SEATTLE SOARS

The top 10 markets in Marcus & Millichap's National Retail Index show dramatic differences compared to the near-term view on the 2005 NRI. Seattle soared to No. 1, from No. 15, while Phoenix, Las Vegas and Atlanta all moved into the top 10, compared with only top 20 finishes in the shorter-term ranking. The reason is simple, says Marcus & Millichap: momentum. Seattle's retail outlook is supported by total employment growth of 8 percent, or 120,000 jobs over three years. Seattle also offers one of the lowest retail inventories per capita.

MARCUS & MILLICHAP NATIONAL RETAIL INDEX
MSA 3-YEAR RANK 2005 RANK CHANGE
Seattle 1 15 ▴ 14
Orange County 2 2 ▪ 0
Phoenix 3 11 ▴ 8
Oakland 4 20 ▴ 16
Las Vegas 5 12 ▴ 7
San Diego 6 1 ▾ 5
West Palm Beach 7 5 ▾ 2
Riverside-San Bernadino 8 6 ▾ 2
Atlanta 9 14 ▴ 5
Fort Lauderdale 10 4 ▾ 6
Source: Marcus & Millichap

RENT SPIKES

Retail rents in New York have surged in the past six months. “Space continues to be in demand as national chains and international tenants are now confident enough to commit,” says Robin Abrams, executive V.P. of The Lansco Corp. and co-chair of the Real Estate Board of New York's retail committee.

$226 Up 46%*

Soho Broadway Corridor

$189 Up 38%

Flatiron District

$160 per square foot Up 38%

Overall East Side

$127 Up 13%

Overall West Side

$126 Up 45%

Battery Park and Chambers Street

$103 Up 6%

Overall Manhattan

$90 Up 38%

125th Street Corridor

$82 Up 14%

Overall Downtown

*Six months through March 31.
Source: REBNY Retail Report

FRAUD FADS

“Fraudulent and abusive returners — camouflaged in the T-shirt and jeans uniform of the average shopper — are launching a multi-front attack on the retail industry,” according to a report by the Center for Retailing Studies, sponsored by IBM and Texas A&M University. “These secret operatives are draining $16 billion annually [according to King Rogers International] from retailers' coffers and costing the average household of four $225 a year.” The center's Retailing Issues Letter attributed much of the retail fraud and abuse loss to the increasing trend by consumers to “borrow” clothes to wear to one event and then return them as if new.

THE BIERI REPORT: CHICAGO

CHICAGO MARKET
SHOPPING CENTER RANKING
900 N MICHIGAN AVE B+
Charlestown Mall C
Westfield Chicago Ridge C
Deer Park Town Center B
Evergreen Plaza D
Ford City C
Westfield Fox Valley Center B
Geneva Commons B-
Glen Town Center B-
Golf Mill Center C
Gurnee Mills A
Harlem Irving Plaza B-
Westfield Hawthorn Center B+
Lincoln Mall C-
Lincolnwood Town Center C
Westfield Louis Joliet Mall C
Main Place at Orland Park B
Westfield North Bridge B+
Northbrook Court B
North Riverside Park Mall C+
Oakbrook Center A+
Westfield Old Orchard Center B+
Orland Square Mall B+
Randhurst Shopping Center C
River Oaks C+
Spring Hill Mall B-
Stratford Square B
Water Tower Place A+
Wheaton Town Square B-
Woodfield A
Yorktown Shopping Center B-

Downtown Chicago's shoreline along Lake Michigan is a magnet for intensive commercial and high-rise residential development of the highest quality. The storied Magnificent Mile boasts perhaps the finest and most comprehensive collection of full-price luxury stores in America. Michigan Avenue hosts Bloomingdale's, Lord & Taylor, Marshall Field's, Neiman Marcus, Nordstrom and Saks Fifth Avenue, plus an extensive collection of luxury stores, specialty shops and restaurants.

Within the mix of extremely successful commercial activity downtown, standout shopping centers include Water Tower Place, 900 N. Michigan Ave. and Westfield North Bridge. Water Tower Place is considered one of the nation's most successful urban vertical centers, both in terms of foot traffic and sales per square foot.

Chicagoland is home to many successful open-air and enclosed regionals supported by affluent customers, such as Oakbrook Center, Westfield Old Orchard Center, Northbrook Court and Woodfield. Westfield America plans to extensively redevelop Hawthorn Center. Far north of the city, Gurnee Mills performs at acceptable levels with an off-price/entertainment focus.

Other successes among suburban centers and older neighborhoods include long-productive sites, as well as recently gentrified areas. One highlight is the eclectic Lincoln Park area, with its growing and improving mix of attractive housing and good street shopping.

The information presented for traffic estimates and regional malls is gained from a variety of sources used in developing the Bieri Market Reports. These sources are public and private, and may even include the developers themselves. When traffic counts are not available, grades are determined by reviewing sales of anchor stores and specialty tenants within a subject project, and then comparing those with like projects.

ORIENT-EXPRESS LEADS HOTELS IN RETURNS

Although hotel REITs outperformed the SNL REIT Equity Index when examining year-to-date total returns through March, it was hotel real estate operating companies that ended the first quarter in positive territory, outperforming both hotel REITs and the SNL REIT Equity Index. (See cover story on hotels in mixed-used projects starting on page 28.)

MARCUS & MILLICHAP NATIONAL RETAIL INDEX
COMPANY NAME CLOSING PRICE ($) 3/31/05 TOTAL RETURN YTD (%)
Orient-Express Hotels Ltd. $26.10 27.03%
Choice Hotels International Inc. 61.95 7.24
John Q. Hammons Hotels Inc. 21.59 6.62
Marriott International Inc. 66.86 6.30
Starwood Hotels & Resorts 60.03 2.79
Hilton Hotels Corp. 22.35 -1.63
InnSuites Hospitality Trust 1.31 -4.39
La Quinta Corp. 8.50 -6.49
Interstate Hotels & Resorts Inc. 4.82 -10.07
Lodgian Inc. 10.25 -16.67
Source: NAREIT