Thursday, June 27, 2019

Preview: KeyPoint Report forSouthern NH 2019

While the 2019 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:

Inventory and Vacancy Rate: The retail inventory in Southern New Hampshire included 29.9 million square feet in 2019, indicating a modest increase of 107,800 square feet from a year ago. However, vacancy rose by 130,600 square feet, increasing the vacancy rate to 9.7% from 9.3% last year. The closings of two Sears stores in Manchester and Salem, as well as a Walmart store in Bedford, are largely responsible. Staples also closed one of its two stores in Nashua, while Mattress Firm vacated four stores. Offsetting these vacancies were new stores that now occupy a number of former large vacancies. Ocean State Job Lot moved into a vacant Toy R Us box in Salem, while Bed Bath & Beyond joined Boston Interiors in occupying the former Hannaford store. XtremeCraze, a trampoline and laser tag entertainment venue, opened in the former TJMaxx store at Apple Tree Mall in Londonderry, which had been vacant since 2016. Another backfill occurred in Nashua where HomeGoods and Sierra Trading Post, its first store in New Hampshire, opened in a vacant Sports Authority store.

Size Classifications: Although the vacancy rate in Southern New Hampshire ticked upward this year, there was one size classification that showed remarkable improvement and that was the 25,000-49,999 SF segment, declining from a vacancy rate of 14.1% to 10.9% this year. Much of that was attributed to the large format backfilling of vacant stores such as Toys R Us, Sports Authority, and TJMaxx mentioned above. The 10,000-24,999 SF classification also made significant improvement. Conversely, the 100,000-199,999 SF segment was hit hard by department store closings, resulting in a rise in the vacancy rate from 2.5% to 6.8%. The 5,000-9,999 SF size range was the only other size bracket that was adversely impacted by more than 100 basis points.

Regional Submarket Rankings: There has been no change in the top ten largest regional markets for the second year in a row: Nashua continues to rank first with 6.4 million square feet of inventory; Manchester follows at 5.3 million square feet; and Salem is a distant third at 3.9 million square feet. Seabrook and Bedford follow with 2.0 million square feet and 1.5 million square feet, respectively.

Among towns with at least 500,000 square feet of retail space, Salem remains the lowest in vacancy rate for the third consecutive year at 6.0%, the same as last year. Derry is a runner-up for the third straight year, coming in at 6.1%. Merrimack remained in third place again this year at 6.5%. The Merrimack 360 project in Merrimack, a 67,300 square foot redevelopment of the former Shaw’s anchored shopping center, which had partially opened last year, is nearing full occupancy.

Among towns with the highest vacancy rate, Seabrook remained in the top spot with a vacancy rate of 16.3%; the Sam’s Club vacancy was largely to blame for the high level. Bedford jumped from 10th to 2nd place on the heels of the Walmart closing. Manchester remains in third place at 12.1%.

Retailer Activity: With respect to expansion by store count, no retailer added more than two stores in the region this year; in fact, there were only two that added that many: Verizon Wireless and California Burritos. D’Angelo’s closed six sandwich shops. Payless ShoeSource closed five stores following its announcement to liquidate. Mattress Firm closed four stores.

Expanding the most by square footage was Ocean State Job Lot, which took over the former Toys R Us unit in Salem. Bed Bath & Beyond followed by filling the remainder of the vacant Hannaford store in Bedford. Core Medical Group, a medical staffing agency, came in third, opening as an anchor to The Shoppes at 655 South Willow, a new mixed-use project located on the site of a former manufacturing plant in Manchester. Sears heads the list in space contraction after closing two stores in Manchester and Salem. Walmart is next on the list, vacating a store in Bedford. Staples was third following the closing of its Amherst Street store in Nashua.

Expect to see a lot more on the Southern New Hampshire retail market when we publish the 2019 KeyPoint Report later in July!

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

The KeyPoint Report for Southern New Hampshire examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during the period from July 2018 through June 2019. The study area includes 39 cities and towns, representing more than 835 square miles and approximately 567,600 permanent residents (42% of the state population).

The 2019 KeyPoint Report for Eastern MA/Greater Boston is available now at KeyPointPartners.com.
The report for Greater Hartford, CT will follow soon.

