Monday, September 26, 2011

Greater Hartford, CT Report Preview

The KeyPoint Report on retail real estate in Greater Hartford, Connecticut will be available soon at KeyPointPartners.com. This is our third report of 2011, and follows our Reports on Eastern Massachusetts/Greater Boston and Southern New Hampshire, both of which are available at KeyPointPartners.com. The 2011 Greater Hartford report will be released shortly. Here are just a few highlights from this year’s report:
Overview
Total retail space in the Greater Hartford region included 37.5 million square feet at the end of the 2011 study period, a modest increase from the 37.3 million square feet reported last year. The most significant new development in the region was the construction of the Stop & Shop-anchored Elmwood Plaza in West Hartford, which added approximately 79,000 square feet of new retail space. This was the only significant shopping center constructed during the study period, reflecting the dramatic slowdown in new development.
Following an alarming rise in the Greater Hartford vacancy rate during the prior study period from 10.6% to 13.1%, the region reversed the trend, lowering the level of unoccupied space to 11.8%. This equates to a reduction of unoccupied space of approximately 448,000 square feet, which stood at 4.4 million square feet at the close of the study period.

Submarkets
Similarly, vacancy rates in all Greater Hartford submarkets improved during the study period, a year after each suffered declining occupancy. Receiving the only “A” for effort, however, was the City of Hartford, which lowered its vacancy rate from 19.3% to 15.0%. However, it had the most room to improve and still remains the sector with the highest vacancy rate.
Nevertheless, all other sectors showed significant improvement, lowering vacancy rates by 1-2%, with the exception of the Northwest submarket, where the rate declined by 0.7%. But even though improvement was shown throughout the region, high vacancy remains a concern with the Northwest sector ending up as the only submarket in single digits at 9.0%.
Town Rankings
At the municipal level, the Town of Manchester remains the dominant retail community by total retail space, with approximately 5.6 million square feet of inventory, with no appreciable change from a year ago. Enfield, Hartford, West Hartford, and Newington follow, all encompassing between 2.5 and 3.0 million square feet of space. Among municipalities with at least 500,000 square feet of retail space, after holding the spot for the past three years, Simsbury no longer tops the list of healthiest retail communities. That honor now goes to Wethersfield, which has the lowest vacancy rate in the region at 4.0%. Much of the Top 10 remains the same as last year. The only addition to the list is Bolton, replacing Simsbury, which dropped out due to the closing of the local Borders store.
Although Hartford had the highest vacancy rate among submarkets in the Hartford region, it was not the worst among municipalities. Vacancy rates in both Berlin and East Hartford exceeded 20%, coming in at 23.9% and 22.5%, respectively. New Britain, East Windsor, and South Windsor also experienced higher vacancy rates than Hartford.

Store Size Rankings

While other markets studied by KeyPoint Partners reported regional vacancy declines, Greater Hartford is the first to avoid vacancy declines in all size classifications. Vacancy among storefronts less than 2,500 square feet was 17.0% at the end of the 13-month period, clearly the worst performing category but still 140 basis points below the vacancy level of a year ago. For stores ranging between 2,500 and 4,999 square feet, the vacancy rate dropped from 14.7% to 12.8%. Until now, it was these smaller size categories, including significant numbers of independent retailers, which experienced continued erosion in occupancy levels within other New England regions. The most significant improvement occurred within the 10,000-24,999 and 25,000-49,999 square foot segments. These categories declined from 11.9% to 9.8% and 16.1% to 13.8%, respectively.
Among the smattering of retailers now occupying the previously vacant 10,000-24,999 square foot units are Aldi, Ulta, EMS, Tractor Supply, and DSW while PC Richards acquired the bulk of the 25,000-49,999 square foot spaces via former Circuit City stores. Stores of 100,000 square feet or more experienced no changes and remain near full occupancy.

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

The 2011 KeyPoint Report on the retail real estate marketplace for Greater Hartford, Connecticut focuses on changes in the region's retail activity, and examines supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories between May 1, 2009 and June 1, 2010, a 13-month span. The Greater Hartford market includes 26 cities and towns and represents more than 835 square miles and approximately 808,700 persons, equating to 23% of the Connecticut total population.

