Will Santa Be Naughty to Retailers?
Bells are ringing, but does this mean cash registers are jingling? We asked some of San Diegoâ€™s top retail brokers what theyâ€™re hearing this holiday shopping season.
CDC Commercial president Don Zech tells us San Diego retail vacancies have creeped down, but owners and retailers are still experiencing pain. One thing to remember, though: you can't get your hair cut on the Internet. (True, but we did get our extensions caught in the printer once.) Savvy mom-and-pops are service-oriented. You can get a decent set of golf clubs at Dick's, but a smart mom-and-pop may craft the clubs to your game, adapt them for your arthritis, give lessons, and embroider the golf bag, and the customer doesn't care that they spent more. Retailers are saying their store sales aren't as good as last year, but their online business, if they have one, has seen a 20% to 100% increase.
A big trend is academic institutions backfilling difficult, long-vacant retail spaces and rejuvenating markets. Earlier this year, Don and his son Nick repped John Paul the Great Catholic University (above) in the purchase of a 24k SF building, bringing young people downtown to dine and shop. (The building sat empty for a decade after the original occupant, a JCPenney department store, moved out, kicking off the area's decline.) The duo also repped the landlord in a 7,000 SF lease for a Taylion online school in San Marcos that will open the first of January.
Colliers International SVP Rick Puttkammer (center, with sons Blake, Chris, and Geoff, and wife Kim) says this has been the shortest shopping season since 2002, with six fewer days. (Husbands, this is not an excuse.) "Everybody's kind of scrambling to pack it all in." Nearly 50% of the shopping will get done from now till Christmas, with Saturday likely to be the second-busiest day behind Black Friday. On the capital markets side, San Diego is one of the top six or seven metro areas in the country, and anything available in the county is seeing multiple offers and sometimes overbid. On the leasing side, with limited supply in the top properties, retailers are singling out preferred shopping centers--asking if any leases are expiring soon and committing in advance to take any available space.
According to Flocke & Avoyer president Steve Avoyer (third from right, with his team), Santa's toting a mixed bag. Apple might be at the top of many landlords' wish lists, he notes, but even it has some stores that perform better than others (although its "bad" stores might be better than most everyone else's good stores). Expansion has slowed for many of the larger retailers, and mom-and-pops still haven't recovered, but fast-food and value-oriented retailers such as Ross and Marshall's are doing great. Nobody can really predict how this season will turn out, he says; in the past, retailers have said it would be a grim Christmas before the last 48 hours turned out to be record-breakers. "There's basically a week left, and in those seven days, the world can change." (Reached for comment, John Mayer says he'll be "waiting.")
On a more upbeat note, Cassidy Turley VP Chad Iafrate (with wife Chanda and their 7-month-old son, Parker) has been looking at the sales reports on existing retailers, and the numbers are positive. He handles leasing at Lake Elsinore Outlets, where Puma has exceeded its sales projections since opening six weeks ago, including 40-minute checkout lines on opening day. However, "it's a bifurcated market," he says. The "nice, shiny stuff"—Class-A trophy properties in the higher-density, more affluent trade areas—are back to pre-recession vacancies and rents are starting to increase. The secondary and tertiary shopping centers and submarkets are slower to come back. What's on his wish list? For Parker to have a great first Christmas.