KeyPoint Partners Company News

KeyPoint Partners, LLC has released The KeyPoint Report for Eastern Massachusetts/Greater Boston 2019. This comprehensive retail real estate Report examines supply, occupancy, absorption, and retailer expansion and contraction for virtually every retail property in the region. The KeyPoint Report is based on KeyPoint Partners’ GRIIDĂ”, a powerful source of retail market knowledge that maintains detailed information on virtually every retail property in key New England markets. The Eastern Massachusetts Report includes 189 cities and towns, representing more than 3,500 square miles (44% of Massachusetts’ land area) and approximately 5.3 million people (77% of the state population). The complete KeyPoint Report can be accessed here or at at KeyPointPartners.com.



National News

US retail sales increased 0.6% in May, with broad-based gains, the Commerce Department said. Retail sales excluding autos and gas rose 0.5%. “Nonstore” retail sales rose 1.4% in May, the strongest gain since January. See sales reports below.

Accelerating Retail

ZIPS Dry Cleaners has a development pipeline of more than 250 franchise stores slated to open over the next 3 years. ZIPS has nearly 60 locations in 8 states…Fast-casual restaurant Coolgreens has 6 locations, and plans to open 8 more US units by the end of 2019…Dollar General plans to open 975 new stores, remodel 1,000 locations, and relocate 100 stores during fiscal 2019….Burlington Stores will open a net of 50 new stores during the fiscal year…For Five Coffee will open at 2 office buildings in Northern VA. The company has 6 locations in New York, with 2 more planned, plus 2 in Los Angeles and 1 in Chicago...CVS Health will open additional HealthHubs in Houston, Atlanta, Philadelphia/ New Jersey and Tampa this year. Long-term, it plans to have a total of 1,500 HealthHubs operating by the end of 2021... Versace plans to open more than 100 stores by 2022. The brand’s owner, Capri Holdings Ltd., said it’s planning to increase Versace’s global footprint from about 188 stores to 300 stores by 2022 while renovating existing locations. A full refurbishment program is expected for 28 US Versace stores...Krispy Kreme plans to open a 4,500 s/f flagship store in early 2020 in Times Square...Cannabis/CBD brand Green Growth has opened more than 50 shops under its Seventh Sense banner during the past four months, and expects to open over 200 shops this year. Green Growth had announced a partnership with Brookfield Properties to open more than 70 shops at Brookfield’s US shopping centers throughout the United States...Online women’s shoe brand Rothy’s will open 5 stores this fall and promises more in 2020. The 5 locations will be in the New York’s West Village, on Boston’s Newbury Street, Georgetown in Washington, DC, and 2 in Los Angeles...Neighborhood Goods will open its second location, in Manhattan’s Chelsea Market.. Neighborhood Goods made its debut in late 2018, at Legacy West in Plano, Texas…Fat Brands has acquired Elevation Burger in a $10 million deal.  Elevation Burger franchises 44 locations in the U.S. Fat Brands has made several acquisitions since it was taken public in 2017, including Ponderosa and Bonanza steakhouses, Hurricane Grill & Wings and Yalla Mediterranean. The company’s chains now operate more than 400 restaurants... Tru Kids Inc. CEO Richard Barry, former executive at Toys ‘R’ Us, plans to open a half-dozen Toys ‘R’ Us stores in the US for the 2019 holiday season. The new Toys ‘R’ Us stores will be about 10,000 s/f, about a third of the size of the closed ones. A new online store will open as well... Another Broken Egg CafĂ©, a restaurant concept that specializes in breakfast, brunch and lunch and closes at 2 pm, has signed 9 new franchise agreements, resulting in the development of 28 new units in the southern and western US. The company, which currently operates 68 locations in 12 states, has set a goal of 300 units by 2025... Pet Supplies Plus signed 22 agreements representing 46 new franchise store deals in the first half of 2019. The new stores will be developed across Texas, Florida, California, Michigan, Kentucky and New Hampshire. Pet Supplies Plus currently has in 460 locations in 33 states... Private equity firm L Catterton will acquire Del Frisco’s Restaurant Group for $650 million, subject to shareholder approval. L Catterton plans to run bartaco and Barcelona Wine Bar separately from De Frisco’s Grille and Del Frisco’s Double Eagle Steakhouse. L Catterton has invested in Bloomin’ Brands, Cheddar’s Scratch Kitchen, P.F. Chang’s, Uncle Julio’s, among others…Line Friends, an Asian brand based on characters from popular Japanese messaging app Line, opened its second US store on Hollywood Boulevard in Hollywood, CA.  Line Friends opened its first US store in 2017 in Times Square, followed by a Hollywood pop-up last year. Line Friends now operates some 140 global stores... Fried chicken chain The Crack Shack is set to expand beyond its home market of California this year. Since its debut in 2015, the brand has opened 4 more locations in Southern CA, including two in Los Angeles last year. A Crack Shack is scheduled to open at the Park MGM in Las Vegas in August.

