Real Estate and Retail Trends in San Francisco Roundtable

August 1, 2011

Our retail chair Craig Johnson and Jean Schlemmer, former Chief Corporate Development Officer at General Growth Properties, took part in our Retail Real Estate Roundtable on July 27th in San Francisco. Here were some of the highlights:

  1. Retailers sales in general are doing better led by higher end buyers less sensitive to economic sensitivity. The bad news of the 2008-09 Great Recession seems to have been digested by the 90% employed.
  2. Office store downsizing – Staples moved first and faster. The rest is history.
  3. Margins among weak players were hurt by cotton increases and labor costs but for others margins are up. Macy’s should do very well in the 3Q.
  4. Department stores market share is up for the first time in 30 years from 2.2% ro 2.7%. Sears moving aggessively to become landlord. No change in merchandising strategy, which is lacking.
  5. Best Buy longer leases will make it harder to reformat stores. No natural takers and margin pressure may continue with space overhang.

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