Retail recovery ramps up
Urstadt Biddle Properties Inc., one of the largest owners of retail properties in Westchester County and Fairfield County, Conn., where it is based, stated the sector”™s real estate market appears to be past the low point of the cycle, adding that it continues to scout acquisition opportunities.
Greenwich, Conn.-based Urstadt Biddle owns more than 15 million square feet of space, some of it in the form of multi-tenant office buildings. Earlier this year, the company acquired a controlling stake in the nearly 200,000-square-foot Putnam Plaza Shopping Center in Carmel, and also acquired several small retail buildings in Katonah.
As of July 31, when it closed its third fiscal quarter, Urstadt Biddle leased 93 percent of its portfolio, up more than a percentage point from last October. The company had a $4.5 million profit in the fiscal quarter, as revenue rose slightly to nearly $64 million.
“Although a weak economy and cautious and struggling retailers continue to stress our portfolio, we believe we have passed the low point in the cycle and things are improving,” said Willing “Wing” Biddle, president of Urstadt Biddle, in a statement. “We are working on several additional acquisitions and are fortunate to have the resources and balance sheet strength to buy the quality properties that we seek at this point in the real estate cycle.”
Throughout the tri-state area, there are continued signs of a recovery in the retail market, as the retail vacancy rate dropped from 8.7 percent in the first quarter to 8.4 percent in the second, according to the most recent data published by CBRE Econometric Advisors, an affiliate of the commercial brokerage company CB Richard Ellis.
In Danbury, Conn., Dick”™s Sporting Goods and the XXI Forever apparel chain are moving into Danbury Fair Mall”™s anchor pad that has lacked a permanent tenant since the 2006 closure of Filene”™s.
“All of our top retailers are making a lot of money, because going back to February of last year they redid their business model,” said Art Coppola, CEO of Danbury Fair Mall owner Macerich Co., in an August conference call with investment analysts. “They redid their business model to make money on less sales, and now they are very confident in their profit margin. ”¦ I am not calling it robust, but the retailers are making money.”
Coppola added the market has received a boost since mall rival General Growth Properties Inc. indicated it would emerge from bankruptcy proceedings relatively intact.
“The scarcity value of regional malls has come back because people realize that General Growth is not going to be liquidated and broken up into pieces,” Coppola said. “Going back to 18 months ago, there was a whole camp of investors out there that were of the belief that we were going to have 200 (retail) centers hit the market all of once, and it was going to flood the marketplace and raise cap rates and lower values. That didn”™t happen.”
Still, New York-area retailers told the Federal Reserve Bank of New York that sales of general merchandise has slowed the past six weeks. While retail container traffic nationally was up 16 percent compared to a year earlier, the National Retail Federation and Hackett Associates attributed that to retailers bringing in merchandise for the holidays after supply disruptions last year.
Researchers with CBRE Econometrics Advisors expect retail availability rates to begin to drop in the first half of next year. Though neighborhood and community centers and regional malls have continued to experience an uptick in availability, rates at the largest shopping centers ”“ those with at least 250,000 square feet of space ”“ have remained flat or declined during the last several quarters.
“Although the economic recovery remains tenuous, consumers are slowly opening their wallets again,” said Abigail Marks, an economist with CBRE Econometric Advisors, in a statement. “However, we remain cautious about a solid consumer recovery due to the fact that we are comparing to some of the lowest points in retail sales history. A steady recovery is still a couple of months off but stabilizing retail center availability rates are certainly a good sign.”