South Florida, the densely packed grid squeezed between the Atlantic Ocean and the Everglades, is back on the priority list of retailers that, until recently, were content to hang out on the beach and wait for more inviting waters, so to speak. Over the past few months, the list of the most active newcomers has included Toys “R” Us, Babies “R” Us, Ross Dress for Less, Sports Authority and Dick’s Sporting Goods, just to name a few.

And while the region is still a long way from the blistering pace of activity that was evident during the housing boom, there are other positive signs of life. A year and a half ago, similar to most major cities across the U.S., shopping center landlords in Miami and South Florida were fending off an overabundance of aggressive rent requests from retailers. All too often, in an effort to grasp some security for the future, many had to give in to retailers’ insistent demands for relief.

In fact, many chains managed to lock into long-term leases at low- to mid-double-digit rent amounts in class “A” centers that used to command $25- or even $30-per-square-foot. During the past few months, however, the flood of rent-reduction requests has tapered off dramatically, even as chains like Dollar Tree, Chipotle Mexican Grill, Burlington Coat Factory, ALDI and Save-A-Lot have flocked to Dade, Broward and Palm Beach counties.

In February, the much-admired grocer Fresh Market opened its first store in Fort Lauderdale, adding to its presence in Broward County and creating quite a buzz. During the past 3 years alone, Dollar Tree has closed more than 40 deals in the market. And, in its bid to give Best Buy a run for its money, hhgregg opened about a dozen stores by the end of 2011.

The healthy appetite of the restaurant sector is another good omen. In recent months, the likes of Taco Bell, Burger King, McDonald’s, T.G.I. Friday’s, Golden Corral, Smashburger and Five Guys Burgers & Fries have all appeared equally bullish on South Florida. Banks such as TD Bank, PNC Bank and Chase, along with supermarkets Publix and Aldi, have also battled hard for market share and space.

There is also talk of new retail projects in Miami. In particular, the proposed Skytown development at I-95 and Northwest 8th Street will add 400,000 square feet of retail, most likely with power center tenants like Target, Old Navy and T.J. Maxx. And while the Florida Legislature has killed — for now — a proposal that would allow so-called “destination casinos” in South Florida, many observers wager that the Genting Group’s massive proposed project in downtown Miami will move forward (sans poker tables and slot machines).

With architecture more reminiscent of Dubai than Miami, the $3 billion project reportedly will occupy some 30 acres, with 5,500 hotel rooms, 200,000 square feet of planned high-end retail and a 3.6-acre outdoor lagoon that would be equivalent to 12 Olympic-size swimming pools. All of this would be surrounded by natural sand beaches. It is hard to imagine anyone planning such an ambitious project back in 2008 or 2009.

Given its longstanding ties to Latin America and popularity with international tourists, the Miami market is hardly subject to the typical ups and downs of the U.S. economy alone. Whenever countries like Brazil and Peru experience robust growth, as both most certainly have since 2009, Miami reaps the benefits. In particular, International visitors often spend their money at hotspots like Aventura Mall or South Beach’s upscale Lincoln Road shopping district. Of late, Brazilian investors have been snapping up attractively priced condo developments all over the city. With Peru’s economy estimated to grow a whopping 5.5 percent this year, it is a good bet the influx of foreign capital will continue to play a positive role here.

Since it is still difficult to obtain financing and refinancing, redevelopment in South Florida continues to suffer. This is part of the reason loan workouts and outright foreclosures of retail properties have occurred — case in point, the troubles of West Palm Beach’s CityPlace, the shopping, dining and entertainment destination that went into foreclosure in part because of reduced rents. But while the recession also forced Palm Beach Mall into foreclosure, this property has been acquired with plans for a 400,000-square-foot, discount-oriented redevelopment. Two anchor spots, one of them a former Dillard’s, are still available at Boynton Beach Mall, which highlights the challenge many regional malls face amid the general pullback of the larger anchors.

Retail success in this market tends to be all about population density. In Dade County, performance has been strongest in Dadeland, a neighborhood in the Miami suburb of Kendall, and Coral Gables, the area southwest of downtown. In the typical major metropolitan market, population density is easy to predict—it will be strongest at the bull’s eye in the center of the dartboard (downtown) and weakest at the outer edges (the exurbs). In the South Florida market, where you can drive from Palm Beach to Miami and hardly know you have left one county for another, the exurban phenomenon of empty shopping centers built in advance of ill-fated residential can hardly be found. This is reflected in South Florida’s relatively healthy retail vacancy rate, which decreased from 6.7 percent at the beginning of 2011 to 6.2 percent at the end.