Industry News: National

US comparable-chain-store sales for August rose by 4.6% year-over-year as measured by the ICSC's tally of 26 major retail chains, the same percentage as last month. According to the ICSC, the “stock-up effect” of Hurricane Irene helped some retailers (mergency supplies, food), and hurt others (apparel). Among merchandise categories, Wholesale Clubs saw the strongest rise at 11.1%, followed by Luxury Stores, which rose by 6.6%. Discounters gained 3.3%. Apparel was up 1.2%. Among individual retailers, Gap dropped by 6.0% and Limited gained 11.0%; Costco was up 11.0% and BJs gained 11.5%. Nordstrom and Neiman Marcus gained 6.7%; Target grew by 4.1% and TJX by 1.0%. Macy’s gained 5.0%, Kohls dropped by 1.9%; Rite Aid rose 2.5%. See our more extensive list of retail sales results below.

Industry News: Accelerating

Casual Male Retail Group plans to open 13 DestinationXL stores this year, 20-30 stores in 2012, and approximately 100 stores over 4-5 years…mall retailer Spencer Gifts has leased its first-ever Manhattan location. The chain operates more than 600 stores…Del Frisco’s Restaurant Group opened the first unit of its newest concept, Del Frisco’s Grille, in New York, and plans to open another 4-6 units every year for the next several years. Del Frisco’s Grille is a smaller, more casual version of its 9-unit Del Frisco’s Double Eagle Steakhouse concept, The company, which also operates 20 Sullivan’s Steakhouse restaurants, plans to “backfill” the 9 markets in which Del Frisco’s currently operate: Dallas; Fort Worth; Denver; Houston; Charlotte, N.C.; Las Vegas; Boston; Philadelphia and New York. The company plans one new Del Frisco’s restaurant and one new Sullivan’s Steakhouse each year…Toys “R” Us will open 21 stores across 13 states by yearend, including 11 “R” Superstores (full-size Toys “R” Us and Babies “R” Us stores under one roof) and 10 “Side-by-Side” locations, and expects to have completed the remodeling of 23 existing Side-by-Side locations by the end of the year. Toys “R” Us embarked on its integrated store strategy in 2006, and since then has converted more than 100 of its traditional US stores to the Side-by-Side format. In 2007, the company opened the first of its new “R” Superstores. By the end of 2011, the company will operate 43 “R” Superstores nationwide...Tiffany & Co. plans to open 17 company-operated stores between now and fiscal year-end 2012, which includes six in the Americas…Bebe Stores expects to open four Bebe stores and as many as seven 2b stores in the new fiscal year, including two stores to be converted from Bebe to 2b. It plans to close 10 Bebe locations. International licensees are expected to add up to 30 standalone stores and 30 shop-in-shops...New Balance has opened its first Experience Store, in New York City. The approximate 4,000 s/f space is designed to reflect the heritage of the century-old brand, the only athletic brand to continue to manufacture shoes in the US. The decor features restored original brick walls and floor-to-ceiling columns .A two-lane track runs along one of the store’s perimeter walls which features a sunken treadmill. Behind a glass-enclosed space, an associate from the company’s Maine facility will assemble No. 880 running shoes. Each pair will be sold in a special ‘Assembled in NYC’ drawstring bag stamped with the date made and edition number. The store will host a live video feed from the company’s Lawrence, MA manufacturing floor...Saks Inc. announced the addition of 5 Saks Fifth Avenue Off 5th stores for 2012, located in upscale outlet, lifestyle, and strip centers in Merrimack, NH, Syracuse, NY, Livermore, CA., Grand Prairie, TX, and Nashville, TN. Saks had previously opened 2 new Off 5th stores and plans to open 3 more later this year. The stores feature an open loft-like environment and range from 25,000 to 28,000 s/f...A federal bankruptcy court judge has approved a deal allowing Books-A-Million to buy the leases of 14 Borders stores. Books-A-Million, now the nation’s second largest bookseller after Barnes & Noble, initially had sought to buy out the leases of 30 to 35 Borders stores. The deal gives Books-A-Million its first stores in New England, expanding its geographic footprint. Books-A-Million operates 231 US stores…A Delaware court has approved the reorganization plan of Harry & David Holdings Inc. The company expects to emerge from bankruptcy on or around Sept. 13. The mail-order food company, known for its fruit baskets, filed for Chapter 11 protection in March, citing falling sales and competition from big-box retailers...Dollar General is on track to expand into Nevada, Connecticut, and New Hampshire in the second half of the year. Dollar General opened 301 new stores in the second quarter and expects to grow square footage by about 7% for the year. The company currently operates more than 9,640 US stores...Seattle’s Best Coffee announced the addition of 12 new locations which have opened since April 2011, completing a portfolio of locations in venues such as city centers, college campuses, airports and office complexes. There are nearly 100 Seattle’s Best locations in the US and Canada...The first Lord & Taylor Home store opened in NJ. The 23,000 s/f store will carry kitchen, bath and bedroom merchandise. Lord & Taylor’s parent, Hudson's Bay Trading Co., owns the license to the Linens 'n Things brand name, and the store will carry Linens 'n Things merchandise.

