Last week at the Atlanta International Council of Shopping Centers (ICSC) convention, one of the speakers asked for a show of hands if the recession was over or not. Needless to say, the large majority raised their hands to show that no, it’s not over. While I agree that we are far from out of this recession, there are some signs of improvement in the retail industry.
In the first nine months of 2010, same-store sales, year-over-year, rose by 3.4 percent. Yes, it’s anemic, and yes we are comparing this to the lack luster 2009, it’s still an increase!
At the same convention, ICSC forecasts that holiday retail sales will increase by 3 to 3.5 percent over 2009 levels, the largest jump since 2006. Again, it’s anemic, but it’s also an increase!
While there are many reasons for this increase, one of the factors that is often overlooked is the flexibility and creativity that brokers/leasing professionals, and owners have demonstrated in negotiating new leases, lease renewals, and options. Is it a coincidence that waiving the standard 3% annual rent increase helped a retailer’s bottom line, and kept “the lights burning”?
The bright spots on the horizon are the discounters and the luxury sector, while the middle sector will be the last to show improvement. Other constant bright spots will be the recession-proof sectors such as fast-food, cosmetics, hair-cutters, and home improvement stores.