The renewed activity of today is just the beginning. Strong population density and limited supply mean this dynamic market will continue to attract even more national retailers. After all, they finally believe it’s safe to get back in the water.

— Bill Rotella is an X Team International partner and president of Fort Lauderdale-based The Rotella Group.

 The Minneapolis-Saint Paul MSA was on the road to recovery long before many others. And while that might come as a surprise to outsiders, this market actually packs quite a punch. With more than a dozen Fortune 500 employers — including Target, Wells Fargo, U.S. Bank, Ecolab and 3M, to name a few—the MSA’s 5.1 percent unemployment rate is a full three points lower than the national average and is consistently ranked as one of the friendliest job markets in the country.  

Little wonder national retailers have been so keen on taking space in prime Twin Cities markets such as Roseville, Edina (Southdale) and Minnetonka (Ridgedale). Whole Foods, for instance, opened a Minnetonka store in a former Circuit City box late last year and also razed a vacant Storables to make way for a Southdale store. More recently, the Texas-based chain announced plans to open a downtown Minneapolis store on the site of a former Jaguar dealership.

Slowly but surely, remaining Ultimate Electronics, Circuit City and Linens ’n Things boxes are being refilled by expanding chains. Some are leasing vacant boxes in their entirety; others are taking portions of subdivided boxes. Case in point: Last year T-Mobile, Godfather’s Pizza and Ulta Beauty took a former Linens box in Burnsville’s Burnhaven Shopping Center, and a 20,000-sq.-ft. anchor is on the verge of signing a lease there as well.

As elsewhere in the Midwest, the grocers have been expanding fastest here. Target has been converting older Minneapolis stores into its PFresh grocery concept, while Walmart has steered away from behemoth boxes in favor of smaller stores that emphasize food. Cub Foods/SuperValu, Aldi and Trader Joe’s, meanwhile, are looking hard at existing boxes in dense population centers—i.e. at “Main & Main.” The other hot category is quick-serve restaurants, particularly Smashburger, Chipotle Mexican Grill, Potbelly Sandwich Shop and Noodles & Company.

In recent years, in fact, these chains alone have taken a total of approximately 280,000 square feet of space in the Twin Cities market. Naturally, one effect of retailers’ renewed interest has been a transition to more positive absorption. In 2011, our 61.4 million-square-foot retail market had an overall vacancy rate of 5.8 percent, with fiscal 2011 net absorption of 508,759 square feet. ALDI, T.J. Maxx, Best Buy, Savers, L.A. Fitness, Trader Joe’s, Whole Foods, Home Goods, Gordman’s and even Goodwill helped make that happen thanks to their interest in vacant junior-anchor boxes.

This is not to say that landlords can breathe a sigh of relief. The top-tier Southdale market, which is known for its fashion and jewelry retailers and is home to two of the MSA’s wealthiest ZIP codes, still has plenty of empty boxes. When the recession hit, chains that had operated multiple Southdale locations closed their underperforming stores but kept the better ones open. Despite the rosy demos, they have no need for more space here. This is abnormal to say the least. Five years ago chains could not find 2,000 square feet of available space in Southdale, and today more than 10 big boxes are up for grabs in this affluent area.

Likewise, Maplewood, Woodbury and Maple Grove also have a number of big-box holes, forcing shopping center owners to go toe-to-toe with each other to re-tenant these spaces. This is keeping rents low and tenant improvement (TI) payouts high. Strip center tenants and quick-serve restaurants alike have grown accustomed to TI allocations 50 percent larger than during the boom. Gone are the days when a landlord with an end cap and drive-thru could sit back and enjoy the fruits of a bidding war between Starbucks and Caribou Coffee. Today, landlords are doing their best to make deals happen with even the most aggressive TI requests.   

On the transaction front, well located, grocery-anchored centers are drawing a significant amount of investor interest and, in general, leading to lower cap rates in the strongest submarkets. To be sure, the credit-worthiness of the tenant lineup can make a huge difference from one property to the next, but here, too, the trend is basically positive. The flipside is that our exurban areas with low population density—the parts of Minneapolis that were “pioneer country” back when chasing residential growth was the strategy du jour—are of no interest to today’s skittish investors. Simply put, transaction activity is not likely to resume in these hinterlands until the U.S. sees a spike in housing starts.

