realestate
In 2023, only 6 projects were completed, with 5 more in 2024, and just 3 scheduled for 2025. Notably, 70% of the projects in the 3-year pipeline are mixed-use developments. Explore the full list of new projects by clicking the link below.
Notably, prices in 2023 tumbled by 12% compared to the previous year. The average capitalization rate paid in 2023 stood at 6.75%, signaling a significant 20% decrease in value for asset sales over $15 million. Amid these challenging circumstances, investors like Woolbright anticipate a turnaround in 2024, with hopes pinned on the Federal Reserve's potential interest rate cuts to reignite the retail property market.
South Markets include: Atlanta, Nashville, Charlotte, and Raleigh/Durham
Even among the top 10, the top four: Wells Fargo, Truist, Band of America and Chase are all in "the 400 Club" and each of them operates over 400 branches. While Florida's population has record growth, the top 10 banks are still shrinking by 1.5%. In 2023, they closed 41 branches out of the nearly 3,000 they operate in the state. Amongst the top four, Wells Fargo and Truist both shrank by about 5% which is a substantial contraction. On the other hand, Bank of America and Chase basically remained unchanged. In 2023, Fifth-Third Bank grew by 10% and TD Bank grew by nearly 5%. As Florida's population continues its record growth, Woolbright predicts that over the next 5 years, Florida's banks will start to expand once again with much of that growth likely coming from the smaller banks.
In 2023, there was a net increase of 172 new restaurant locations or a growth rate of 1.2%, which is in line with the pace of population growth. Starbucks was Florida's restaurant growth leader with 38 new stores. The top 8 companies accounted for nearly all of the net gain. On the other hand, there were three companies, Burger King, Boston Market and Subway, that combined closed just over 100 stores in 2023. To achieve the 1.2% growth, the restaurant companies opened 519 new locations and closed 347, so there is a constant battle with small gains in this highly competitive business.
In recent years, there were 3 openings for every 2 closings, but in 2023, Bed Bath & and Tuesday Morning closed a combined 101 stores which cancelled out the expansions. In 2024, Woolbright forecasts a return to big box openings far exceeding closings.
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.
Dollar General and Publix led the 100 companies operating big box stores in Florida. Today's leaders are far different than past years where mega chains like Walmart, Target, Lowes, Home Depot and Costco dominated.
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!
Fresh Markets was bought by Apollo in 2016. They have a weak balance sheet with $800M of bonds that require 9.75% interest payments. Back in April, the Fresh Market bonds were selling for less than $0.50, but today they have rocketed up to $1.03 because COVID brought a strong increase in sales. Help me understand what happens to Fresh Market when sales return to pre-COVID levels?
Major open-air retail REIT stocks had a major rally over the last 30 days and they have now recovered more than half of their losses. Clearly, investors see green shoots, but there is still a long way to go. As a group the REITs are trading at a huge discount to their NAV, net asset value. REITs own about 20% of major metro retail assets. Is the market telling us that the nimble entrepreneur shopping center owners will beat out the big corporate players? I'm rooting for the little guy!
History is on our side - they may well be the "roaring 2020's". The average time between recessions has grown from about two years in the late 1800s to five years in the early 20th century to eight years over the last half-century.
It’s been 13 years since the last recession began in Dec. 2007. That’s the longest we’ve gone without starting a new recession ever, going back to before the Civil War. Hopefully, the roaring 2020's will be a decade without any downturns.
Onward!
Enclosed malls are only 10% of US retail space. There are over 50,000 open-air centers and just over 1,000 malls. The bottom half the malls will close in the next 5-10 years and yet, those closings will have NO impact on the US economy. It's the circle of life. There is no retail apocalypse.
