned stores in 16 states...The closing of the Howard Johnson restaurant in Bangor, ME this month leaves only 1 restaurant in a chain that once numbered more than 800. Howard Deering Johnson started the business in 1925, when he inherited a soda fountain outside Boston. That evolved into a chain of restaurants featuring comfort food and 28 flavors of ice cream. The remaining restaurant is in Lake George, NY... Buffalo Wild Wings is opening at the Pheasant Lane Mall in Nashua next month, its 5th NH location. Buffalo Wild Wings runs about 1,200 restaurants globally...New Balance’s real estate arm will start construction soon on its 295-unit apartment building and the Boston Celtics’ new practice facility in Brighton. All three projects are part of Boston Landing, NB Development Group’s 15-acre, mixed-use development that includes the brand’s new global headquarters. Five new eateries will also open at Boston Landing next spring or early summer, including Seaport Grill. Names of the other restaurants were not disclosed.

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 declined 0.3% in August, the Commerce Department said. It was the first decline in retail sales since March. Sales increased 0.1% in July, a small upward revision from an initial flat reading. Excluding autos, retail sales last month fell 0.1%.

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 decreased slightly in July, increased in August. The Index now stands at 101.1 (1985=100), compared to 96.7 in July. The Present Situation Index rose from 118.8 to 123.0, while the Expectations Index improved from 82.0 last month to 86.4.

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

PURCHASING MANAGERS INDEX

Manufacturing contracted in August as the PMI® registered 49.4 percent, a decrease of 3.2 percentage points from the July reading of 52.6 percent, indicating contraction in manufacturing for the first time since February 2016 when the PMI registered 49.5. 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