Developers in this market face the same challenges that have kept bulldozers idle in so many other parts of the country—lack of demand and financing—leaving far fewer developers in the Twin Cities today than there were just a few years ago. Call it the Darwinian natural selection of real estate. Fortunately, there is at least some talk in the market about a few new projects on the books. The highest-profile of these is Minneapolis-based CSM Corp.’s purchase of the 51-acre Lockheed Martin Corp. property in Eagan, which boasts high incomes, easy freeway access and a strong daytime population. Ultimately, the site will likely be rezoned and redeveloped into a retail-only project that should be a boon to this second-ring suburb.

The plain fact is that hard economic times have forced everyone to make smarter, more realistic decisions. Not so long ago, Wall Street was encouraging most expanding retailers to put store count first and ask questions later. Today, retailers seem more concerned with asking lots of questions and thinking about earnings potential first. That means the competition for getting deals done is even harder. In the end, it will surely translate into a stronger, more vibrant retail industry; one that already seems to be emerging in the Twin Cities.

— Christopher E. Simmons is an X Team International partner and senior vice president of retail leasing for Minneapolis-based Welsh Cos.

The Howard Hughes Corp. unveiled its first project as an independent company this week and it seems to be off to an impressive start with a development plan that has become a smash hit in one of the toughest markets in the country: New York City.

New York retail brokers say the plan has the potential to completely revitalize the property with a design that takes advantage of the Seaport’s great location and a new merchandising mix that would serve as a draw for local residents and office workers as well as tourists.

“What the Howard Hughes Corp. is proposing is plainly based on everything that’s happening downtown,” says Robin Abrams, principal and executive vice president with The Lansco Corp., a New York City-based real estate services firm. “I think it’s brilliant because certainly from a design point of view it takes advantage of the location and creates something that’s really exciting and vibrant.”
“In particular, if you look at the Pier 17 building, it’s kind of a box. This new plan has so much air and light and takes advantage of people being able to go inside and outside and see views of the water. Before, you went inside and you were in a mall.”

The view the full Retail Traffic article, click here.

http://retailtrafficmag.com/news/Howard_Hughes_NY_Project_Hit_03152012/?NL=RET-01&Issue=RET-01_20120315_RET-01_514&YM_RID=%60email%60&YM_MID=%60mmid%60

As reported in The Site Optimizer (Retail Traffic) on Feb 21, 2012

Word on the street is that Mac Cosmetics, a division of Estee Lauder, signed a lease at Vornado Realty Trust’s 691 Fifth Avenue building that breaks the record for the highest rent ever paid for a New York retail space.

The 1,400-sq.-ft. space, formerly occupied by Elizabeth Arden’s Red Door Spa, sits on a prime stretch of Fifth Avenue, near 54th Street.

Vornado officials did not confirm the deal.

If true, the transaction sets a new high for rental rates in an area that last year already ranked as the most expensive retail strip in the world, according to brokerage firm Cushman & Wakefield. In the fourth quarter, rents on upper Fifth Avenue averaged $2,388 per sq. ft., Cushman & Wakefield reports. The figure reflects 59.2 percent in rental growth over the past five years—a period that included some of the worst years on record for retailers. At the end of 2011, the vacancy rate on Fifth Avenue stood at 6.1 percent.

The East side of the street, where Red Door Spa was based, has been in especially high demand among luxury tenants and the space in the Vornado building has been the only one to come on the market in some time, according to Robin Abrams, principal and executive vice president with The Lansco Corp., a New York City-based real estate services firm. The West Side of the street houses the flagship stores of Uniqlo and Zara.

To read the full article, please visit: http://retailtrafficmag.com/news/record_rent_deal_Fifth_Avenue_02212012/?NL=RET-02&Issue=RET-02_20120221_RET-02_604&YM_RID=sbutts@identitypr.com&YM_MID=1293046

As reported in Shopping Centers Today February 2012

Few new shopping centers are going up in the U.S., and yet Wall Street remains hungry for growth. The retailer response is to expand “in place”: to reshape their spaces and fine-tune their brands, in the hope of squeezing more from existing footage. From Macy’s $400 million remake of its New York City store in Herald Square to a wholesale recasting of some 3,000 Army and Air Force PX stores nationwide, retailers are aggressively reinventing their images.

At least 8,000 U.S. stores under the Jones Lang LaSalle retail umbrella are undergoing some kind of renovation program, says Steve Jones, managing director of the Jones Lang LaSalle multisite retail program. “In fact, there is a backlog of several years,” said Jones. “Retailers are busy seeking out a new brand identity and figuring ways to carry that over to the store level and their products and fixtures.” New-store growth has slowed, so retailers know they need to increase same-store sales, he says. “They’re looking at how to increase revenue and are doing minor and major renovations ranging from new paint to new fixtures to new equipment to entirely new departments. They want to give the customers a whole new look and feel.” The national slowdown in new construction has given retailers an opportunity to re-examine the in-store presentations they may have neglected when they were busy opening new units, says Jones.

