One of the single-biggest reasons behind the continued strength of retail real estate has been that despite a series of shocks to the system — wars in Afghanistan and Iraq, the housing bust, exploding gas prices and deadly hurricanes — Americans have kept shopping. Consumer spending seemed to weather every storm despite warnings from many quarters that a demise was imminent.
So when the same-store figures for April came in showing it had been the worst month in the nearly 40 years that same-store sales stats have been tracked, one had to wonder if it was a momentary hiccup or the beginning of the oft-predicted death knell of the American consumer.
At the ICSC Convention, most seem to be voting for the former. The combination of it being the coldest April in a decade, high gas prices and the April shift that pushed more Easter-related sales into March laid the groundwork for one bad month. But everyone seems to have put that behind them now.
“Retailers aren’t looking at April,” says Greg Maloney, president and CEO of retail for Jones Lang LaSalle. “Every single retailer I talk to says they’re looking at the first four months together.” And from that view, they like what they see, he says.
One professional who is a bit more worried is to Eric Lutz, principal of Farmington Hills, Mich.-based Lutz Real Estate Investments, who says April sales were a preview of what’s to come, primarily laying the blame on the troubles in the single-family housing market. “So many people have gotten variable rate loans, plus another factor is the halo effect — if you thought your house was worth $100,000, and now you realize it’s worth only $30,000, you are more hesitant to go to the mall,” Lutz says.
Timothy W. Murnane, senior vice president and general manager of real estate with Opus, says he thinks troubles have to do with particular sectors rather then there being across the board problems.
“Some retail such as home improvement may be going through a rough period whereas others like Target and JCPenney are picking up the slack,” he says.