By SCTWeek, Friday, April 25, 2014

E-commerce’s impact on centers ‘overblown’

retail sales vs. ecommerce

retail sales hold strong against ecommerce competition

Purported traffic declines at brick-and-mortar stores became a big story in the wake of the 2013 holiday season. But little credence should be given to all those news reports that say e-commerce is killing brick-and-mortar retail, says Bill Martin, founder of ShopperTrak, which provided many of the numbers that media outlets cite. ShopperTrak measures foot traffic for about 1,000 customers, using some 70,000 devices in all types of retail around the globe. “A lot is being made about the Internet and its encroachment on the brick-and-mortar store, but this is overblown,” Martin said. “When we look at the data, we still see that more than 94 percent of all commerce is taking place inside the brick-and-mortar stores.”

According to ShopperTrak, U.S. retail sales during the 2013 holiday season increased by 2.7 percent from the year-ago season, even as the number of shopper visits decreased. “It’s important to note that the number of trips to the mall has not changed dramatically over the past five years,” Martin said. “But the number of store visits each shopper makes has eroded due to the vast accessibility of pre-shopping-trip information available to today’s shopper.”

As Martin sees it, the notion that people are going to the likes of Best Buy, looking at TVs and then buying them online for a cheaper price is backward. Far more prevalent, he argues, is the scenario of “web-rooming,” whereby shoppers do lots of online research, but then go to a store to make the actual purchase. This behavior can translate into fewer store visits without eroding sales, he says. “Studies have shown that likely 70 percent of purchases are pre-researched online,” Martin said. “So even though we are seeing some declining numbers of shopper visits, we are actually seeing a high value proposition coming to the store.”

Likewise, when Martin talks about the need to keep statistics in perspective, he echoes the sentiments of shopping center landlords. “As far as the growth in brick-and-mortar sales, the raw dollar numbers dwarf what is being spent online,” he said. “If you can pin a retailer down and say, ‘Tell us about your profit margin on online versus brick-and-mortar stores,’ it is still all about the store.”

Martin says he frequently cautions journalists and analysts to be careful about drawing unwarranted conclusions. “You have to take everything in context and include all information that is relevant,” he said. “ShopperTrak provides other relevant information to the media and journalists, and generally we see the media focusing on the negative points and leaving out other metrics we have provided.” Despite the traffic declines reported by his firm, Martin anticipates a healthy future for retail in all its forms. “We have seen steady increases in sales of both the Internet and brick-and-mortar stores since the recession or pullback of 2007 and 2008,” he said. “That suggests to me there is room for both.”


By SCTWeek, Friday, April 25, 2014

Amazon suffers in states where it must collect sales tax

Amazon sales decline in state where sale taxes are collected

Amazon sales decline in state where sale taxes are collected

Researchers at Ohio State University have quantified what brick-and-mortar merchants and retail center owners have long suspected: Online retailers that fail to collect sales tax enjoy an enormous competitive advantage. According to a report published by The Ohio State–based National Bureau of Economic Research and titled The Amazon Tax, Amazon.com’s sales fell by 9.5 percent on average in states that force the online retailer to collect sales tax. The percentage is substantially higher — 24 percent — for sales exceeding $300, the report says.

Researchers tracked some 245,000 households that shelled out at least $100 for purchases on Amazon in the first half of 2012, keeping tabs on the group through the following year. They found that states requiring the collection of online sales taxes reported a 2 percent increase in sales at physical stores during that time span. Roughly a third of the study’s research subjects live in states where new tax laws came into effect during the period: California, New Jersey, Pennsylvania, Texas and Virginia. The study appears to validate the argument that brick-and-mortar retailers “are indeed impaired by the unfair advantage online retailers have at the point of sale,” said Robert L. Thatcher, general manager and director of leasing at Concord Mall, in Elkhart, Ind. States lose an estimated $23 billion annually in sales taxes uncollected by online retailers.

The report belies Amazon’s claims that sales tax does not influence purchasing decisions, says Lance Muzslay, co-owner of Sole Sports Running Zone, an Arizona chain. “If that’s the case, then why don’t those retailers raise all their prices?” asked Muzslay, who has testified before the Arizona Senate on the online tax issue. “Of course, they wouldn’t dare, because they know they’d lose a lot of business. In effect, that’s what happens to brick-and-mortar retailers all the time when they’re required to collect 5 percent to 10 percent in tax that their online competitors aren’t.”

