Where is the Bright Spot?…RETAIL

The past six or so months have been “a bit” challenging. It seems every which way we turn we are bombarded with national statistics pronouncing unfavorable projections, negative reports, and downbeat news. Are those projections, reports and news coverage true? For the most part, yes. Does that set a negative tone, bring us down and freeze future action? Of course! We need to change our focus from the negative to the “bright spots” occurring at the same time, beneath the headlines. We can make the choice as to what news and events we pay attention to.

Retail has definitely been hit by these challenging times. However, like everything else there are bright spots in the current retail market… So, where are these supposed bright spots?

Fast food restaurants featuring discounted value menus are doing very well. Times are tough for all as expendable income has decreased and consumers are looking for bargains. This area of the industry should continue to grow even after the market rebounds.

Grocers had sound performance in 2008, and 2009 should follow suit. National grocers such as Wal-Mart and Kroger added new locations, while Winco Foods and Sunflower Farmers Market announced plans to enter the market with multiple locations. Local grocers such as Harmons are standing strong as well. Again, with expendable income decreasing, consumers are tightening their belts by staying home and cooking meals. The exception of eating out is of course fast food value meals.

Local businesses with single concept outlets are taking advantage of the current market and opening additional locations.

This is a “tenants market” and will be for at least two more quarters. This is the time to “blend and extend,” as many in the industry are coining the term. Work a new deal and extend leases with landlords to keep spaces from going dark. Likewise, landlords should welcome and present new creative ways of keeping space from going dark to “non-traditional” retail tenants.

Owner user opportunities are more attractive because of new SBA lending guidelines, which have decreased the exposure to local banks. This is another area of the market, in addition to local leasing where deals are getting done.

It isn’t all doom and gloom. People are cautiously optimistic and we believe we will see a rebound in the third or fourth quarter of this year. Even though there is no new product coming online, existing product vacancy will stabilize or decline.

If you have weathered the economy this long, you should make it through to see the other side. Keep open communication and welcome new and creative ideas. There are bright spots!

Rick Newton is one of eleven Retail Specialists in the Commerce CRG, Salt Lake City office. Rich can be reached at 801.303.5485 or rnewton@commercecrg.com.

Reproduced with permission of The Enterprise, Utah’s business journal, www.slenterprise.com.

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