We recently posted a blog on how the recent extreme weather much of the country has faced could impact commercial real estate as a whole. Well, it looks like the retail sector somewhat suffered, according to a recent Marcus & Millichap research report.
The report primarily blamed the poor weather for a 0.2 percent dip in core retail sales (excluding auto and gas), as well as unemployment insurance ending for 1.3 million people in December and slowing personal-income gains. While this is by no means a drastic sales plunge, the weather definitely played a big role in this slight retail decline.
There wasn’t all bad news. Grocery and home-improvement stores saw their sales increase, and Marcus & Millichap’s research team doesn’t says that retail spending is 14 percent above pre-recession levels, and vacancy levels continue to decrease.
However, two major chains, JC Penney and Red Lobster, are having problems that could eventually spell trouble for landlords, and “shoppers’ budgets are increasingly stretched to maintain current consumption levels,” the report says.
Meanwhile, the largest retail real estate landlords don’t currently have much to complain about, according to an International Council of Shopping Centers news report on the sector’s largest REITs.
All of the major companies reported on, whether they own and operate shopping center or mall portfolios posted NOI and rental rates during the fourth quarter. For shopping centers, Federal Realty Investment Trust’s 4.3 percent increase in same-center NOI growth was most impressive. At malls, General Growth Properties saw a 6.2 percent improvement.