Industry News: Decelerating

Collective Brands, parent company of Payless and Stride Rite shoe chains, announced that it would close 475 underperforming stores over the next three years and has hired a firm to help it explore options. The company currently operates 4,844 stores, of which 4,461 are Payless stores. Of the 475 stores to close over the next three years, more than 300 will be shuttered by the end of the year, including about 275 Payless and 75 Stride Ride stores.

Industry News: New England

Bloomingdale’s, The Outlet Store will open at the Wrentham (MA) Village Premium Outlets in October. The 25,000 s/f Wrentham location will be the company’s sixth outlet and first in MA.The company is looking at additional MA opportunities…Priscilla of Boston, the bridal boutique that got its start on Newbury Street in 1945 and shot to prominence after making Grace Kelly’s wedding gown, is closing. Its parent company, David’s Bridal, will shutter the store’s 19 national locations, including its store on Boylston Street. Priscilla of Boston was started by Priscilla Kidder, who cemented her reputation when she designed the 1956 wedding of Grace Kelly to Monaco‘s Prince Rainier…Noodles & Company announced a new development agreement with franchise group Hartford Noodles, LLC, in Hartford, CT to open its first Noodles & Company location in Hartford in 2012, and several additional locations over the next five years. Noodles & Company is a collection of more than 260 neighborhood restaurants in 20 states. The partners of Hartford Noodles previously developed Five Guys Burgers & Fries locations in CT...The Finish Line Inc. has invested $8.5 million to buy Greater Boston Running Co. - which consists of 3 MA stores - and its affiliated stores in 7 other states. Finish Line has 650 mall-based stores...Boston jeweler Shreve, Crump & Low will move next year from Boylston Street to a smaller store on Newbury Street. The retailer had previously vacated its long-time space at the corner of Arlington and Boylston streets for the former FAO Schwarz toy store building nearby.

August Retail Sales






































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. *Includes Hannaford Bros., Food Lion, Bloom, Bottom Dollar, Harveys, Kash n' Karry and Sweetbay

Commerce Department Monthly Sales

After seven months of increases, total U.S.retail sales remained flat in August, the U.S. Commerce Department reported. Excluding autos, gasoline and building materials, retail sales were unchanged, the weakest performance so far this year, after a 0.3% increase in July.
Source: U.S. Department of Commerce - commerce.gov



















Treasury Yield Sources: Bloomberg, L.P.; Bondsonline.com; Wall St. Journal; federalreserve.gov; ustreas.gov

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had improved slightly in July, plummeted in August. The Index now stands at 44.5 (1985=100), down from 59.2 in July. The Present Situation Index decreased to 33.3 from 35.7. The Expectations Index decreased to 51.9 from 74.9 last month.
Source: The Conference Board - www.conference-board.org

Purchasing Managers Index

Manufacturing continued its growth in August as the PMI registered 50.6 percent, a decrease of 0.3 percentage point when compared to July's reading of 50.9 percent. The PMI registered the lowest reading since July 2009, when it registered 49 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