Special from NREIonline.com
Terry Brown could never be accused of being pollyannish about the health of the U.S shopping center industry. The chief executive of Edens & Avant says America is over-retailed — “we don’t need 25 square foot of gross leasable area per person in the country, that’s ridiculous” — and that a stubbornly high unemployment rate of 9.9 percent nationally threatens sustained growth in retail sales.
But privately held Edens & Avant, which develops, owns and operates community-oriented shopping places in primaryon the East Coast, isn’t remaining idle. The Columbia, S.C.-based company whose portfolio includes 140 centers in 14 states, is about to break ground on a 500,000 sq. ft. Target-anchored shopping center at the intersection of Lee Highway and Gallows Road in Fairfax County, Va.
It is also in the midst of redeveloping several older shopping centers in its portfolio, including Merchant’s Walk in Marietta, Ga., set to be completed by early 2011. A new Whole Foods Market will complement existing retailers Old Navy, Kohl's, Stein Mart, PetSmart and a movie theater.
On Sunday, the opening day of the 2010 ICSC RECon in Las Vegas, NREI spoke with Brown on the show floor about the company’s strategy as well as the current retail climate.
NREI: How is your portfolio performing, and what is your assessment of the retail market today?
Brown: Foot traffic has definitely picked up in our centers, and retail sales have picked up a bit. Our occupancy at its peak was around 96 percent. It troughed to around 92 percent, and has been hovering at that level. We might hit 93 percent by the end of the year.
Over the last 60 days, retail sales for virtually every retailer have been positive in terms of same-store comparables. But that’s compared with first-quarter 2009, which probably was one of the worst quarters of the last 80 years. So, retailers are still very cautious.
The last few weeks have served as a reminder. The stock market was down 900 points [in intraday trading], then up 300 points. There is still a lot of uncertainty surrounding the debt crisis in Greece. It’s hard to find an employment report from any economist that shows something under a 9.5 percent unemployment rate in the U.S. at the end of 2011. There have been 8 million reported jobs lost since the recession began in December 2007. We’re not going to get sustained growth in retailer sales until we putback to work.
I know that consumer confidence is up, consumer sentiment is up, and net worth is up, but 10% of the workforce unemployed is a big number. We think that we’ve troughed in every single market including Florida at this point, but we see this being a rocky, long, extended recovery.
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