Driven by improvements, annual retail construction spending rose from $40.9 billion in 2010 to an estimated $42.03 billion last year, with projections of an increase to $46.2 billion this year and to $53 billion next year, according to Reed Construction Data. Though sales results depend on many factors, merchants can realize sales growth of at least 6 percent on such projects, and in some cases much more, Jones says.

In the case of the 3,100 Army & Air Force Exchange Service department stores, systemwide rebranding and remerchandising helped boost sales by upwards of 200 percent in most locations, according to Jones Lang LaSalle. Jones Lang LaSalle and consultants came up with a new logo, remarketed the stores as “The Exchange,” conceived a V-shaped store layout and reorganized the sales floors. These stores were losing business to off-base big boxes and other private stores before the overhaul.

Fast-food restaurants are on the move too. Arby’s boosted sales at some 70 restaurants it renovated, all of them over 20 years old. Jones Lang LaSalle assisted with the new look, which includes fresh signage, brighter interiors and kitchen upgrades.

In many cases department store retailers are initiating their renovation strategies at flagship stores. In November Macy’s announced a four-year, $400 million overhaul and expansion of its Herald Square store. A reconfiguration of office and storage space will add 100,000 square feet of floor space for a total of 1.2 million square feet. The shoe department will be the world’s largest, offering up to 300,000 pairs, according to Macy’s. The redesign is to incorporate new technology interactive store directories. Ultimately, the store will boast 22 restaurants and food-service stations. “Like other department stores, Macy’s is trying to make their real estate more productive while creating the right customer experience and aggressively moving into the digital space,” said consultant Wendy Liebmann, CEO of New York City–based WSL Strategic Retail. “Retailers are being forced to think about productivity. They’ve come to recognize that opening more stores isn’t the route to growth and profitability.”

As of last December, Macy’s is operating roughly 850 stores (including Bloomingdale’s), the same number it was operating in 2007. Last year the chain remodeled its Water Tower Place Macy’s store, in Chicago, and its New York City Bloomingdale’s flagship store. The reported price tag on that revamp of the 520,000-square-foot New York Bloomingdale’s is $50 million.

Department stores typically postponed renovations through the first few years of the recession, Liebmann says, but they are now making up for lost time. Sak’s Fifth Avenue completed a comprehensive flagship store renovation in 2010, JCPenney has revamped its various prototypes, and Barneys New York, Lord & Taylor, Nordstrom and others are reassessing their real estate, she says. Kohl’s remodeled 100 stores last year, up 18 percent from the number of remodels the year before.

“Retailers want to remain relevant in the eyes of the customer and send a message that they are cutting edge, and there’s no better way to signal that than a renovation,” said Kenneth Katz, a principal of Baker Katz, a Houston retail brokerage. “We’re seeing it across the board in all product types. It is a great opportunity to make a statement.” Best Buy, for one, is spending a lot on renovations while also trimming its prototype size, he says.

Many retailers that expanded robustly last decade often found that they failed to generate enough additional revenue to justify the effort, says Jeff Green, who heads an eponymous retail consulting firm in Phoenix. “So now they really want to drive their sales per square foot in smaller or existing locations,” Green said.

While large retailers try to get more out of existing boxes, some regional retailers are pondering the store-expansion opportunities afforded by the large number of small-space vacancies in most markets, says Mike Schmid, who heads the research and geographic-information-systems departments at Fort Worth, Texas–based Buxton. “They are looking for locations, but they are taking the opportunity to better understand who their customers are first,” said Schmid.

In the Philadelphia area smaller apparel retailers are growing into new locations rather than renovate the existing ones, says Douglas Green, a principal of Michael Salove Co., a real estate brokerage and advisory firm in Philadelphia. “There is a more disciplined approach to expanding than four or five years ago,” he said. “Deals have to fit into a tighter box. The local supply of shopping centers has dwindled to a point where we are on the precipice of new construction here.”

Grocery chains have spent the past four years improving existing stores instead of building new ones, and they remain on that path, says Chris Wilson, president of Los Angeles–based Wilson Commercial Real Estate. “The recession more or less defined and refined that objective,” Wilson said. The strategy carries forward to some retail REITs as well, Wilson says. “We do leasing for Regency Centers, and they’ve also been concentrating on getting greater value out of their existing portfolio.”