Amazon is now legally required to collect sales tax in 20 states, including the three most populous: California, New York and Texas. Florida will join the group next week. After winning undisclosed state incentives to build two distribution centers in Florida, Amazon said this month that it will begin collecting that state’s 6 percent sales tax on May 1.

Meanwhile, revenue-strapped cities are making their voices heard too. This month Mayor Dewey F. Bartlett Jr., of Tulsa, Okla., called online sales the main reason his city is running short on revenue, even as the City Council of Bloomington, Ill., passed a resolution urging Congress to pass the Marketplace Fairness Act.

Last week Best Buy CEO Hubert Joly reiterated his call for Congress to enact the measure, telling the Economic Club of Minnesota: “We don’t think the government should pick the winners … [or] subsidize Amazon and eBay.” Asked about any other government-affairs priorities Best Buy may have, Joly’s response bordered on the acerbic. “Number one is e-fairness, number two is e-fairness, number three is e-fairness, number four is e-fairness, and number five is e-fairness,” he said.

The Marketplace Fairness Act remains a major plank in the ICSC government-relations platform at both the state and national levels, says Thatcher, who chairs ICSC’s Central Division Government Relations committee. The measure remains stalled in Congress, ostensibly as details about enforcement of a point-of-sale tax are worked out.

Consumers are expected to pay taxes for online purchases even in states that have passed no laws specifically requiring it, but this is difficult to enforce unless online sellers have either a physical store or a warehouse within the state. “Amazon should collect and remit state sales tax [across the board], and states are smart to get Amazon to do it,” said Joe Caruso, a franchise consultant at Baltimore-based Franchise-Info who is also president of the Capital Area Franchise Association.

But brick-and-mortar retailers need to attend to more than just fighting the online-tax-collection battle. “Consumers continue to approach buying goods and services online with a high sensitivity to price, and their selection of where they buy is influenced by a perception of a tax savings, convenience and free shipping,” said Ken Lamy, president of the New Orleans–based Lamy Group. “So brick-and-mortar stores must continue to motivate consumers to visit stores and reward them in financial ways that neutralize these perceived savings.”

Often lost in the debate is the role shopping centers play “as crown jewels of economic development and stability,” Thatcher said. “When you order online, it effectively exports capital from that market that’s not likely to return and thus erodes the velocity of money in the community.”

The breadth of the Ohio State survey appears to rule out any statistical anomalies about Amazon’s no-sales-tax edge. “There is no ambiguity,” said report co-author Brian Baugh in an interview with SCT. “It has been their competitive advantage.”


By Globe St, Tuesday, April 22, 2014

Five Retail Leasing Trends You Need to Know

MIAMI—Retail leasing is a different animal in Miami than it is in Houston, Seattle or Chicago. But there are some common threads that run through the markets.

GlobeSt.com caught up with Jerry Welkis, president of Welco Realty and X Team International partner, to get his take on how retail leasing has changed and what trends he sees in emerging in part one of this exclusive interview. Welco has represented the likes of AMC Theaters, Marshalls, Toys ‘R Us, Party City, and Dress Barn. Be sure to come back this afternoon for part two, where Welkis will discuss his best retail leasing strategies.

Read more…


By Globe St, Tuesday, April 22, 2014

Three Best Practices for Retail Leasing

MIAMI—When it comes to retail leasing, one strategy does not fit all deals. GlobeSt.com caught up with Jerry Welkis, president of Welco Realty and X Team International partner, to get his take on what works when and why in part two of this exclusive three-part interview.

Welco has represented the likes of AMC Theaters, Marshalls, Toys ‘R Us, Party City, and Dress Barn. You can go back and read part one of this interview, “Five Retail Leasing Trends You Need to Know,” if you missed it.

Read more…


By Bloomberg, Monday, April 21, 2014

Amazon Sales Take a Hit in States With Online Tax

Amazon sales decline in state where sale taxes are collected

Amazon sales decline in state where sale taxes are collected

In one of the first efforts to quantify the impact of states accruing more tax revenue from Web purchases, researchers at Ohio State University published a paper this month that found sales dropped for Amazon when the online charge was introduced. In states that have the tax, households reduced their spending on Amazon by about 10 percent compared to those in states that don’t have the levy. For online purchases of more than $300, sales fell by 24 percent, according to the report titled “The Amazon Tax.”

