Wednesday, August 28, 2019

Greater Hartford, CT Report Preview

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 2019 retail market was a relatively stable one.

Retail Inventory and Vacancy: Total retail space in Greater Hartford currently stands at 37.6 million square feet, an increase of 166,300 square feet from last year. The modest change is primarily attributed to a low level of new development offset by a number of conversions to non-retail space. However, the region still could not escape a slight uptick in the vacancy rate from 10.6% to 10.8%.  At the same time, the region was able to avoid any large format chain liquidations or multi-store closings such as it had experienced in years past. As a result, Greater Hartford experienced its third consecutive year of positive absorption, netting an incremental 50,700 square feet of occupied retail space.

Size Classifications: During 2019 changes in vacancy rates among size classifications were generally mixed. Size ranges under 25,000 square feet, which represent nearly two-thirds of the total number of tenants in the region, all experienced increases in vacancy rates. The most significant impacts were in size classifications of 2,500-4,999 square feet, which increased from 13.1% to 14.8%, and 5,000- 9,999 square feet, increasing from 12.7% to13.7%. The overall vacancy rate for tenants under 2,500 square feet rose 70 basis points while those in the 10,000-24,999 square foot bracket only experienced a 40 basis point swing. Vacancy rates of size classifications above 25,000 square feet either declined or reflected full occupancy. The 50,000-99,999 square foot segment showed the most improvement, lowering its vacancy rate from 8.1% to 6.4% on the backs of Target filling the vacant Walmart Neighborhood Market in West Hartford and Urban Air Adventure Park, which is planning a fall 2019 opening in the former Bob’s Stores unit in Manchester. Also the vacant Showcase Cinema in East Hartford, which has remained an eyesore for the community for a number of years, was purchased by the town with plans to redevelop the site as a residential or mixed-use project. The vacancy rate in the 25,000-49,999 square foot segment also improved by 100 basis points, a result of backfilling several vacant units. Segments larger than 100,000 square feet remained fully occupied.

Town Rankings: The ten largest retail markets among Greater Hartford communities, based on square feet of retail space supply, have remained unchanged for the past three years. 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 1.2 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, the lowest rate was found in Rocky Hill, coming in at 4.5%. Glastonbury, which last year held the number one spot, finished 2019 in the runner-up position at 5.4%. Farmington, finishing the year at 6.1%, rounds out the top three. Among towns with the highest vacancy rates, Enfield again finished the year at 20.9%, impacted largely by vacant Macy’s and Sears stores at Enfield Mall. East Windsor followed at 19.4%, followed by South Windsor at 15.9%. Only one of the top ten towns managed to hold its vacancy rate below 10.0%.

Retailer Activity: Planet Fitness led all retailers in square footage gain this year, a result of its acquisition of five Cardio Express locations in the region. Target opened a smaller prototype in the vacant Walmart Neighborhood Market in West Hartford, ranking the discounter in second place. Raymour & Flanigan opened its fourth store in the region, in Avon, to finish in third. The Cardio Express exit from the market represented the largest space contraction among retailers in the region. The 84,200 square foot Kmart closing in Vernon ranked second. It was the largest single store closing in the region. Fallas closed its Wethersfield store, coming in third place.

People’s United Bank added the most locations in the region through its acquisition of Farmington Bank, picking up 12 branches. The Planet Fitness acquisition of five Cardio Express fitness centers was good enough for the runner-up spot. A number of retailers added two stores, including Cost Plus World Market, O’Reilly Auto Parts, and Chick-fil-A among others. Farmington Bank declined by 19 locations, the most in the region. Payless ShoeSource liquidated its seven stores and Subway closed six units, finishing in second and third, respectively.

The full report will be released soon. Stay tuned!
Bob Sheehan, Vice President of Research
BSheehan@KeyPointPartners.com

The KeyPoint Report examines the retail real estate marketplace for Greater Hartford, Connecticut, with a focus on changes between August 2018 and August 2019. 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 nearly 60,000 retail establishments. The KeyPoint Reports contain a summary and analysis of market trends and activity for each studied area.

The 2019 KeyPoint Reports for Eastern MA/Greater Boston
& Southern NH are available now at
KeyPointPartners.com/Retail-Reports. 
The Report for Greater Hartford, CT will follow soon.