Some remodeling has been executed with an eye toward saving energy. Two 14,000-square-foot Nike Factory stores — one in Louisville, Ky., and the other in Des Moines, Iowa — were remodeled late last year to achieve LEED (Leadership in Energy and Environmental Design) Gold certification. Before they reinvest wholeheartedly in existing stores, large tenants typically seek a commensurate financial commitment from landlords, says Jones. “They’re looking at the lease to determine the remaining terms and making sure they’re there at the appropriate price point and that the owner is upgrading the center along with them,” he said. “It’s an opportunity for renegotiation.”

Store renovation is still a relative bargain for U.S. retailers, Jones says, but that may be changing. “This is still an opportune time to renovate, with construction prices remaining low,” he said, “but with improving conditions, that’s bound to get more expensive.”

As reported in Shopping Centers Today February 2012

Welcome to the neighborhood, not-so-big-box ­retailers. In their ­effort to get ever nimbler and more market-responsive, already shrinking “box” retailers continue shaving down their store dimensions and rolling out concepts to customize them for smaller shopping centers and in-line spaces, especially in urban areas. Some merely want to augment the sales of their full-line formats and online stores, while others want to bring their products directly into suburbia-shy neighborhoods. Whatever their motivation, though, these high-profile drivers of traffic are finding that landlords are eager to move walls and clear up paths.

Petco, for one, has been busy pushing deeper into submarkets with its smaller Unleashed by Petco stores, some of which are taking over former Blockbuster Video end-cap spaces and stand-alones. Unleashed by Petco took over a 5,000-square-foot space in Arlington, Va., last year and made plans to occupy a 3,710-square-foot Blockbuster space in Willow Glen, Calif., this year. Petco began rolling out Unleashed stores, which specialize in high-end, organic products, in 2009. Most neighborhoods have been receptive, but not all. Late last year Petco withdrew its application for an Unleashed store in a long-vacant, 5,000-square-foot Walgreens space on Geary Street, in the Richmond District of San Francisco, following opposition from business and consumer groups.

Another retailer shrinking down to squeeze into tighter spaces is Whole Foods Market. At just 13,700 square feet, Whole Foods’ new store in the town of Jamaica Plain, just outside Boston, is about a fifth the size of the chain’s largest stores. The store, which opened inside a former Hi-Lo grocery store in November, had to forgo its Whole Food Café and a few other standard features to fit the size constraints.

Because development capital in most markets remains constrained, “merchants are looking for creative ways to grow sales in maturing markets, and we are seeing some unconventional things happening,” said David Palmer, executive vice president of Dallas-based Cencor Realty Services. “We’re finding it makes more sense for landlords to renovate centers in correlation with existing or new anchors.” As cities struggle to generate sales-tax income, they are proving to be more compliant in approving zoning changes for unique projects and leases, he says.

Walmart, once known for having two blueprints — big and bigger — has launched an array of smaller format stores desifned to squeeze into urban spaces and malls.

Landlords and brokers are getting increasingly creative in accommodating high-profile tenants, sometimes finding subleases of merchants who are downsizing, or approaching tenants whose term is ending, says Douglas Green, a principal at Michael Salove Co., a Philadelphia real estate brokerage and advisory firm. Retail consultant Jeff Green, who heads his own firm in Phoenix, says the shopping mall remains the center of gravity for retail in most communities and cautions big-box stores that they need to be looking to remain “around that center as their leases expire.” Decentralizing stores into smaller satellite spaces “may be a great idea,” he said, “but it seems too early for most ­retailers.”

In many regards, the retail industry is following the lead of Best Buy, which has shrunk prototypes, tweaked layouts, introduced demonstration tables inside full-line stores and opened more kiosks and mobile stores. In its current fiscal year, the retailer is planning to open only six to eight of the larger-format stores, but 150 more of the Best Buy Mobile stores.

Some retailers are shrinking in place instead of seeking smaller digs. Hill Country Holdings, owner of about 20 Ashley Furniture HomeStores nationally, including nine in the Houston market, told the Houston press that it is looking at decreasing its stores sizes by subleasing to other retailers. The stores, which range from 30,000 to 45,000 square feet, would be downsized by between 6,000 and 15,000 square feet each.

During the past few holiday seasons, Toys ‘R’ Us opened several hundred pop-up stores, leading to the creation of a dozen permanent Toys ‘R’ Us Outlet stores of about 5,000 square feet each.

