the state of u.s. retail

The State of U.S. Retail

Taylor Coyne, JLLResearch Manager, U.S. Retail

January 2019

2© 2017 Jones Lang LaSalle IP, Inc. All rights reserved.

Retailers saw their best holiday season in 6 years

• Holiday sales are up 5.1 percent since last year

• Black Friday sales rose by ~9.0%

• Apparel sales grew 7.9% percent (best growth rate since 2010) and home improvement spending increased by 9%

• Online shopping was up 19.1%

Source: ICSC, Mastercard SpendingPulse


2018 holiday shopping indicates a shift to online and mobile

• A little less than half of holiday shoppers said they would buy most gifts online

• Top 5 retailers where consumers planned to shop were:– Amazon (22.1%)

– Walmart (15.8%)

– Target (12.3%)

– Macy’s (4.3%)

– Best Buy (4.1%)

Source: JLL Research


$

Value + experience


Value retailers see revenue growth despite lower experience scores


Vacancies remain flat despite closures

$16.

88

$17.

20

$16.

17

$15.

30

$14.

99

$14.

85

$15.

07

$15.

32

$15.

62

$16.

07

$16.

88

$17.

60

5.8%6.4%

7.3%7.1% 6.9% 6.7%

6.3%5.7%

5.3%4.7% 4.5% 4.5%

$13.00

$13.50

$14.00

$14.50

$15.00

$15.50

$16.00

$16.50

$17.00

$17.50

$18.00

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD2018

Quoted rent

Vacancy

Source: JLL Research, Q3 2018


Construction remains limited and focused on mixed-use and urban projects

Percent of retail product under construction, Q3 2018Retail supply & demand

General Retail, 65.1%

Shopping Center, 16.5%

Mall, 12.4%

Power Center, 3.3%

Specialty Center, 2.7%

133.

2

10.3

65.2

64.9 71

.8 83.0

119.

4

107.

4 124.

5

88.7

35.2

155.

1

86.9

44.3

45.0

46.9 51.5 63

.3 72.6

71.5

75.7

40.3

.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD

Net absorption (m.s.f.) Total delivered (m.s.f.)

Source: JLL Research, Q3 2018


But what about all the closures?

100100100100100100101109110

124132

150170

200200200

228250252

268379

400500

600735

bareMineralsCharming Charlie

Michael KorsSally Beauty

Sears HometownThe Children's Place

BrookstoneKmart

Foot LockerVitamin WorldClaire's Stores

StarbucksH&MGNC

Mattress FirmSignet Jewelers

SearsBest Buy Mobile

Bon-TonAscena Retail Group

TeavanaH&R Block

SubwayWalgreensToys R Us

# of announcedclosings

Source: PNC, Coresight, JLL Research, Q3 2018

• Bookstores• Electronics stores• Office supplies• Mid-priced apparel• Mid-priced grocery

– especially unionized• Casual dining

– older, struggling concepts• Stationery/Gift shops

Replaceable by internet

Mid-range retailers

Other

Retail categories contracting in the next year


$

Value + experience


Off-price retail and home furnishing stores rush to fill vacant department store space



Discount stores, restaurants, clicks to bricks retailers plan aggressive future openings

• Vacant spaces – including anchors –continue to be backfilled by groceries, off-price retailers, craft & hobby stores and fitness centers, among others.

• Discount/variety stores, fast food restaurants and apparel retailers top the list of retail categories with announced openings.

• Clicks-to-bricks retailers like Fabletics, Untuckit, and Indochino are aggressively expanding their physical footprint.

• Entertainment tenant, Urban Air Adventure Parks, is doubling its store count to 100 this year and plans to double again to 200 locations next year.

18

25

35

51

63

65

70

80

96

120

136

172

195

200

209

250

254

263

1001

1363

1717

Home Improvement

Wholesale club

Discount department stores

Toys/Games

Shoe store

Entertainment

Pet supplies

Specialty

Crafts/Hobby

Mass merchandiser

Accessories

Health & beauty

Sporting goods

Auto parts

Grocery

Mobile

Home furnishings

Fitness center

Apparel

Restaurants

Discount/variety

# of announced openings



E-commerce retailers plan 850 physical stores in the next 5 years

Apparel & Accessories,

74.3%

Furniture, Home Furnishings & Housewares,

11.4%

Specialty/Other, 5.7%

Cosmetics/Beauty, 5.7%

Consumer Electronics,

2.9%

Luxury, 1%Luxury Lite, 11%

High, 50%

Middle, 32%

Low/Discount, 7%



$

Value + experience



Accessible, human, immersive, intuitive

Glossier GlossierCasper


Four phases of clicks-to-bricks expansion



Most major mall renovations fall into four categories


Upgrading food and beverage is the top renovation strategy

2.2%

2.2%

3.3%

5.6%

5.6%

7.8%

8.9%

10.0%

11.1%

12.2%

16.7%

28.9%

34.4%

41.1%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

Medical

Distribution Center

School

Call center

Demolished

Office

Community & kid spaces

Hotel

Open space & parks

Multifamily

De-malling

Entertainment

Tenant upgrades

Food and beverage

Percent of renovated and redeveloped malls since 2014 that are in the process of or have already underwent significant renovationsSource: JLL Research


More retail isn’t always the answer

The Amazing Brentwood, Vancouver, BCAustin Community College, Austin, TX


Can co-working work at the mall?

Mall, 21.3%

Streetfront retail, 20.0%

Mixed Use, 17.3%

Neighborhood center, 12.0%

Community center, 12.0%

General/freestanding retail, 6.7%

Theme/festival, 5.3%

Power center, 5.3%

Where retail coworking spaces are located



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the state of u.s. retail

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