Monthly Archives: May 2010

Revealing National Retail Trends

Recently, I participated in a round table discussion with other retail experts in Southern CaliforniaShopping Center Business just published the following article about that discussion entitled “Revealing National Trends.”

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Feature Article, May 2010 – Shopping Center Business

“Revealing National Trends

Southern California Roundtable leads to discussion of trends that can be applied nationally.
Roundtable moderated by Jerrold France and Randall Shearin

Shopping Center Business held a retail roundtable hosted by Holland & Knight at the City Club on Bunker Hill in Los Angeles.

Shopping Center Business recently held a retail roundtable in Los Angeles, hosted by the law firm of Holland & Knight at the City Club on Bunker Hill. Attendees of the roundtable were Pat Donahue, Donahue Schriber; Sandy Sigal, Newmark Merrill; Jill Bensley, JB Research Co.; Jeff Kreshek, CIM Group; Bill Stone, Excel Realty; Jeff Green, Jeff Green Partners; Mark Schurgin, The Festival Companies; Greg Lyon, Nadel Architects; Julie Brinkerhoff-Jacobs, Lifescapes International; Tamsen Plume, Holland & Knight; Karl Lott, Holland & Knight; and Susan Booth, Holland & Knight.

SCB: Southern California is an important market as a lot of retail trends are created here. What do you get as an overall sense of the market here?

Donahue

Donahue: We are better off than we were a year ago. There were relatively no transactions last year. Things are starting to thaw out. We have exposure to four states and Southern California held up much better than Northern California, Arizona, Nevada and Oregon. Our occupancy in Southern California is even with a year ago, where our portfolio is off 400 basis points. Our rents in Southern California year over year are flat to plus two, versus a portfolio that was negative 11. Out of our entire portfolio, 80 percent is in California.

Stone: Our concentration is in the Southeast [United States]. The Southeast has been better; we have a number of centers there at 100 percent occupancy. When you go to the centers, not only are the parking lots full, but there restaurants are full. There are not as many people shopping out west. The whole country has been waiting for the other shoe to drop. In California, everyone is worried about the state. There has been some hesitation here on the part of people to go out and spend. People are holding their money.

Bensley: I looked at the personal savings rates back to the 1960s. This year, the savings rate is 3.3 percent, and that is down, which is good for the shopping center industry because consumer spending is two-thirds of our economy. Last year, it was about 5 percent. In 1991, during the last recession, the savings rate was at 7 percent. In the 1980s, it was at 10 percent. It just shows you the transition of what we’ve done in taking out money from our homes. That is where all that money came from. It was the spending of cash that was then all lost with the value of our houses.

Donahue: We, as a country, took on more debt in the last 7 years than in the previous 40 years combined.

Bensley: It is astounding. It is bad for retail when people save more, but at some point we have to even out.

Donahue: If we go to what we were doing, we will all be out of business. We have to have a positive savings rate. The idea that you are supposed to live above your means is not good. I’m thrilled we’ve shifted to a positive savings rate. It is going to wreak havoc on our business, there’s no question, but it is going to weed out the people who shouldn’t be in this business. Circuit City, Linens ‘N Things and Mervyn’s only lasted 12 months in the downturn. These aren’t retailers who weathered the storm. They shouldn’t have been in business when they were. This recession is weeding those players out. At the end of the day you will come back with a much stronger economy, a much stronger country, and consumers who are doing the right things. We can’t be leveraging ourselves into this.

(Left to right) Stone, Schurgin and Sigal.

Sigal: A lot of the retail failures were a function of the credit markets shutting themselves off. We are seeing a return of some financing to the marketplace. There are the haves and have nots — there are tenants who have access to the capital markets and the REITs who have access. The have nots are just holding on for dear life. If their debt gets called they are done. California is such a large market, you can’t say ‘California is recovering.’ We have centers in the inner city, denser communities. That customer has continued to visit because there is nowhere else to go. Our tenants are the 99 Cents Only and the discounters. In this kind of environment, their marketplace has grown. They have the base who has no one else to go and they have a new group of shoppers. A lot of people will discover retailers like Walmart, K-Mart and Target, and once they discover it, they will keep going. Our L.A. region has seen no increase in vacancy. We are still at 95 percent. In San Diego, we’ve been affected; we are 400 basis points worse there, just around 90 percent. It is a function of high rents and it is dependent on the housing market. The Colorado market has been our best market. It has been steady…

Click Here to read the rest of the article at Shopping Center Business.

HOW I WILL SPEND MY SUMMER VACATION

11 Bedroom Home in Tuscany

How can you go on a fantastic summer vacation and stay within a budget? With the recession impacting every area of our lives, we are all looking for ways to economize without giving up lifestyle.  I found a great way to go on a fabulous foreign vacation and pay just a fraction of the cost.

I recently had dinner with a friend whose company builds timeshares in beautiful and exotic locales.  He was talking about their target market, namely Boomers seeking vacations that connect with multiple generations:  kids, parents, grandparents and even great-grandparents.  For this, a family can pay up to $50,000 for a one to two week time period scheduled annually.

“What about home exchange,” I asked him.

“Oh, I’ve heard about that, how does it work?”

For those of you who don’t know this service, it is a very cost-effective way to temporarily trade your home with someone anywhere in the world.  You register with a website and pay about $10 per month to have your home registered for exchange.  You have access to more than 35,000 listings all around the world.  Of course, you make your property sound gorgeous and desirable when you list it, providing pictures of your home when it had just been landscaped and was clean and sparkly.  This gives you access to some incredible homes in a chosen summer, Christmas, Winter or any season location.  We chose Madrid, Barcelona, Paris, Athens and Sydney for our first try.  I know this doesn’t sound like a list of places with much in common!  But we are being extremely flexible since we will pay only for airfare.

View from a Villa on the Greek Island of Paros

And oh, how beautiful are some of the homes!  A 16th century castle in Northern England; a seven-room apartment in Paris; a drug lord’s mansion in Costa Rica (just kidding, but it looked like it could be owned by someone selling questionable substances).  Like Christmas, you send out emails from your own home page to places that pique your interest.  Then, you wait!  Most we have received are from nice families telling us they already have their plans/exchanges complete for the summer.  But we also received several intriguing responses.

There are a few drawbacks.  First, you can’t be obsessive about your house.  I wouldn’t leave any priceless art on the walls.  And any electronics, you might find them nonfunctional when you return, if you leave them available.  But with these few caveats, you have the world at your fingertips!

A few ways this may not work:  1) Your house is not very attractive; 2) You don’t live in a desirable location; or    3) You don’t want strangers staying in your house.

Villa in Vence, France

I am thrilled about the possibilities and we are currently waiting to confirm our location for summer vacation with our grown children and their girlfriends.  Still, I am wondering if this service has impacted the fractional/timeshare world?  Post your comments or email me about your multi-generational vacations.  I am anxious to hear stories about home exchange or other creative ways of vacationing these days!

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All pictures are actual listings at HomeExchange.com.