The retail market is tied to the real estate market, and real estate, though troubled, is not proving to be quite as bad as some expected. That means retail, though also challenged, should begin to arrive at an even keel. The study comes from Colliers International.
Colliers says two ongoing problems that will continue to tamp things down are the lack or new construction and continued softness in lease rates, which it says are 25%-40% below peak levels.
But it says 2010 will be the year in which “not as bad is the new good.”
Less trouble in real estate will mean more consumers head back into the stores – although some retailers won’t make it or will be forced to close outlets here and there. But in the end, consumer confidence will gradually improve and bring other factors up in its wake.
“It appears that retailers will likely face a period of years during which wave after wave of troubled assets will gradually be returned to the marketplace,” remarked Collier’s Garrick Brown. “This will result in further pricing drops, but retail space values have already taken the lion’s share of the declines that can be expected. Retail real estate is entering into what’s best described as a ‘not so fast recovery.’”
RBR-TVBR observation: So Colliers still expects that some businesses will fail, and others will contract, closing stores. Which would you bet on — the ones that keep their name in front of the public with a normal advertising program or those who see promotion as a good place to cut budget? We think the winners in your market will be the ones who remain on your client list.