HOME EQUITY BOON SLOWS, RETAIL TO SUFFER
Homeowners leveraged low interest rates and rising home values to pull $279 billion out of their homes in 2005 through cash-out refinancing, up from $185 billion in 2004. Retail growth will moderate this year as interest rates rise and home price appreciation cools.
Capital is flowing freely across regions as retail investors seek higher yields in new markets. Exceptions to the trend include public REITs, which accounted for almost half of the acquisitions in the Northeast. In contrast, private REITs are showing a greater preference for the Southwest.
THE BIERI REPORT:
|Third Street Promenade||A|
|Del Amo Fashion Center||A|
|Grove at Farmers Market||B+|
|Northridge Fashion Center||B|
|Galleria at South Bay||B|
|Los Cerritos Center||B|
|Santa Monica Place||B|
|Fox Hills Mall||B|
|Montebello Town Center||B-|
|Puente Hills Mall||B-|
|Santa Anita Fashion Park||C+|
|Media City Center||C+|
|West Covina Fashion Plaza||C+|
|Antelope Valley Mall||C+|
|Eagle Rock Plaza||C+|
|Promenade at Woodland Hills||C|
|Avenue of the Peninsula||C|
The city of Los Angeles defines the urban sprawl phenomenon in America. Downtown shopping is not significant. Beverly Hills, however, houses the second most important collection of street luxury shops in the United States.
Street shopping has come and gone and is back again with projects replacing or reconfiguring street locations, including Farmers Market, Hollywood and Highland, Third Street Promenade and Montana Avenue in Santa Monica. Malls abound, pushed by department stores, and developers have typically followed the freeway path. Los Angeles has a huge appetite for retailers of all price points and most have very successful locations.
Century City has a new second level, and Topanga is undergoing a major expansion, adding nearly 600,000 square feet. When completed it will include 100 new specialty shops, a new Neiman Marcus and an expanded Nordstrom. Victoria Gardens has just opened, while Mills is undertaking a major redevelopment of Del Amo Fashion Center.
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.
GO WEST … AND SOUTH
The 16 states with the fastest growing populations during the first half of this decade were in the West, South and mid-Atlantic regions, according to the Census Bureau. On an absolute basis,, Texas and Florida added the most residents, accounting for 41 percent of the total U.S. population increase from 2000 to 2005. Population growth fuels employment growth, so it's no surprise, says Grubb & Ellis, that the states with the fastest growing populations are creating a lot of jobs and a lot of demand for all types of real estate.