The findings add to concerns about how much the world’s largest online retailer can expand. The Seattle-based company, which reports quarterly earnings on April 24, has been grappling with decelerating revenue growth amid heavy spending by Chief Executive Officer Jeff Bezos on new initiatives. Amazon has enjoyed an edge against brick-and-mortar retailers because consumers didn’t have to pay a sales tax for purchases from the e-commerce site, yet that has eroded as states including California and Texas have unveiled the levies.

Read more…


By Real Estate Deal Sheet, Wednesday, April 16, 2014

Wealthy Investors Bet on CRE

Wealthy investors

High net-worth individuals and family offices continue to see commercial real estate as a priority investment class, and as proof of their confidence, they are allocating more money to the sector. National Real Estate Investor covers the topic in an article here, written by Elaine Misonzhnik, and this direct quote from the story explains the trend: “A survey completed this February by Morgan Stanley’s wealth management unit found that 77 percent of investors with $100,000 or more in assets now have a direct stake in real estate properties, while another 34 percent own REIT stocks. That makes real estate the most popular alternative asset class out there, with only 34 percent of surveyed investors owning the next most popular alternative asset, collectibles.”
Misonzhnik cites research from Real Capital Analytics, which estimates that private investors, including high net worth individuals, purchased $144.4 billion in commercial real estate last year, an increase from the previous year of 18 percent. Further, The Wealth Report 2014, published by Knight Frank, reports that 47 percent of ultra-high net worth individuals (globally) forecast an increase in property investments this year. Here’s a direct quote from the report: “According to analyst Real Capital Analytics (RCA), global investment in commercial property rose 17% to $533 billion in 2013. Knight Frank is forecasting increases of 11% in 2014 and the same again in 2015, taking the amounts invested to US$593 billion and US$657 billion respectively.”

According to The Wealth Report, these wealthy investors are expected to follow the same path as institutions by looking into deals located within secondary markets. The report also states what we’ve been reading and reporting all year: “The buzz words in commercial property in 2014 will be ‘secondary,’ ‘diversification,’ and ‘development.’” – See more at: http://www.realestatedealsheet.com/blog/featured-content/wealthy-investors-bet-cre#sthash.HEI4dosD.dpuf


By GlobeSt April 1, 2014

Cashing In On Options

Dear Ms. Real Estate:

Nina Gruen -- Ms. Real Estate

I have an obsolete outer suburban shopping mall that’s experiencing increased vacancies and low cash returns. What use options do I have to improve my cash flow?

—Cashing In On Options

Dear Cashing In On Options,

If your center were located in a high-income area, Ms. Real Estate would suggest redevelopment into an exciting mixed-use residential, retail and entertainment center. But don’t even think about that or the tenants who once generated base rents and overages if your customer base is comprised of middle- and lower-income folks facing the shock of lower real incomes and the increased appeal of bargains at Amazon.com and the like.

But cheer up! While Obamacare may drive up your health care insurance and limit your choice of doctors, it may offer you a financially rewarding reuse option.

A major effect of Obamacare will be to create lower-cost medical treatment options than hospitals traditionally have been able to provide. Medical clinics, docs-in-boxes, physical therapy and x-ray centers are just some examples of activities that will increasingly take place outside of a hospital environment.

Read more…


Centers Business Management sponsors second annual Retail Live Los Angeles trade show at the Costa Mesa Hilton

CBM Sponsers Retail Live

West Covina, CA – National retail trade organization, Retail Live, held their second annual Los Angeles marketplace trade show on April 2nd, at the Orange County Hilton hotel in Costa Mesa. Centers Business Management (CBM) joined an elite group of leading Southern California Commercial Real Estate related organizations, including France Media (Western Real Estate Business), Jones Lang LaSalle, NewMark Merrill, Festival Companies and CAM Services, among others, in sponsoring the show. This also marks the second time CBM has sponsored the event.

Differing from most CRE trade shows, Retail Live is a tenant’s only showcase. The event featured 70 booths hosted by over A+ national and regional tenants. The show is specifically designed for Brokers, Landlords, Municipal Representatives and Vendors to court tenants. By considerably narrowing the field, the show not only allows brokers to zero in on tenants for whom they have ideally suited space, but also lays the ground work to foster future relationships.

“By strictly catering to tenants and eliminating all the brokerages and vendors vying for attention, the show has a much less formal, more relaxed feel. And it really seems to loosen people up and get them talking,” offers CBM’s West LA Leasing Director, Geoff Grossman. “I spoke at length with a tenant who’s familiar with one of CBM’s longtime landlords and even one of CBM’s founders. That’s not typical of CRE trade shows. Even better, I walked away with four legit leads — best money I’ve spent all year!” Grossman says in closing.

