The 12 months of 2009 will bring the worst
of times and potentially the best of times
for retailers.
While those lacking a war chest may be
forced to fold their tents following a dismal
holiday spending season, the stalwarts will
find the field ripe for expansion.
"A number of retailers will stay alive and
others won't survive," says Ken Mattison, vice
president of the retail services group at Grubb
& Ellis / NCG in Reno.
Adds Kelly Bland, a vice president in the
retail group of NAI Alliance,"We're coming off
of the two worst months October and
November in memory."
Dave Claflin, vice president of marketing at
RED Development, says many signed tenants
for Legends at Sparks Marina postponed 2008
openings.
"It's bloody out there. Everyone is feeling a
lot of pressure to perform," Claflin says.
While some retailers wait it out, others
stop the bleeding by closing stores, says Shawn
Smith, a vice president working in retail at the
Reno office Colliers International.
Nationwide, 6,100 stores have closed
already, and the International Council of
Shopping Centers projects 14,000 more stores
will close in 2009.
On a local level, adds Smith, more than 35
stores were closed in 2008.
Mattison says,"Christmas season is the
make-or-break for the year. It's going to be a
light Christmas for everyone. Spending is
down 30 percent across the board. Sales that
once began after the holiday now start before
Thanksgiving.Most everyone in our sector of
the commercial real estate market is wondering
what will happen after Christmas."
Even national chains are closing anchor
stores,with some going out of business.
Yet some areas escape the squeeze.
Reno's North Valleys,with an underserved
population of 40,000, is home to 3 Flags, still
in development, says Mattison."There's a huge
need for retail up there. Of 33 spots, 31 are preleased."
"To survive, some people have had to
rethink sizing," says
Mattison.And
among individual
stores, second-generation
spaces
those vacated by the
original retailers
have become popular.
Tenants pay up to
$1 per square foot
less than at newer
centers, where lease
rates reflect the high
land and materials
costs of the past six years.
But landlords of all centers can mitigate
the damage by keeping tenants from jumping
ship.
While rent concessions may stick in the
craw, it's cheaper than recruiting new tenants.
Especially now, when even national chains are
having a tough time finding franchises to
spread their brand,Mattison says.
And retail chains are employing delaying
tactics with their planned openings of new
stores.
"The No. 1 thing stores do is try to contain
their openings," says Claflin."Retailers say,
"Let's pick the best 20 markets for expansion
and get the best deals that we can."RED
Development, he says, is also under pressure to
maintain relationships with dawdling tenants,
because the same chains are in other RED centers
nationwide.
However, the closing and restructuring of
national and local retailers and restaurants is
not a doomsday scenario, says Smith.
"When the economy rebounds, the restructured
retailers will be better positioned to
expand and take advantage of retailers who
wrecked or sank during the Perfect Storm of
2008."
That makes it a good time for big retailers
to be looking for store locations in Reno.
"While we do have a couple poking
around, they've got lots of other opportunities
around the country," says Bland.
And despite the
challenges, developers
continue to build.
About 2.2 million
square feet of retail
space is planned in
the region.
But retailers
today struggle.
"Second quarter
sales are not very
nice. People are not
using their credit
cards. During the
past three or four holiday seasons, people were
tapping credit cards and home equity," says
Frederick Steinmann, business consultant with
the Nevada Small Business Development
Center who is currently on leave to pursue a
doctorate degree.
That home ATM machine went dry when
housing prices tanked.
Taxable sales this autumn in Washoe
County were running more than 9 percent
below year-earlier figures, the state
Department of Taxation reported. Sales in
Carson City were down by more than 10 percent.
Yet optimism remains.
"I firmly believe 2009 will be better than
2008," says Claflin."I believe we've seen the low
point of the cycle."
But in the short term, even if the feds issue
another stimulus check,warns Steinmann,
"Consumers will use a future stimulus check
to pay down debt. There's plenty of liquidity in
the system. There's just no consumer confidence."