KeyPoint Partners Company News

New retail leasing assignments: Minuteman Landing, a new 24,000 s/f retail center to be built near Minuteman Office Park in Andover, MA, and NH 9/106, a 10.6 acre parcel of land for sale/lease off Route 393 in Concord, NH. Both will be handled by VP of Leasing Don Mace....Team News: Rich Couillard has been promoted to Property Manager in the Burlington, MA office. Rich has been an Assistant Property Manager in the Brookline, MA office. Chris Domos, Assistant Property Manager, will be joining the Brookline office. Rachel DiGiorgio joined the Burlington, MA office as Accounts Payable Data Entry Clerk.

National Retail News

U.S. consumers spent more at retail stores and restaurants in July, the Commerce Department said.  Retail sales rose 0.7% last month, after a 0.3% gain in June. Online retailers, grocery stores, clothing retailers and electronics and appliance stores all reported strong gains.... See sales reports below.

Accelerating Retail News

At Home opened its 200th store, with a goal of operating more than 600 stores…Capriotti’s Sandwich Shop has signed 48 franchise development deals within the first 6 months of the year. Capriotti’s currently has 100 operating locations, and more than 130 new shops in progress…The Cheesecake Factory has a deal to buy Fox Restaurant Concepts. Fox’s concepts include Culinary Dropout, The Henry, and Blanco. It currently operates 45 restaurants across 7 states and was the creator of True Food Kitchen and Zinburger. Cheesecake operates 219 restaurants in the US, most under The Cheesecake Factory name. Its other ventures include Grand Lux Cafe, RockSugar Southeast Asian Kitchen and Social Monk Asian Kitchen…5.11 Tactical opened its 50th company-owned store in Fort Bliss, TX. To date, 5.11 owns retail stores in 24 states…Orangetheory Fitness announced expansion into its 50th state, Wyoming. Orangetheory now has more than 1,200 studios in 50 states and 22 countries…Birkenstock Americas opened its 2nd US location, in Venice Beach, CA. It comes after the successful opening of the brand’s first US store in Manhattan’s SoHo neighborhood in 2018…Old Chicago Pizza & Taproom has opened 10 new restaurants in the last year, with 4 more locations set to open in the coming months. By year-end 2019, Old Chicago will have a presence in 25 states…The Container Store has opened a new store concept called The Container Store Custom Closets at its redesigned location in Los Angeles. A second Custom Closets location will open by the end of the year in Dallas…Ross Stores Inc. opened 22 Ross Dress for Less and 6 dd’s Discounts stores across 10 different states in June and July, part of the company’s plans to add approximately 100 stores in 2019, with 75 Ross and 25 dd’s Discounts locations. As part of this wave of openings, Ross entered Ohio and now operates in 39 states...Michaels Jewelers, the 10-store CT chain based in Waterbury, has been purchased by Camile Hannoush, one of the owners of Hannoush Jewelers. Hannoush doesn’t plan to change anything about Michaels, though he will open a new store in the National Harbor Casino in Oxon Hill, MD., the chain’s first store outside CT in decades…Marathon Petroleum Corp. will rebrand 700 stores it acquired from Andeavor to its Speedway convenience store banner by the end of 2019. MPC’s Speedway LLC subsidiary has already rebranded more than 400 stores...Sprouts Farmers Market will expand into new markets, with 6 stores in 2 new states during the second quarter...Noodles & Co., which has 395 company-owned units and 62 franchised units, is planning for 5% unit growth system-wide, with the potential to grow to 7% unit growth in subsequent years…Liberty Tax will acquire The Vitamin Shoppe, which operates 750 stores, in an all-cash transaction valued at approximately $208 million. Liberty Tax, the parent company of Liberty Tax Service, recently acquired retailer Buddy’s Home Furnishings. The Vitamin Shoppe deal is expected to be completed in the fourth quarter.