“Everybody is looking at whether they can be more relevant in a smaller space,” said Mike Schmid, who heads the research and GIS departments at Buxton Co., a Fort Worth–based customer analytics and development firm. Some retailers, including Home Depot and Lowes, are asking if they could better serve a large-store trade area with two smaller units in some cases, says Schmid, who spent 13 years with Lowes before joining Buxton in June.

“Retailers are trying to determine how they can do these [smaller] stores in urban markets and satisfy a highly desirable customer that they haven’t been able to fully capture at suburban locations,” said retail architect John Clifford, a principal at New York City–based base Perkins Eastman. “As they do this, they are also faced with trying to protect the integrity of their brands and meeting old consumer expectations for full product lines.”  Some of the most lucrative opportunities are in areas with high barriers to entry, lofty rents and a litany of challenges to landlords, he says.

In the U.K. two small-format offshoots of Tesco and Sainsbury’s — Tesco Express and Sainsbury’s Local — have been gathering steam for years in small street spaces. Each occupies about 2,500 square feet and reaches grocery customers who would not otherwise shop at the more remote superstore sites. Similarly, the Waitrose supermarket chain introduced its first 3,000-square-foot Little Waitrose concept store in the U.K. last year, with plans to open 300 more over the next 10 years.

Palmer says he is already starting to see junior big boxes downsize. Some will eventually become more showroom-oriented than full-line retailers and be able to fit into even more-compact spaces. “There is no such thing as a standard prototype anymore,” said Chris Wilson, president of Los Angeles–based Wilson Commercial Real Estate. “Almost every retailer has changed theirs, or is at least secretly reviewing it.” 

Close your eyes, relax, breathe deep—and swipe your credit card.

Retailers have long known that less-stressed shoppers are likely to browse longer, but now there’s evidence that they’ll also be more receptive to higher prices. A recent study in the Journal of Marketing Research found that relaxed shoppers were willing to pay up to 15% more for goods than less-relaxed ones.

After a few minutes of soothing music or a few sips of free cappuccino, your brain gets the message that there’s no reason to be on alert, says the study’s co-author Michel Tuan Pham, a professor of marketing at Columbia Business School.

The findings were consistent in a series of six experiments involving more than 670 participants. In one experiment that simulated an auction, relaxed participants bid about 11% higher for a digital camera than less-relaxed participants, whose bids were closer to the product’s estimated market price on online auction sites. The same effect was observed across a large variety of products in other studies.

The researchers theorize that relaxed consumers think about the value of products at a more abstract level. For example, in the bidding experiment, relaxed participants focused more on what the camera would enable them to do, such as collect memories. The less-relaxed participants focused more on the concrete features of the camera itself, such megapixels.

The findings help explain why high-end boutiques and luxury hotels often provide relaxing environments.

Now, more stores and even shopping malls are offering new soothing amenities and services. Chief in their marketing plans: trays of complimentary cocktails and finger food, private events before and after regular store hours, and cushy seating nooks with free Wi-Fi and flat screens that encourage shoppers to linger. Some stores are dabbling just for the next few months; others are aiming for a more relaxing experience year-round.

“It’s a subtle way to get you to buy more, and pay more for it,” says Jeff Green, owner of retail consulting firm Jeff Green Partners in Phoenix. Using emotional marketing tactics is one more way that retailers, are trying to wean shoppers off the big discounts of years past, Mr. Green adds.

Doug Wood, president and chief operating officer of Tommy Bahama, says he realized two years ago that the locations with the best holiday sales were those greeting shoppers with trays of complimentary mimosas and snacks from their attached restaurants. Last year all 13 restaurant-attached Tommy Bahamas offered food during the last two weeks of December. This year, they’ll have it every day starting in mid-November.

“Our shoppers come in more stressed than we’d like,” he says, adding that snacks in stores boost traffic to Tommy Bahama restaurants as well.

At minimum, the approach serves as a forced break.

“If I, as a retailer, can get you to sit for a bit, the chances of me selling you something are infinitely better,” says marketing consultant Paco Underhill, the author of “Why We Buy.” Samples can also secure a sale in places like Williams-Sonoma, which says stores ramp up tasting opportunities during the holidays.

Odds also improve, Mr. Underhill says, if there’s some place for a shopper to “park her ‘accessories,’ like a husband or boyfriend. That takes so much tension off the floor.”

With an eye to that, mall developer Westfield Group is rolling out cushy seating areas with couches and free Wi-Fi hotspots in the public areas in some of its 55 U.S. properties; flagship Garden State Plaza in Paramus, N.J., will have them by Black Friday, says northeast regional marketing director Lisa Herrmann.

