The Five Retail Trends to Watch in January 14, 2015

Transcription

1 The Five Retail Trends to Watch in 2015 January 14, 2015

2 U.S. ECONOMIC TRENDS

3 Inflation Adjusted Crude Oil Prices Fall Below Long-Term Average Price per Barrel (Nov Dollars) $160 $120 $80 $40 $0 Long-Term Average: $ * * Through January 11 Oil prices for West Texas Intermediate crude Sources: Marcus & Millichap Research Services, Energy Information Administration, BLS

4 U.S. GDP Growth Accelerates Numerous Drivers in Unison Annualized Quarterly Percent Change Industrial Starts (in millions) 10% 5% 0% -5% -10% * * Forecast Sources: Marcus & Millichap Research Services, BEA

5 Confidence Rising Will Support Economic Momentum Consumer Confidence Small Business Optimism Consumer Confidence Index Budget Set Until Sept 2015 Debt Ceiling Locked In Until Mar Small Business Optimism Index * * Through November Index: December 2002 = 100 Sources: Marcus & Millichap Research Services, The Conference Board, NFIB

6 Employment Gains Accelerating Likely to Lift Wage Growth in 2015 Quarterly Job Growth (Millions) Million +8.2 Million Million* 2015 Forecast: 3.1 Million Million * * Forecast Sources: Marcus & Millichap Research Services, BLS

7 Full Jobs Recovery But Not For All Metros Absolute Change Jan Nov Top 10 Metros Absolute Change Percent Change 12 Mo s Change* Bottom 10 Metros Absolute Change Percent Change 12 Mo s Change* Houston 355, % 126,700 New York 292, % 80,200 Dallas-Ft. Worth 261, % 114,600 Austin 132, % 27,600 San Francisco 107, % 38,100 Washington, D.C. 100, % 15,100 Boston 95, % 46,900 San Antonio 91, % 27,900 Denver 85, % 34,700 San Jose 85, % 37,400 U.S. Total 1,730, % 2,784,000 Chicago -66, % 33,400 Northern NJ -64, % 8,200 Detroit -63, % 14,100 Philadelphia -61, % -2,000 Las Vegas -49, % 22,400 St. Louis -36, % 16,100 Phoenix -34, % 53,100 Cleveland -31, % 12,400 Orange County -20, % 32,500 Sacramento -15, % 21,100 U.S. Total 1,730, % 2,784,000 * Trailing 12-month change through November Sources: Marcus & Millichap Research Services, BLS

8 U.S. ECONOMIC TRENDS

9 Retail Sector

10 U.S. Retail Sales Maintain Momentum Growth Lifts Economy 12% Total Retail Sales $350 Monthly Retail Sales Excl. Auto and Gas Year-Over-Year Change 6% 0% -6% 20-Year Average: 4.3% Retail Sales ($ Bil.) $310 $270 $230 $869/person $983/person +19% -12% Recession * $ * * Through November Sources: Marcus & Millichap Research Services, U.S. Census Bureau

11 Post-Recession Retail Sales by Store Type; ecommerce Gaining Share of Retail Sales Post-Recession Growth Change from Dec to November 2014 Nonstore Retailers Restaurants/Bars 29.8% 64.5% Apparel 27.4% Health/Personal 23.5% Building Materials 21.3% Grocery 20.1% Miscellaneous 16.0% General Merchandise 14.4% Electronic Shopping as % of Retail Sales 12.0% Percent of Sales 9.5% 7.0% 4.5% Sporting Goods 13.2% Furniture & Electronics 12.3% 2.0% 0% 18% 36% 54% 72% * * Through October Excludes auto & gas sales Sources: Marcus & Millichap Research Services, U.S. Census Bureau

12 Top U.S. Retailers Expanding in 2015 Top 15 Retailers Expanding Category Current Stores 2015 Store Openings* Subway Fast Food 38,317 2,500 Dollar General Variety Store 10, Five Guys Restaurant 1, T-Mobile Cellular / Wireless 2, KFC Fast Food 5, Pizza Hut Restaurant 7, Eleven Convenience Store 50, Long John Silver's Fast Food 1, Dunkin' Donuts Food or Beverage Specialty 10, Burger King Fast Food 7, Baskin Robins Food or Beverage Specialty 2, Great Clips Salon / Spa 3, Jimmy John's Fast Food 1, Mail Box Stores Printing / Copies 2, Starbucks Coffee Shop 18, * Estimate Sources: Marcus & Millichap Research Services, RBC Capital Markets

13 National Retail Metro Ranking by 2015 Retail Sales Growth Top 10 Markets Retail Sales ($ Billions)* Y-O-Y % Change Salt Lake City $ % Charlotte $ % Orlando $ % New York $ % Austin $ % Palm Beach $ % Ft. Lauderdale $ % Dallas-Ft. Worth $ % Boston $ % Atlanta $ % U.S. Total $5, % Bottom 10 Markets Retail Sales ($ Billions)* Y-O-Y % Change Chicago $ % Philadelphia $ % Cleveland $ % Detroit $ % Milwaukee $ % Minneapolis $ % Northern NJ $ % Oakland $ % Los Angeles $ % Columbus $ % U.S. Total $5, % * Forecast Sources: Marcus & Millichap Research Services, U.S. Census Bureau, Moody s Analytics

14 Retail Sector

15 Capital Markets

16 10-Year Treasury Hovering Near 30-Year Trough Rate 16% 12% 8% 4% 0% Year High: 13.56% * Through January 13 Sources: Marcus & Millichap Research Services, Federal Reserve Year Average: 5.8% 30-Year Low: 1.53% *

