How bad is it in retail?
Nationwide, there is a 16.2 percent in vacancy rate, up 43% from just a year ago. Construction of new retail has fallen by half and rents are down 5 percent from last year. Although the wave of bankruptcies that were feared after retail's dismal Christmas season hasn't occurred, there is talk of "zombie" chains kept alive by the cash flow from money-losing sales. Our team at the giant International Council of Shopping Centers trade show in Las Vegas had no trouble making appointments -- attendance was cut in half by the recession.
It's not just that consumer spending is down because of rising joblessness. Consumers are saddled with debt that they must work to retire now that home equity has disappeared as a source of financing debt. And more and more shoppers are hitting the web, looking for bargains. This may mean a long-term shrinkage in "brick and mortar" sales -- and the stores that provide them.
America's long shopping binge fueled a remarkable boom in store construction. According to the New York Times, "In 1986, the United States had about 15 square feet of retail space per person in shopping centers. That was already a world-leading figure, but by 2003 it had increased by a third, to 20 square feet. The next countries on the list are Canada (13 square feet per person) and Australia (6.5 square feet); the highest figure in Europe is in Sweden, with 3 square feet per person."
A couple of years ago, the Riverpark Shopping Center looked like a formidable new entrant in the crowded Ventura County marketplace. The developers had signed up one of the hottest retailers in Whole Foods, plus a new multiplex and REI, the outdoor sporting goods chain. But there has been no major tenants signings announced since -- and construction has noticeably slowed on the shopping center.
On this side of the river, the Pacific View Mall is weathering the storm with tenant resignings, but has not been able to close the deal with tenants to redo the vacant buildings at the north end of the mall behind the new Target. Retailers across the nation are insisting on bargain leases -- leaving shopping center owners with the harsh choice of accepting unfavorable terms or leaving stores vacant.
Of course, this has a big impact on local governments. Citizens in many communities have happily supported retail expansions -- and even tolerated big subsidies to developers and retailers to provide sales tax revenue to support local services. But now, as auto malls and shopping centers struggle, the reliance on the revenue they provide is proving to be unsustainable.
Many hope the downturn's slowing portends a turn-around by the end of the year. But robust consumer sales and new retail developments are years away. The largest mall owner in the nation is in bankruptcy and Wall Street financing has virtually disappeared.
That poses a number of challenges locally, not only in funding vital public safety and community services, but also in providing local jobs and economic activity. It will leave vacant stores and empty streets in many parts of local towns. It will discourage the kind of mixed-use projects that seemed so promising in bringing back vitality to neglected areas. And it will pose tough choices to local City Councils as they struggle to maintain the stores they have -- and are pressed to subsidize any new ones they want to attract.
It's not just that consumer spending is down because of rising joblessness. Consumers are saddled with debt that they must work to retire now that home equity has disappeared as a source of financing debt. And more and more shoppers are hitting the web, looking for bargains. This may mean a long-term shrinkage in "brick and mortar" sales -- and the stores that provide them.
America's long shopping binge fueled a remarkable boom in store construction. According to the New York Times, "In 1986, the United States had about 15 square feet of retail space per person in shopping centers. That was already a world-leading figure, but by 2003 it had increased by a third, to 20 square feet. The next countries on the list are Canada (13 square feet per person) and Australia (6.5 square feet); the highest figure in Europe is in Sweden, with 3 square feet per person."
A couple of years ago, the Riverpark Shopping Center looked like a formidable new entrant in the crowded Ventura County marketplace. The developers had signed up one of the hottest retailers in Whole Foods, plus a new multiplex and REI, the outdoor sporting goods chain. But there has been no major tenants signings announced since -- and construction has noticeably slowed on the shopping center.
On this side of the river, the Pacific View Mall is weathering the storm with tenant resignings, but has not been able to close the deal with tenants to redo the vacant buildings at the north end of the mall behind the new Target. Retailers across the nation are insisting on bargain leases -- leaving shopping center owners with the harsh choice of accepting unfavorable terms or leaving stores vacant.
Of course, this has a big impact on local governments. Citizens in many communities have happily supported retail expansions -- and even tolerated big subsidies to developers and retailers to provide sales tax revenue to support local services. But now, as auto malls and shopping centers struggle, the reliance on the revenue they provide is proving to be unsustainable.
Many hope the downturn's slowing portends a turn-around by the end of the year. But robust consumer sales and new retail developments are years away. The largest mall owner in the nation is in bankruptcy and Wall Street financing has virtually disappeared.
That poses a number of challenges locally, not only in funding vital public safety and community services, but also in providing local jobs and economic activity. It will leave vacant stores and empty streets in many parts of local towns. It will discourage the kind of mixed-use projects that seemed so promising in bringing back vitality to neglected areas. And it will pose tough choices to local City Councils as they struggle to maintain the stores they have -- and are pressed to subsidize any new ones they want to attract.
posted by Rick Cole at
10:53 AM
6 Comments:
Just a loose quick count the other day on Ventura's main street from 4 points to downtown showed over 45 empty commercial stores. As was noted in the blog post, "How bad is it in retail?" "Our Team" consisting of the Mayor and a couple of council people had no trouble making appointments because attendance was cut in half by the recession, goes to show that some cities have enough sense to have their "Teams" stay at home and not waste the money on this exorbitant, useless trip.
not bad at Wal-Mart, they continue to save people money and provide jobs... the one in Oxnard is about ready to add 150 employees for their Super Center Expansion, it is the biggest Tax contributor in Oxnard from retail sales. not the solution for poor ventura but a great start.
Indeed, looking at the upside only of Wal-Marts overly asserted contributions to our community can paint a pleasant picture but if one researches the high cost of low price and educates themselves on the net impacts of the big box retailers model the end result is simply net loss. Net loss in quality jobs. Net loss in total employment. Net loss to the community. Net gain in mostly poor quality goods made in china.
The irony of the anti-Walmart initiative that will be on the City ballot in November is that it will do nothing to prevent Walmart from moving into the K-Mart location on Victoria, or any other location for that matter, as long as they stay under 90,000 square feet.
What it will do, however, is discourage other reputable and profitable retailers that could produce high sales tax revenue to the City from coming to Ventura because of the size restriction. This includes IKEA, Costco, Bass Pro Shop, Frye's Electronics, etc.
Good thinking, guys...
The last anonymous poster is right that the November initiative measure won't stop Walmart. Neither, however, would it stop "IKEA, Costco, Bass Pro Shop, Frye's Electronics." IKEA, Bass Pro Shop and Frye's are all exempt because they sell little or no food (yes, IKEA does sell some Swedish food products, but that takes up less than the 3% of floor space outlined in the initiative.) COSTCO, like the Walmart subsidiary Sam's Club, would be exempt as a "membership" retailer. What would be caught up in the ban on new Superstores would be "big boxes" that offer more than token food products -- like the Target store in the Pacific View Mall.
Here it is again mid summer and I am planning my twice a year trip to the super wal-marts in canyon-country (back to school and christmas). With three kids, two houses, and two professional incomes we need a lot of stuff and bye a lot at wal-mart. Must be in the neighborhood of 3-4K per year I spend at wal-mart. Too bad it is not here in Ventura. It sure would be nice to buy food and "stuff" all together locally, but why pay so much extra. The local stores in Ventura cost too much. For example, last week I took the kids to Magic Mountain and we stopped in their big, wonderful store. I didn't need a big TV in the bedroom, why not at these prices. So, now I am the owner of a third big screen TV all bought in canyon-country. Wake up Ventura and see the future. Wal-mart is doing very well in this global down turn.
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