Retail
In addition, the price levels in 2023 fell by 12% as compared to 2022. The average capitalization rate paid in 2023 was 6.75% for asset sales over $15M. Woolbright, like many investors, expects that retail property values and volumes to improve significantly in 2024 as the Federal Reserve cuts interest rates.
I had the honor of hosting the Special Industry Groups Development forum, where I shared insights on the market and the upcoming retail developments in Florida. In the video below, I breakdown over 2,000 hours of research my team conducted over the last 12 months that will give you all you need to know.
Download the full presentation deck.
Please click on the links below to see the details for each new project.
2020 Annual Openings: Florida Major Markets
From 2014 to 2021, the market cap of these top 20 companies shrank by $4.4 billion. Those that did manage to grow in size only did so through the acquisition of competitor companies.
Take Kimco, for example. In 2021, they bought WRI’s 29 million square foot portfolio. And yet, between 2014 and 2021 Kimco’s GLA only grew by 10 million square feet. This means that were it not for the WRI acquisition, Kimco’s total GLA would have actually contracted by 19 million square feet in those six years. Similarly, Kimco’s market cap appears to have increased by $3.1 billion in that same six-year period. And yet, when we consider that they acquired Weingarten with a $4.8 billion market cap, were it not for that purchase, Kimco would have lost $1.7 billion in value. And yet, Kimco’s stockholders paid 7.6% in general and administrative fee and awarded Kimco’s CEO $7.7 million in compensation for the privilege.
Talk about a herd of big, inefficient elephants in the room.
Big box space comprises 75% of the retail inventory in Florida and represents 80% of sales. Far from shrinking, in 2021 big box retailers added 182 locations across the state and added a net of 4.0M SF of new space. So clearly, neither the retail apocalypse or the pandemic are affecting the big box players.
Small shops, meanwhile, represent all of the retail contraction in Florida, closing a total of 480 stores statewide. But the majority of these closures were not from retailers or restaurants ‒ those national tenants closed only 38 and 31 stores, respectively, which represents only a minor post-Covid adjustment. Instead, the majority of the national retailer contraction was felt in the service industry and in the banking sector. While the pandemic may explain the challenges faced by the service industry, banks were primarily affected by two factors. First, SunTrust and BB&T merged into Truist, a move which directly caused 50% of the branch closings. Second, the continued rise in online banking has impacted the banking industry as a whole, prompting the entire sector to operate more efficiently.
This might seem alarming, but it isn’t an apocalyptic indicator that retail is dying; rather, the data indicates that the nature of retail itself is changing. With the rise of curbside pickup, delivery services, and front-door stores seeing increased back-door sales, the average square footage of retail space per person in the state will contract over the next decade and retail development will nearly stop. In the 1980’s, Florida had approximately 17 sf retail space per person. By 2030, we will return to that level. This is just another system that is going through self-optimization.
South includes: AL, GA, NC, SC, TN, VA
Openings: 82 stores
Ace Hardware Corporation: 1
American Freight: 1
Ashley Furniture: 1
Badcock Furniture: 3
CVS: 1
Dick’s Sporting Goods: 1
Dollar General: 27
Dollar Tree: 5
Esporta Fitness: 7
Family Dollar Stores: 5
Floor and Decor: 1
Food Lion/Delhaze: 6
Habitat for Humanity: 2
Harbor Freight Tools USA: 3
Kirkland’s, Inc.: 1
Lidl: 1
Marshall’s: 2
Pet Supplies Plus Inc.: 2
Planet Fitness: 2
Publix: 3
Sears: 1
Total Wine & More: 1
ULTA: 3
Walgreens: 1
Wegmans Food Markets: 1
Closings: 52 stores
Ace Hardware Corporation: 1
Badcock Furniture: 3
Bargain Hunt: 1
buybuy Baby: 1
CVS: 1
Dollar General: 9
Dollar Tree: 1
Family Dollar Stores: 4
JC Penney: 2
K & W Cafeteria: 1
Kirkland’s, Inc.: 1
LA Fitness: 7
Marshall’s: 1
Office Depot: 8
Office Max: 1
Petco: 1
Piggly Wiggly: 1
Regal Cinemas: 1
Save-A-Lot: 2
Sears Appliance: 1
Total Wine & More: 1
True Value Company: 1
Walgreens: 2
Openings: 65 stores
Ace Hardware Corporation: 1
Aldi: 4
American Freight: 1
Ashley Furniture: 2
CVS: 1
Dick’s Sporting Goods: 1
Dollar General: 20
Dollar Tree: 3
DSW Shoe Warehouse: 1
Family Dollar Stores: 2
Five Below: 2
Food Lion/Delhaze: 1
