CPN - February 2009 - (Page 25)

retail center,” said David Jacobstein, a senior advisor to Deloitte L.L.C.’s real estate group and former president & COO of Developers Diversified Realty Corp. FULL HOUSES The saturation quantities below represent the largest gaps between potential sales activity and actual spending in select retail segments among the markets listed on Nielsen Claritas’ Affluence Index. A market is considered saturated when sales exceed projected potential sales activity. CLOTHING/ACCESSORIES DEPARTMENT STORES 2008 Saturation 2008 Saturation MORE THAN MEETS THE EYE Core Based Statistical Area Population (in millions) Core Based Statistical Area Population (in millions) Whatever the investor’s preNew York City-NJ-PA 19M 9,042 San Diego-Carlsbad, CA 3M 1,614 ferred strategy, the value of a Los Angeles-Long Beach 13.3M $2,453 Los Angeles-Long Beach, CA 13.3M $588 retail asset is only as good as its Washington, DC-VA-MD-WV 4.3M $737 Naples, Marco Island, FL 333,295 $203 ability to bring in customers— Boston-Cambridge-Quincy, MA 4.5M $633 Vallejo-Fairfield, CA 421,678 $193 and revenue. Munoz argues that Seattle-Tacoma-Bellevue, WA 3.3M $507 San Jose-Sunnyvale, CA 4.3M $155 an investor can learn a great Bridgeport-Stamford-Norwalk, CT 901,429 $452 Trenton-Ewing, NJ 370,641 $144 deal about the long-term investSan Diego-Carlsbad, CA 3M $406 Santa Rosa-Petaluma, CA 476,532 $136 ment value of a retail property Kahalui-Wailuku, HI 144,043 $332 Hilo, HI 177,290 $114 by looking at the potential marNaples-Marco Island, FL 333,295 $274 Kahalui-Wailuku, HI 144,043 $84 Trenton-Ewing, NJ 370,641 $176 Kapaa, HI 64,061 $78 ket for its individual store categories. Most bellwether retail categories have seen sales slip BUILDING MATERIALS/GARDEN SUPPLIES ELECTRONICS/APPLIANCE STORES or stall during the past year.Yet 2008 Saturation 2008 Saturation a close look at market supply Core Based Statistical Area Population (in millions) Core Based Statistical Area Population (in millions) and demand suggests that there Washigton, DC-VA-MD-WV 5.4M $947 Los Angeles-Long Beach, CA 13.3M $4,443 is more to the issue than meets Sacramento-Arden, CA 2.1M $814 New York City-NJ-PA 19M $1,171 the eye. Even among upscale San Diego-Carlsbad, CA 3M $708 Washington, DC-VA-MD-WV 5.3M $605 Naples-Marco Island, FL $333,295 $665 San Diego-Carlsbad, CA 3M $419 markets, there is no hardBend, OR $159,560 $522 Seattle-Tacoma-Bellevue, WA 3.3M $299 and-fast rule for determining Barnstable Town, MA $223,611 $434 San Jose-Sunnyvale, CA 4.2M $288 which ones offer the greatest Bridgeport-Stamford-Norwalk, CT $901,429 $406 Boston-Cambridge-Quincy, MA-NH 4.5M $247 untapped potential for a given Bozeman, MT $84,398 $326 Sacramento-Arden, CA 2.1M $163 type of store. Ocean City, NJ $96,204 $301 Santa Rosa-Petaluma, CA 476,532 $118 Consider apparel retailers, Hilton Head Island-Beaufort, SC $169,612 $296 Naples-Marco Island, FL 333,295 $79 which have seen sales decline steadily during the recession. Source: Nielsen Claritas Nielsen Claritas research confirms WAREHOUSE CLUBS/SUPERSTORES that many major and midsize mar2008 Saturation ket supply and kets are indeed saturated by clothing the biggest margin are Sacramento; Market Population (in millions) Seattle-Tacoma-Bellevue, WA 3.3M $1,141 stores from the perspective of sup- Boulder, Colo.; Torrington, Conn.; demand reveals Bend, OR 159,560 $273 Santa Cruz,Calif.;and Lexington,Md. that their potenply and demand. The conclusion Fairbanks, AK 88,088 $211 Surprisingly, Nielsen Claritas data tial sales growth emerges from data comparing a marHilton Head Island-Beaufort, SC 169,612 $70 ket’s buying capacity—its potential reveals that a surplus of one type of and long-term Santa Rosa-Petaluma, CA 476,532 $41 investment expenditures in a retail category— store does not rule out growth Vallejo-Fairfield, CA 421,678 $41 potential in a market for another value vary conwith actual consumer spending. Carson City, NV 55,550 $29 Nielsen Claritas found that mar- store in an overlapping category. siderably. The Edwards, CO 59,428 $5 ket saturation by clothing stores Serving as anchors for hundreds of Seattle-Tacoma centers, department stores offer market is an upoften marks large, economically mature metropolitan areas, such as some of the same products as more and-coming investor favorite. Yet investors and their capital sources Greater New York City, Los Angeles specialized merchants like clothing overall supply of warehouse-style have long relied on market analysis and Washington,D.C.,as well as mid- stores.Yet five of the top 10 upscale centers there, as measured by esti- and horse sense. Munoz does not size markets like the Bridgeport- markets that tend to be oversub- mated revenue, outstrips potential entirely dismiss the value of comStamford-Norwalk region of Con- scribed by apparel stores—New demand by $1.4 billion. Meanwhile, mon sense, but he cautioned that in some well-established markets like lenders and equity partners will necticut and New Jersey’s Trenton- York City and its environs; WashLos Angeles, Boston and San continue to demand more detailed, Ewing area. As investors evaluate ington, D.C.; Seattle; Boston; and Bridgeport-Stamford, Conn.—are Francisco, Wal-Mart-style stores still persuasive market analysis from centers or individual stores for have plenty of potential for sales investors. He predicted, “You’re acquisition, that raises the question underserved by department stores. Another area worth exploring is growth. In those markets, barriers to going to see a shift from gut feel to of how much those stores may contribute to the long-term investment the warehouse-style store that has entry encountered by club stores fact-based decisionmaking.” —Reach retail editor Paul Rosta growth potential of the centers emerged as a solid performer and help ratchet up the sales growth at paul.rosta@nielsen.com. where they are located. Despite the valuable anchor in the current cli- potential--and therefore, the value--of mate.Owners that intend to sell cen- existing stores, Munoz explained. national decline in apparel-store Visit www.cpnonline.com for a CPNToday’s unpredictable markets sales, some upscale markets remain ters anchored by these assets can Nielsen Claritas opportunity/surplus rightly point to sales growth that require a shift in investment strate- report on supermarkets, specialty grocery underserved. Among the markets stores and restaurants. where potential exceeds supply by beats other stores. But data on mar- gy. Like retailers themselves, www .cpnonline.com • Februar y 2009 • COMMERCIAL PROPERTY NEWS 25 http://www.cpnonline.com http://www.cpnonline.com

Table of Contents Feed for the Digital Edition of CPN - February 2009

CPN - February 2009 Contents Starting Line Buzzworthy Office Data/Analysis Washington, D.C., Market Profile Ranking: Mortgage Banks & Brokerage Firms Top Deals of 2008 Mortgage Banking Mexico Brokerage Sustainability CPN-Nielsen Claritas Special Report Resource Guide

CPN - February 2009

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