Decelerating Retail News

Yum! Brands said Pizza Hut will likely decrease domestic locations by nearly 500 stores over the next two years as the brand closes underperforming dine-in restaurants and swaps them out for modern express stores. Pizza Hut closed 2018 with 7,482 US restaurants...The iPic Entertainment movie theater-restaurant chain has filed for Chapter 11 bankruptcy protection. The 16-location operation will remain open while financial problems are resolved…Walgreens Boots Alliance plans to close about 200 US stores. Earlier this summer, the company announced it was reviewing its portfolio in the US, where it operates approximately 10,000 stores…Steak n Shake burger chain has closed 106 restaurant locations since the beginning of 2019 with 67 of these closures occurring in the second quarter. The decision to close was made as Steak n Shake faces reduced customer traffic at its locations. Total locations fell to 307 at the end of the quarter…Perkins & Marie Callender’s Inc. filed for bankruptcy protection and closed 29 Perkins Restaurant & Bakery and Marie Callender’s restaurants. Perkins has 342 locations; Marie Callender’s has 7 company and 21 franchised restaurants…Barneys New York filed for bankruptcy protection as it looks to find a buyer. The 96-year-old luxury retailer will shutter its stores in Chicago, Seattle and Las Vegas and Seattle, along with 5 smaller format stores and 7 Barneys Warehouse locations. The closings will leave Barneys with 5 flagships, including its outpost on Manhattan’s Madison Avenue...TransformCo. announced that 21 Sears stores and 5 Kmart stores will close in late October.  TransformCo. said it could not rule out additional store closings in the near-term as it works  to return the company to profitability. Liquidation sales at the 26 locations are expected to begin around August 15...Women’s fashion retailer A’Gaci filed under Chapter 11 in the United States Bankruptcy Court, with the intention to close all 54 of its retail stores.

New England Retail News

G Group, UK-based parent company of EG America, entered into an agreement to acquire Westborough, MA-based Cumberland Farms, which operates approximately 600 convenience stores in seven Northeast states and Florida. The acquisition will take the EG Group’s US network to nearly 1,700 stores in 30 states…Trader Joe’s is coming to Boston’s Seaport District, with a 15,000-20,000 s/f store in the same structure as Trillium Brewing Co. in Fort Point...Freedom Wind Tunnel Indoor Skydiving plans to open at Patriot Place in fall of 2020…Shake Shack is coming to Boston’s Downtown Crossing this fall, the third Boston location for the hamburger chain... Nantucket’s first cannabis shop, the Green Lady Dispensary, opened this month on an appointment-only basis after receiving approval to operate from the state’s Cannabis Control Commission.

Mall News

GNC plans to shutter approximately 900 stores, mostly in malls. As of June 30, GNC had approximately 8,000 locations, of which approximately 5,900 are in the US, including some 2,000 in-store shops at Rite Aid locations. There are currently GNC stores in over 800 malls…Toys “R” Us is returning with two 6,500 s/f locations at Simon’s The Galleria in Houston and at Westfield Garden State Plaza in Paramus, NJ, with additional locations in prime US retail markets expected to open in 2020. The stores are a joint venture between Tru Kids and technology retailer B8ta. Tru Kids bought the intellectual property of Toys “R” Us, including the brand names of Toys “R” Us, Babies “R” Us, and Geoffrey the Giraffe, after the chain’s bankruptcy filing and liquidation last year...The Village at Burlington (MA) Mall will welcome the next round of personal services, retail and restaurants as part of Simons’s redevelopment of the property. Caffe Nero will open  as part of phase one of the redevelopment. Additional new arrivals in the coming months include uBreakiFix cell phone repair services; Modern Acupuncture; and Gyu-Kaku Japanese BBQ ... Foot Locker is teaming with Nike to roll out interactive “Power stores”, four times as big as typical Foot Locker stores. The newest opened this month in Manhattan. The retailer plans upwards of 50 over the next 3 years. It has 3 in the US today: 1 in Detroit and 2 in Philadelphia... The holding company for Lolli and Pops candy store chain filed for Chapter 11 Bankruptcy protection in the state of Delaware, and has closed all stores, including many in malls owned by Brookfield Properties. Lolli and Pops launched in 2012 and quickly grew to 72 locations across the country. Brookfield partnered with Lolli and Pops in 2017, and has since opened 40 locations at its malls... Boston-based online furniture retailer Wayfair opened its first full-service retail store in Massachusetts at the Natick Mall this month.

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 rose 0.7% last month, after a 0.3% gain in June.

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® rebounded in July, following a decrease in June. The Index now stands at 135.7 (1985=100), up from 124.3 in June.

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

PURCHASING MANAGERS INDEX

Manufacturing expanded in July, as the PMI® registered 51.2 percent, a decrease of 0.5 percentage point from the June reading of 51.7 percent. This is the lowest reading since August 2016, when the index registered 49.6 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