Gold’s Gym: 1
Habitat for Humanity: 1
Harbor Freight Tools USA: 6
Harris Teeter: 1
Lidl: 6
Old Navy: 1
Ollie’s Bargain Outlet: 1
Pet Supplies Plus Inc.: 1
Planet Fitness: 3
Publix: 2
True Value Company: 1
ULTA: 2
Closings: 17 stores
Aldi: 1
Ashley Furniture: 1
Badcock Furniture: 1
Bed Bath & Beyond: 1
Dollar General: 3
Dollar Tree: 1
Five Below: 1
Gold’s Gym: 1
Habitat for Humanity: 1
JC Penney: 2
Save-A-Lot: 2
True Value Company: 1
Walgreens: 1
Openings: 30 stores
Ashley Furniture: 1
Bealls Outlet: 1
CVS: 1
Dollar General: 10
Dollar Tree: 5
DSW Shoe Warehouse: 1
Family Dollar Stores: 2
Five Below: 1
Harbor Freight Tools USA: 2
LA Fitness: 2
La-Z-Boy Incorporated: 1
Planet Fitness: 1
Sears Appliance: 1
Walgreens: 1
Closings: 8 stores
Dollar General: 2
Family Dollar Stores: 2
JC Penney: 1
Kirkland's, Inc.: 1
Office Depot: 1
Walgreens: 1
Openings: 20 stores
Ashley Furniture: 1
CVS: 1
dd's Discounts: 3
Dollar General: 8
Family Dollar Stores: 1
Five Below: 1
Ollie's Bargain Outlet: 1
Pet Supplies Plus Inc.: 1
Regal Cinemas: 1
ULTA: 2
Closings: 5 stores
Ashley Furniture: 1
CVS: 1
Dollar General: 1
Office Depot: 2
I follow many of the top ecomomic thinker blogs and in a recent post on Calafia Beach Pundit, Scott Grannis summarizes my thoughts exactly on current market conditions.
Conditions in the US look fantastic these days. Prices for lots of goods and services are soaring. Retails sales are at all time highs. Job openings are at record highs. Financial markets are awash in liquidity, and financial market conditions in general are about as good as they have ever been. Debt service burdens for most people are at all-time lows. The stock market is on the cusp of new all-time highs. Corporate profits are booming. Air travel is surging.
“Private sector jobs have recovered almost 70% of what they lost due to the Covid-19 shutdown. ”
The economy has recovered just about all it lost to the Covid-19 crisis. Household net worth is at all-time highs in nominal, real and per capita terms. Private sector jobs have recovered almost 70% of what they lost due to the Covid-19 shutdown. Vaccines and natural immunity have all but vanquished Covid-19. Conditions are improving daily, with no near-term end in sight. On the inflation front, expectations currently remain reasonably anchored at around 2.5%.
The open air REITs have nearly recovered all of their COVID losses. The average open air REIT's stock is currently only about 10% below their pre-COVID levels. At this price level, the stock market is indicating that open air centers are currently worth about 5% less than their pre-COVID prices. We predict a full recovery by the end of 2021. Onward!
Illustration by Hugo Lin. ThoughtCo.
The short answer is not much. I determined this several years ago at my cottage on the Saint Lawrence River.
First, I plotted on the x-axis the actual sales for over 100 stores operated by a large grocery chain in Florida.
Next, I plotted two different values for each center on the y-axis: a) the center’s occupancy rate and b) the center’s asking rental rate.
If the sales were correlated with either item then the (x,y) points would follow a straight line. Unfortunately, the plot looked like a shotgun blast. There was no correlation between the grocery anchor’s sales and either center’s rents or occupancy level. In other words, the sales did not convey any information about the rest of the center.
So, the next time some genius goes on and on about how good their center is because the grocery anchor or any other anchor has “high sales”, just let them know that there is no correlation with anything meaningful. Now you are the genius.
Onward!
Repost from Progressivegrocer.com
Walmart has dropped the $35 minimum order requirement for express delivery. Express delivery promises that customers will receive their merchandise within two hours. We are watching the transformation of retailing.
Onward! There is no retail apocalypse.
Openings: 17 stores
Ace Hardware Corporation: 1
Crunch Fitness: 1
CVS: 1
Dollar General: 5
Dollar Tree: 2
Family Dollar Stores: 4
Floor and Decor: 1
Planet Fitness: 2
Closings: 2 stores
Ace Hardware Corporation: 1
Michaels Stores: 1
Here is what I use to see the future
How can you see the future? Unfortunately, there is no crystal ball, but the next best thing is the prediction markets that harvest the wisdom of the crowds to come up with the best guess for the future. Predictions based on betting, date back to 1503 when bets were placed to predict the next Pope.
What do you use? Please post it to the comments. #future #investing #retail #markets