Department stores and boutiques are achieving a similar effect by adding in-store cafés, or breaking up a large store into small rooms. “They engineer it so that some are almost empty, on purpose,” says Jim Bieri, principal at retail real estate-consulting firm Stokas Bieri Real Estate in Detroit.

Another crowd-control technique increasingly popular during the holidays is hosting a private event for a small groups of shoppers outside normal store hours. Lines to get into toy store FAO Schwarz often stretch up Manhattan’s Fifth Avenue, but this year, in a partnership with MasterCard’s “Priceless New York,” the store will let a handful of shoppers get in two hours early each day in November and December. Nordstrom department stores have added more evening events for its Fashion Rewards members this year between Thanksgiving and Christmas to handle increased demand, says spokesman Colin Johnson.

Likewise for high-end fashion retailer Kate Spade: “We do see a nice sales lift from customer events,” says Kyle Andrew, senior vice president of global brand marketing. The brand hosts local events year round, but plans to add more this year—including a blowout New York event near Black Friday with colorfully festooned taxis bearing the Kate Spade logo to ferry attendees home—as a way to generate loyalty.

Guests sometimes get a discount of 20%, she says, but the allure for most is early access to new products and a chance to peruse gift-guide options.

For all their plans, retailers’ relaxation efforts may not soothe shoppers. All it takes is one stressful element—crowds, disorganized shelves, a pushy sales clerk—to snap people out of a relaxed state, Dr. Pham says.

“Getting shoppers to relax, and stay relaxed, in a holiday environment is going to be difficult,” he says.

By KELLI B. GRANT

As reported in SmartMoney 9/29/11

It’s a time-honored way to lure shoppers into a store: Offer them something they can’t get anywhere else. In the run-up to the holiday season, those “exclusive” deals are becoming more common — but not necessarily more desirable.

Almost every store has limited editions and exclusive items on offer these days — some of them whole product lines’ worth. Toys R Us has so many proprietary items that, for the first time, the retailer sent out a 44-page fall catalog this month devoted entirely to its exclusives (including highly anticipated toys like Moshi Monsters and the Air Swimmer). Beauty retailer Sephora boasts in its recent marketing campaign that Dior’s fall runway makeup and a special range of nail polish colors from OPI are only available at its stores. “It’s a constant effort to get shoppers in stores, and exclusives are retailers’ best way to distinguish themselves from their competitors,” says Jim Bieri, an independent retail consultant.

The effort comes at a time when retailers are worried that consumers will stop spending, says Bieri. High unemployment combined with a jittery stock market has made consumers nervous, and exclusive products are a way to boost demand and business without necessarily dropping prices. To that end, many stores are focusing less on offering one product but on an entire line or range of goodies to generate more buzz, says Jim Silver, editor in chief of TimetoPlayMag.com. Consider Target, which in September launched a collection with Italian fashion design house Missoni. The company’s stores sold out of the items, which included throws, tote bags and dresses, within minutes of opening and crashed Target.com for a full day.

But what’s good for stores may not be good for consumers. Exclusive deals means stores don’t have to meet a competitor’s deep discounts, or offer any discount at all to make the item attractive, says Silver. And even if the item goes “on sale,” it’s not easy to tell how good a bargain you’re really getting. The store might have planned the original price of say, $50, knowing that it would offer a $5-off coupon right away, says Silver. Shoppers are also more likely to over-spend on an exclusive item, says Michelle Madhok, founder of sale site SheFinds.com. Some get swept up and purchase more than they intended; others visit for one item they can’t get anywhere else end up buying other stuff, too.

To avoid paying too much, experts say shoppers should adjust their habits, especially as the holidays approach. Although discounts aren’t common, some exclusive items do go on sale — the Toys R Us catalog included more than a dozen coupons. Madhok says shoppers might also check rebate portals like Ebates, which is currently offering 8% cash back at Sephora, or buying secondhand gift cards from resellers like CardAvenue, where cards for Best Buy sell at 5% discounts. Also, check around: Often exclusive items differ only in minor details (like color) from ones sold cheaper elsewhere.

