The National Retail Federation (NRF) in April responded to growth in several major economic indicators by raising its retail sales estimate for 2002.
NRF's Retail Sales Outlook — which provides forecasts for a sales category that includes tenants commonly found at malls and shopping centers — predicted an annual increase of 6% compared to a previous estimate of 3.7%. “The mini-recession we experienced in 2001 is over after one quarter of negative growth,” says Rosalind Wells, NRF's chief economist. “The recovery has begun, and it has come sooner and with more vigor than anticipated.”
Factors contributing to the turnaround include strong consumer spending, an improving job market, robust home sales, and a more positive corporate outlook, Wells says.
Dr. Roger Tutterow, director of the Econometric Center at suburban Atlanta's Kennesaw State University, says consumer spending helped the recovery considerably by picking up the slack of corporate America, which avoided making major capital investments during the downturn.
“It really hasn't been that deep of a recession if you look at it in the broad sense,” Tutterow says. “But if you focus on the stock market — where there's a heavy reliance on capital spending in sectors such as technology and telecom — it looks a lot worse than the general economy.”
And there's more good news on the retail front: The National Association of Realtors (NAR) recently projected that net absorption in the retail sector will rise from -12 million sq. ft. in first quarter 2002 to 26 million sq. ft. in the fourth quarter. NAR says net absorption should reach 146.6 million sq. ft. in 2003 — four times the level projected for this year. (For more on the effects of vacancy on retail real estate, see “The Balance of Power,” p. 68.)