When Gar Herring, president and CEO of Dallas-based developer The MGHerring Group asked a luncheon crowd at ICSC's Southeast Conference in Atlanta on Tuesday if they thought the recession was over, an overwhelming majority of hundreds of attendees raised their hands to show they feel it isn’t over yet.
Just a year ago, commentators were comparing the U.S. economy to that of the Great Depression of the 1930s, Herring said, but despite the prevailing sentiment that shopping center developers, owners and managers are still enduring hard times, there are a number of signs that the industry is improving.
Same-store sales rose in the first nine months of 2010 on a year-over-year basis by 3.4 percent, according to ICSC, said Herring, who is vice president of the group’s Southern division. And ICSC forecasts that holiday retail sales will increase by 3 to 3.5 percent over 2009 levels, the largest spike since 2006.
“Conditions are improving, albeit slowly,” says Herring. “We can draw encouragement from the fact that retailers and shopping center operators have responded creatively to the many challenges thrown their way since the dark months of 2009.”
Shopping center professionals and brokers have put their leasing, management and marketing skills to “the sternest imaginable test,” and now shoppers are returning and traffic is up at the retail centers, says Herring. “Retailers have generally shifted from a position of having to mark down a glut of excess inventory to selling at full price.”
However, the retail tide is not yet lifting all boats. The discount sector remains strong and the luxury segment of the industry has been strengthening, but the middle market has been slower to rebound.
Discounter Dollar General plans to expand its 9,100 stores by another 1,200 within two years. Fast food retailer Burger King plans to add 500 stores, while Quiznos will add 1,200.
As jobs and consumer spending lead to greater sales and profits for retailers, and renewed demand for store space in malls and shopping centers, retail leasing is expected to strengthen further.
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