17 Core Inflation vs. 10-Year Treasury 4% Core Inflation 10-Year Avg. Core Inflation 10-Year Treasury 10-Year Avg. 10-Year Treasury 3.35% 3% Rate 2% 1.93% 1% 40-Year Average Core Inflation: 4.07% 10-Year Treasury: 6.78% 10-Year Average Core Inflation: 1.93% 0% 10-Year Treasury: 3.35% * * Through January 13 Sources: Marcus & Millichap Research Services, Federal Reserve, BLS

18 U.S. Commercial Mortgage Backed Securities (CMBS) Issuance $250 CMBS Issuance (Bil.) $200 $150 $100 $50 $ * Forecast Sources: Marcus & Millichap Research Services, Trepp *

19 Retail Lender Composition by Percent of Total Dollar Volume Percent of Total Dollar Volume 100% 75% 50% 25% 0% 23% 29% 17% 8% 19% 11% 9% 10% 12% 12% 12% 15% 27% 14% 29% 8% 11% 8% 9% 44% 9% 7% 9% 42% 23% 26% 21% 15% 9% 5% 3% 3% 4% 4% 3% 3% 1% 1% 1% 1% 2% 2% 4% 46% 13% 19% * 46% 5% 46% National Bank International Bank Regional/Local Bank CMBS Insurance Financial Private/Other * Estimate Includes sales of properties $2.5 million and greater Sources: Marcus & Millichap Research Services, Real Capital Analytics

20 Capital Markets

21 National Retail Overview

22 Store-Based Retail Sales Growth Supports Rising Retail Space Absorption Quarterly Net Absorption (Mil. Sq. Ft.) Net Absorption** Store-Based Retail Sales 3.3% * 18% 12% 6% 0% -6% Y-O-Y Percent Change * Preliminary estimate for 4Q ** Trailing 12-month average Store-based core retail sales excludes gas stations, auto dealers, grocery stores, and non-store retailers Sources: Marcus & Millichap Research Services, CoStar Group, Inc., U.S. Census Bureau

23 Tame Construction Supports Steady Tightening of Vacancies Completions Vacancy Rate 200 9% Completions (Mil. of Sq. Ft.) % 7% 6% Average Vacancy Rate * 15** 5% * Estimate ** Forecast Sources: Marcus & Millichap Research Services, CoStar Group, Inc.

24 National Retail Metro Ranking by Vacancy Rate Top 10 Markets 2015* Vacancy Y-O-Y Bps Chg. San Francisco 2.2% -20 San Jose 3.3% -70 San Diego 3.5% -60 Oakland 3.7% -60 New York 3.9% -20 Miami 4.0% -20 Boston 4.1% 10 Salt Lake City 4.3% -30 Orange County 4.4% -40 Los Angeles 4.5% -40 U.S. Average 6.0% -60 Bottom 10 Markets 2015* Vacancy Y-O-Y Bps Chg. Las Vegas 9.7% -70 Phoenix 9.4% -100 Cleveland 9.2% -40 Detroit 9.1% -70 Sacramento 8.6% -120 Inland Empire 8.6% -30 Atlanta 8.2% -100 St. Louis 7.9% -50 Chicago 7.8% -90 Kansas City 7.8% -60 U.S. Average 6.0% -60 * Forecast Sources: Marcus & Millichap Research Services, CoStar Group, Inc.

25 National Retail Overview

26 National Sales Trend Overview

27 Total Transactions (000s) U.S. Retail Investment Trends Transaction Activity by Price Tranche $1M-$10M $10M-$20M $20M Single-Tenant +32% * Trailing 12-months through 3Q Includes sales $1 million and greater Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics 14* Total Transactions (000s) Multi-Tenant $1M-$10M $10M-$20M $20M+ -7% 14*

28 National Single- and Multi-Tenant Retail Price and Cap Rates Single-Tenant Multi-Tenant $250 Average Price Cap Rate 10% $200 Average Price Cap Rate 10% Average Price Per Square Foot $200 $150 $100 9% 8% 7% Average Cap Rate Average Price Per Square Foot $150 $100 $50 9% 8% 7% Average Cap Rate $ * 6% $ * 6% * Trailing 12-months through 3Q Includes sales $1 million and greater Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics

29 Re-Pricing of Risk by Quality Reflected in Retail Cap Rate Trends by Market Type 10% Primary Secondary Tertiary Average Cap Rate 9% 8% 7% 40 bps 140 bps 6% * * Trailing 12-months through 3Q Includes sales $1 million and greater Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics

30 Retail Cap Rate Trends Average Cap Rates vs. 10-Year Treasury Average Rate 12% 9% 6% 3% 450 bps Single-Tenant Cap Rate 10-Year Treasury Rate 440 bps 10-Yr Treasury Long-Term Avg. 450 bps Cap Rate Long-Term Avg. 210 bps 560 bps 420 bps Average Rate 12% 9% 6% 3% 520 bps Multi-Tenant Cap Rate 10-Year Treasury Rate 550 bps 10-Yr Treasury Long-Term Avg. 560 bps 250 bps Cap Rate Long-Term Avg. 640 bps 530 bps 0% 0% * * * Through December 31 Includes sales $1 million and greater Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics

31 National Sales Trend Overview

32 Questions?

33 The Five Retail Trends to Watch in 2015 January 14, 2015