“Retail Live is a great way for agents to learn about the marketplace and build their personal business, in addition to meeting tenants and general networking. And the tenant only setting genuinely facilitates deal making opportunities,” says CBM President, Rick Rivera. “I would recommend future Retail Live events to any leasing agent who wants to get ahead in retail leasing,” Rivera states in relationship to CBM’s continued sponsorship of Retail Live Los Angeles.

To find out more about Retail Live, visit them online at www.RetailLive.com. For more information about CBM and its Retail Property Management & Leasing services, please contact Rick Rivera at 310.575.1517 x201, rickr@033ee62.netsolhost.com

Download Retail Live PR


West Covina, CA – March, 2014, Centers Business Management (CBM) accepts Certificate of Recognition from West Covina Mayor for sponsoring the city’s annual Cherry Blossom Festival on behalf of Commercial Realty Consultants, Inc. for SHP Capital, LP.

CBM Accepts Cert at West Covina Cherry Blossom Festival

West Covina’s annual Cherry Blossom Festival was held this past March 29th at South Hills Plaza, 1410-1432 S. Azusa Avenue (managed by Centers Business Management (CBM) property manager Pamela Ozell).  Ms. Ozell accepted a Certificate of Recognition on behalf of the property owner, SHP Capital, LP, for allowing the city to host the event at South Hills Plaza and sponsoring a portion of the event electrical services, in addition to sponsoring portable restrooms for visitors and dressing facilities for event performers.

Organized by the City of West Covina and the East San Gabriel Japanese Community Center, the annual Cherry Blossom festival celebrates the Japanese heritage shared by a large portion of West Covina’s population. The East San Gabriel Japanese Community Center leadership, the West Covina City Council and West Covina Mayor, Steve Herfert, were all on hand for the event and presided over the awards ceremony. Mayor Herfert personally presented Ms. Ozell with the city’s Certificate of Recognition.

“South Hills Plaza plays an especially important role in West Covina’s Japanese Community, as Marukai Market (the city’s largest and most highly patronized Japanese market) has anchored the shopping center for over 15 years,” shares Ms. Ozell. “The owners are thrilled to be a part of the festival and give back to a community that has treated them so well. The special certificate is just really added bonus!” Ms. Ozell further adds.

In addition to gratitude for the Cherry Blossom Festival sponsorship, the City of West Covina is also very pleased with South Hills Plaza in general, as the shopping center’s outstanding curb appeal is a bright jewel of the community’s retail and commercial district. After CBM took over management in 2005, South Hills Plaza undertook a large scale remodel, and Ms. Ozell has diligently maintained the property, preserving its luster for nearly a decade.

To find out more about CBM and their Retail Property Management and Leasing services, please contact Rick Rivera at 310.575.1517 x201, rickr@033ee62.netsolhost.com.

Download Cherry Blossom PR


By SCTWeek, Friday, April 11, 2014

Family Dollar to close 370 stores, cut prices

FAMILY DOLLAR Closes 370 Stores

Family Dollar, a juggernaut of expansion in recent years, announced plans to close 370 of its 8,100 stores in the second half, and to slow new-store growth to about 400 per year (from 525 in fiscal 2014) beginning next year. The announcement comes on the heels of a slow holiday sales season for the chain. Family Dollar posted a 6.1 percent year-on-year drop in net sales for the fiscal second quarter (ended March 1). Same-store sales fell 3.8 percent during the quarter, while net income dropped to $90.9 million, from $140.1 million for the year-ago quarter.

“The 2013 holiday season was challenged by a more promotional competitive environment and a more financially constrained consumer,” said Howard R. Levine, chairman and CEO, in a press release. “In addition, like many retailers, our second-quarter results were significantly impacted by severe winter weather — which resulted in numerous store closings [and] disrupted merchandise deliveries — and higher-than-expected utility and store-maintenance expenses.”

Family Dollar will also try to boost traffic by slashing prices on about 1,000 basic merchandise items, and to increase profits by slashing an unspecified number of jobs, Levine says. The store closures and staff reductions should result in annual savings of about $45 million, he says.

During the first half of the fiscal year, the chain opened 244 stores, closed 22 and renovated, relocated or expanded 319. Family Dollar says it anticipates that same-store sales for the fiscal third quarter will decline in the low-single-digits range. For the coming fiscal fourth quarter, the company predicts that same-store sales will be flat or up slightly.