Signs of Improvement in Retail

November 16, 2010

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!

Joaquin Canals, Broker, NAI Carolantic Realty

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.   

Market Activity

August 12, 2010

Many of you may know that NAI Carolantic has researched and reported on the commercial real estate market for over 25 years as it relates to vacancy, absorption, new construction, etc.  However, you may not know we also track market ‘activity’ in several ways.

One of the ways we study activity is by the number of prospects in the market looking for property to buy or to lease.  In the first quarter of 2010, we saw an increase in activity, followed by a decrease in the second quarter.  Recently, however, we have started to see an upswing in activity. Things are not getting better as quickly as we might hope, but they ARE getting better.  I’m thankful I am living in the Research Triangle area and so are many of my clients. 

Richard Hibbits, Vice President,

As an example, despite being hammered for the last two years, most of my retail clients have survivied thankfully.  None of them expect a quick return to a buoyant economy, but they would be the first to tell you they are also glad to be in the Research Triangle area instead of almost anywhere else in the country.

Job Recovery

August 6, 2010

In a recent report by the NAI Global national economist, Dr. Peter Linneman, he stated all major industries except for the information sector have registered employment gains.  He noted, “Aside from the government sector (591,000), the largest absolute job increases were in professional and business services (314,000), manufacturing (108,000), leisure and hospitality (95,000), and trade, transportation, and utilities (74,000)”.

In our market, the Raleigh-Cary metropolitan area gained 22,100 private-sector jobs between June 2005 and June 2010, the fifth best total among the 100 largest US metros according to the US Bureau of Labor Statistics.  This was the biggest job gain of any metropolitan statistical area outside of Texas.  Eighty-four major markets suffered declines in private-sector employment during the half-decade, while only 16 finished on the upside as reported by the Triangle Business Journal.

Just this week, additional positive job growth news included Caterpillar’s plans to expand its manufacturing facility in Lee County adding 325 jobs to its operations in Sanford over the next four years.    A Caterpillar supplier is also expected to locate 160 workers at the Sanford site bringing the expansion’s job total to 485 new positions.  Triangle Business Journal reported Caterpillar was offered almost $5 million in economic incentive grants from state and local governments to pick Sanford over a competing site in Florence, South Carolina.

Jake Plotkin, Broker, NAI Carolantic Realty,

I think you would agree we live in a unique area.  We have an educated workforce, a strong housing market, low cost of living and a high quality of life.  These traits are just a few reasons why Wake County has experienced such strong job growth since 2005 (rated #5 by Manpower out of all US Cities).

The US and North Carolina Continue Toward Economic Recovery

May 4, 2010
Jimmy Barnes

Jimmy Barnes, SIOR, President of NAI Carolantic Realty

According to the Washington Daily News, North Carolina unemployment dropped from roughly 535,000 in February to about 496,000 in March. Promising news as well from the News and Observer, which said, “The broad-based household survey of jobs shows statewide employment up for four consecutive months (December to March) and increasing at an average monthly rate almost twice as fast as in the nation.”  AW North Carolina is just one of many companies contributing to this advantage. The transmission supplier for Toyota is investing $100 million and adding 360 jobs at its Durham plant according to SYNC newsletter.

Nationally, Wells Fargo’s Weekly Economic & Financial Commentary reports that real GDP grew at a 3.2% annual rate during the first quarter of 2010 and that consumer confidence was up 5.6 points in April.

Our NAI Carolantic brokers report a continued increase in activity with deals actually being closed.  After a slow start to the year, we have had over 20 leases signed and several sales transactions in just the last 45 days  Our listings, not unexpectedly, have increased 35% and clients are asking us for assistance more than ever.  Please give us a call if we can be of help to you in analyzing your real estate position:  919-832-0594.

Turning the Corner

April 21, 2010

Jim Adams, Broker, NAI Carolantic,

As NAI Carolantic continues its commitment to tracking the information that will best help its clients make informed business decisions, positive signs are emerging that bode well for the future of the market on micro and macro levels.

In the April 19th issue of Business Week, staff writer Mike Dorning contradicted the polls with hard evidence of a national economic recovery.  Among other things Dorning mentioned that manufacturing has been recovering for eight straight months, and that economists are revising GDP growth forecasts for 2010 from 2.1% to 3%.  While recovery remains slow without a new driver for the economy, it seems that in spite of the recession woes and psychology, the indicators for a favorable return on a national level are present.

Locally, our region continues to receive positive national press with high rankings in various studies.  Raleigh-Cary was recently named as the ‘Third Best Place in the Country for Business and Careers’ by and Durham metro ranked 23rd.  The study ranked the 200 largest metropolitan statistical areas on cost of doing business; educational attainment; and economic, income, job and population growth. 

There are also tangible signs that the Triangle economy is on the rebound.  While liquidity from debt sources remains in short supply and underwriting stringent, at NAI Carolantic we are working with many well capitalized buyers that are seeking buy opportunities either with no debt or with a low debt to cost ratio.  As the economy continues to improve, banks and other lending institutions predict that current lending restraints will ease…a process that appears to already be underway.