Decelerating Retail

Abercrombie & Fitch Co. plans to close its Hollister flagship in Manhattan’s SoHo district and has exercised the kick-out clause for its flagships in Fukuoka, Japan, and Milan, Italy...Kohl’s Corp. will close its Off/Aisle by Kohl’s locations in August. Kohl’s debuted the off-price format, designed to sell merchandise that customers had returned to Kohl’s full-price stores, in 2015 in NJ.  The company went on to open three additional locations in the Milwaukee area…Barnes & Noble has agreed to sell itself for $476 million to an arm of investment firm Elliott Management, which owns U.K. bookstore chain Waterstones. With 627 stores in 50 states, Barnes & Noble is the nation’s largest bookstore chain... Francesca’s expects to close at least 30 locations this year. The company ended the quarter with 722 stores...Lululemon closed its two men’s only stores, in SoHo and Toronto…Fred’s Inc. is closing an additional 49 stores, with going-out-of-business sales underway as of June 21. The pharmacies in the locations will remain open. The chain has announced the closure of a total of 263 stores during the past two months. After the combined 313 closures, Fred’s will be left with 244 stores...Pier 1 is looking to close some 57 locations in its current fiscal year, higher than the chain’s previous estimate of 45, which it gave back in April. At that time, Pier 1 ended the quarter with 967 stores, down 30 from the year-ago period.

New England

Frank Pepe Pizzeria Napoletana opened at the Burlington (MA) Mall this month, the company’s 11th location, taking over half of a former Uno pizzeria.... Paris Creperie has been a Coolidge Corner staple for 16 years. Now, the creperie has opened a second location on the ground floor of the One Seaport building at 60 Seaport Blvd. Along with crepes, the new location will offer a beer, wine, and cocktail menu.

Mall News

Red Robin Gourmet Burgers is closing 10 underperforming restaurants. The chain has 572 stores in operation. 7 of the 10 restaurants tagged for closing are located inside malls. The closings will leave Red Robin with 66 mall locations…Gap Inc. expects to close about 30 company-operated stores, net of openings and repositions, in fiscal 2019. The company plans 10 store openings for both Old Navy and Athleta…During fiscal 2019, Express expects to close 11 retail stores and convert another 27 to outlet stores. Express operates more than 600 retail and factory outlet stores in the US and Puerto Rico...YM Inc., new owner of Charlotte Russe, is re-launching Charlotte Russe retail outlets across the US, with 5 of 100 planned locations already open. YM, a Toronto-based clothing manufacturer which operates more than 560 stores across North America, purchased the Charlotte Russe brand in March when its parent company filed for bankruptcy. YM’s store banners include Urban Planet, Bluenotes, Urban Kids, West 49, Sirens, Suzy, and more.

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

U.S. retail sales increased 0.6% in May, the Commerce Department said. There was a rise in auto sales, but retail sales excluding the sector rose 0.5%, the government said. April sales were revised up to a 0.3% gain from the initial report of a 0.2% fall.

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® improved in May, following an increase in April. The Index now stands at 134.1 (1985=100), up from 129.2 in April.

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

PURCHASING MANAGERS INDEX

Manufacturing expanded in May, as the PMI® registered 52.1 percent, a decrease of 0.7 percentage point from the April reading of 52.8 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