2009 Retail Forecast

Jim Makens

The Makens Company

 2008 Predictions
 Wal-Mart growth of market share slows down

 Grocery retailers expand in the DFW

marketplace, capturing market share
 New Mixed-Use and Power Centers which are
not already under construction, may be pushed
back into the next year
 Lease-up of existing centers is slower, with
landlords providing greater finish out allowances
and possibly some free rent
 Some of the traditional national pad site users
slow in expansion
 Changing Consumer
 Consumer spending accounts for 70% of
total U.S. GNP
 Expect deep discounts

 Less credit, more cash

 Trading down

 Low consumer confidence and tight

credit translates to less, more frugal
spending
 Changing
Changing Retailer
Retailer

Deep discounting
2008 retail sales down 1.7%
(average)
Reducing employees
Increased online shopping
 Changing Retailer
 Cater to younger (16-28) age
group
 Use of direct mail coupons
 Value retailers move up
 Reduced expansion, unprofitable
store closings, footprint
shrinkage, rent re-negotiating
December Sales 2007 vs. 2008
 Most Impacted Retailers
Retailers with high debt ratio
High end products and
services
Retailers with current small
market shares/weak position
going into 2009
Categories of Retail Centers

 Wal-Mart  Power Centers

 Mixed-Use Centers

 Neighborhood Centers  Convenience Centers

 TODs
 Wal-Mart
x
 Since 2004 Wal-Mart has been the No. 1
seller of groceries in Dallas Fort Worth
 2008 global net sales were $371B, up from
$348B in 2007 ($63 million dollars a day
increase)
 DFW still has the largest concentration of
stores of any major metropolitan area in the
U.S.
 Wal-Mart’s grocery market share is 38.42%
up 0.65% from 2007
 Fort Worth area Grocery Market
Shares*
%Loss/Gain
2005% 2006% 2007% 2008% 2007-2008

Wal-Mart** 31.2 34.92 37.77 38.42 + 0.65

Kroger 14.5 16.47 15.30 15.61 + 0.31
Albertson’s 18.1 12.34 10.69 8.64 - 2.05
Tom Thumb 9.8 11.42 10.78 10.75 - .03
Others 26.3 24.85 25.46 26.58 + 1.12

*Source – Shelby Report

** Includes SuperCenter and Neighborhood Grocery
 Grocery Expansion
Aldi
Anticipated 40 DFW stores
17,000 sq. ft.
Head to head with Wal-Mart
Sprouts & Market Street
continue cautious expansion
 Power Centers
 250,000 – 600,000 sf of leaseable area
 1 – 3 Major anchors of 125,000-150,000
sf, i.e. Target, Wal-Mart, theatres, Lowe’s,
Home Depot, J.C. Penney’s
 Several Junior anchors of 20,000 sf, i.e.
Ross, Office Depot, PetSmart
 Small shop space (about 15% of anchor
space)
 Several pad sites (banks, fast food, gas)
 Power Centers
3.7 Million sq. ft. of Power
Centers in Fort Worth area
1% Negative net absorption
Continued increasing
vacancies
 Mixed Use Centers
● 150,000 to 1 million + sq. ft.
● Several components with a retail center as the focal point
● Often includes a municipal building such as a City Hall or
library
● High density residential or office space is another component
often included
● Entertainment may be a component such as a theatre, sports
stadium, or performing arts complex
● These developments are usually designed to promote
pedestrian traffic
● Southlake Town Square is an example of a Mixed-Use
development with a retail center & town hall as the central
focal point
Southlake Town Square

FM 1709 (Southlake Blvd.) @ Carroll St., Southlake

● 1.2 Million sq. ft GLA ● Theatre, City Hall, townhomes
● 98% Occupancy Level ● Model Development
● Built 1928 ● Redeveloped to Mixed Use
● 470,000 sq. ft. Retail ● 240 Residential Units
● 92% leased ● Spurred 7th Street revival
Museum Place
Museum Place

● 11 Acres ● 130,000 s.f. Office

● 1,050,000 s.f. ● 500 Residential Units
● 170,000 s.f. Retail ● Hotel
West 7th

● 1.1 Million s.f. ● Residential

● 350,000 s.f. Retail ● Hotel
● Office ● Restaurants
The Shops at SOSEVEN

South of Montgomery Place & north of Lancaster Blvd.

Phase III
● 60,000 Retail ● 71 Residential Units
● 20,000 Office ● Projected May opening
 Alliance Town Center

SEQ I-35 @ Heritage Trace, north Fort Worth

● 200 Acre development ● Phase II 250,000 s.f. Retail
● Pioneering Mixed Use ● 70,000 s.f. Office
Glade Parks, Euless, TX
Glade Parks

SWQ of Hwy. 121 @ Glade Rd., Euless

● 130 acres ● 120 Brownstones
● 800,000 sq. ft. Retail ● 478 Apartments
 Neighborhood Centers

 80,000 to 150,000 sf including the anchor

 Ten to twenty acres of land

 Supermarket anchor with gas station

 2-3 additional pad sites

 Retail shop space of 25,000 to 40,000 sf

 Convenience Centers
 Not anchored

 Locate near larger anchored centers

 Follow residential growth

 Many mom & pop tenants & medical

professionals
Transit Oriented Districts (TODs)

 Mixed Use Development including

commercial and residential

 Anchored by a mass transit station

 Reduce Traffic congestion

Transit Oriented Districts
 2009 Predictions
 Many high end retailers will close locations
 Landlords will have to pay higher finish-out
dollars to secure leases
 Shopping Centers that are poorly leased will go
back to lenders
 Overall retail vacancy will increase, Convenience
Centers and Power Centers being the most
impacted, Mixed Use and Grocery anchored
centers will fare the best
 2009 will be a buying opportunity for
underperforming Shopping Centers
 Grocery Stores will start to expand again
 TODs begin to emerge