Tuesday, May 26, 2015

Marcus & Milichap Retial Forum Notes

300 + gathered at the Westin Galleria Dallas for the Marcus & Millichap Retail Forum, to get updates on the latest trends and info. One of the most interesting panels was a market outlook featuring Joe Hickman, CEO of Blue Star Land (think Cowboys new facility and master plan and large developments in Prosper), Stan Thomas, CEO of Thomas Enterprises (Wade Park- Frisco) and John Weber, Principal of Weber & Company (huge retail developments in Ft. Worth)     These companies are currently producing developments totaling in excess of $1BB which will make seismic changes in the North Texas real estate landscape. Each of them were cautiously bullish on the growth projections for the Metroplex, and particularly the highest growth markets. 
Another key note presentation was by John Chang, FVP of Research for Marcus & Millichap. Here are his highlights.

·         The US has added 11.5MM jobs in past five years with steady quarterly gains. 8.7MM jobs were lost during the recession. He predicts about 3.0MM jobs added in 2015.
·         Consumer confidence (index) is almost back where it was in 2007. This has raised retail revenues. The US is 19% higher in total revenue sales over 2007.
·         Internet sales are up 65% since 12/08. That trend is being driven by Amazon, Apple and Walmart. This is helping traditional store sales, as many are becoming fulfillment centers.
·         Drop in oil prices, which is close to historic average, is helping retail, manufacturing, and logistics providers. Acts as an inflation deflationary buffer.
·         Texas has outpaced the US growth rate for the past 20 years, and in 2014, grew 3.4%. The state enjoys a steady migration of about 200K jobs per year. Texas retail sales are growing at around 5% annually.

  • Nationally, retail vacancy has dropped from 8% to under 6%. Most recent M&M/NREI survey shows 68% of investors will increase their real estate holdings this year, and 58% expect their retail to grow in occupancy. With a 450 bps spread between cap rates and treasuries on retail, he predicts investment in the sector will remain robust, particularly in the high growth markets.
Sayres Dudley/DHR International