Retail expansion is set to ramp up in 2012, said real estate consultants.
“There’s been a fantastic retail rebound in 2011, which was really led by accessories [retailers]. The category will continue to lead the way in 2012,” said Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman.
“The turmoil in Europe [is not a deterrent]. None of my [international] retailers have stopped signing leases or seeking expansion, as they still see the U.S. as the best place to invest. The U.S. is a country of shopaholics, whether they have $5 or $500 to spend,” Consolo added.
Already, holiday sales in 2011 are up nearly 5 percent over 2010 levels, according to ShopperTrak, which provides traffic counting services at retail stores and malls. Consumers spent 14.8 percent more, year over year, during the week ended Dec. 24, ensuring December 2011 sales are on track to outpace December 2010 sales by about 4.7 percent, the firm said. Retail rents also have risen in recent months due to previous vacancies being filled and still-increasing demand, according to data from real estate consultancies.
The high streets and trophy malls, in particular, will continue to benefit from stronger tenancy than less prized malls, which will slide further if they lose an anchor tenant in Sears, said consultants. (Sears Holdings Corp. said earlier this week it will close as many as 120 of its Kmart and Sears discount and department stores.)
Among retailers, luxury names will spend the most on expansion in 2012. Coach opened 22 outlets this year, compared with an average of three previously, noted Jones Lang LaSalle, which added that “higher income consumers remain insulated from the worst changes in the economy.”
“We’re working on several new deals with Jimmy Choo. From the U.K., Gina is looking for flagships in New York and Miami,” Consolo said.
Research by Jones Lang LaSalle, as well as by Cushman & Wakefield, also said that 2012 will herald the return of real estate development to core urban areas — translating into smaller store formats — as well as see retailers continue to reach new customers via expanding outlet stores.
According to NPD Group, apparel sales at factory outlets rose 17.8 percent from April 2010 to April 2011, while industry-wide apparel sales inched up a paltry 1.4 percent.
“These aspirational shoppers are looking for value, a trend that will accelerate if the economy remains stagnant,” said Cushman’s report.
Finally, store expansion will be targeted to capitalize on the evolving diversity of the U.S. consumer base, which in the last decade has seen an aging population, as well as a 3.3 percentage point increase in the share of Hispanics/Latinos and a corresponding 2.8 percentage point decline in the share of Whites.