Compiled by John Nelson

As reported in Texas Real Estate Business October 2011

Texas Real Estate Business recently spoke with several retail real estate executives in the state to get their impressions of the market. Participants included: Jason Baker, co-founder and principal, Baker Katz; Gerald Crump, vice president and director of Central Region, Weingarten Realty; Jerry Goldstein, senior director — National Retail Group, Marcus & Millichap; Jeff Read, principal, Read King Commercial Real Estate; R. Carson Wilson IV, marketing director, Fidelis Realty Partners; Jason Claunch, principal, Catalyst Commercial, Inc.; Tim McNutt, director of leasing and sales, Bright Realty; Jean Smith, COO, UCR Realty; Keith McRee, vice president, NAI REOC — San Antonio; David Simmonds, principal, Retail Solutions; Ramiro Aleman, manager of business development, Harlingen Economic Development Corp. ; Bob Ayoub, President, MIMCO — El Paso; Michael Blum, Partner and Managing Broker, NAI RIO Grand Valley; Max Prestridge, broker, Huntington Group; Randy Summers, Vice President, Davis Equity Realty and Jason Clanton, broker associate, Curt Green & Co. Commercial Real Estate.

Houston

From Houston, the following professionals participated in the roundtable discussion: Jason Baker, Co-Founder and Principal, Baker Katz; Gerald Crump, Vice President and Director of Central Region, Weingarten Realty; Jerry Goldstein, Senior Director — National Retail Group, Marcus & Millichap; Jeff Read, Principal, Read King Commercial Real Estate; and R. Carson Wilson IV, Marketing Director, Fidelis Realty Partners.

TREB: What is the current state of retail activity in Houston?

Baker: Retail activity is high in Houston, unlike anything we’ve seen in the last 3 years. What vacancy has been created through the fallout is all but gone. We’re hearing retailers reference the market activity as reminiscent of 2005-06. Retailers who struggled with a backlog of inventory 2 years ago are flowing products off the shelves now and activity is very positive.

Crump: The Houston and Texas market in general has performed remarkably well compared to other parts of the country and the retailers have taken note. We are seeing fairly strong activity from the national and regional retailers and retail service providers. The mom-and-pop startups are still struggling to get financing so we are seeing fewer deals from them; however we are seeing good small shop franchise activity. We have released the vast majority of our big box vacancies in the Houston market and at the state level with overall occupancy above 92 percent. Small shop leasing has been strong in the dominant grocery and soft goods anchored centers within the various trade areas. Second tier centers or unanchored strips are the laggards in the marketplace unless the landlords are willing to drop rents to maintain occupancy.

Goldstein: The sale of retail properties, which is the area I’m involved in, has improved in 2011. It’s not just for the reason that investors got sick of low interest rates being paid by banks on their sidelined cash, but more that some sellers have met the market with where they are selling their properties. There has also been an acceleration of lenders (banks and special servicers) discounting notes and retail centers to reduce their REOs and defaulted loans.

Read: Although still not near pre recession levels, 2011 has been a breath of fresh air for developers, brokers and investors. Grocery store anchored retail continues to be the most active segment of the market followed closely by restaurants, service users, and medical. Big box retailers are being very selective and opportunistic and are opening a reduced number of stores. Medical clinics and hospitals have branched out into neighborhoods in an effort to be convenient to patients and are now focused on the same real estate characteristics as retailers — location, visibility, access, and co-tenancy.

Wilson: Driven by the heath care and the oil and gas business sectors, Houston’s economy is amongst the most robust of any major metropolitan area in the country. The Houston Business Journal listed Houston as the No. 2 city in the U.S. in terms of job growth, adding an estimated 51,000 non-farm jobs from April 2010 through April 2011. As a direct result, suburban Houston communities are amongst the fastest growing in the U.S., with Katy being listed by many publications as the single fastest growing community in the country. The Houston retail market is significantly more active than at any time since the onset of the recession in 2008. After several years of dormancy, many retailers are starting to expand in order to meet the growth demands of Wall Street. Given Houston’s thriving local economy relative to the rest of major markets in the U.S., it has become an obvious destination for these expanding retailers. This excitement is significantly tempered somewhat by the overregulation, debt and fiscal problems created by the federal government.

TREB: What retail leasing/development trends have surfaced during the economic downturn? Have any major developments come online this year? Are any planned?

Baker: The sites with the most activity are those properties landowners have been sitting on throughout the recession the last 3 to 4 years, like the Whole Foods development at Cinco Ranch. We’re also seeing new projects on existing tracks of land, and even more commonly, activity igniting the second or third phase of an existing project that had been postponed while landowners let the market catch up. A good example of this is the Phase II and III development of LaCenterra at Cinco Ranch. There is a continued increase in non-traditional users backfilling retail space left vacant by traditional retailers. The banking category, once known for overpaying in rents during the boom of 2005-06, has slowed to a crawl in activity.

Crump: Deals have become much more difficult to get done especially where approvals are needed from other tenants. Approvals that were once easy to obtain have increasingly become more difficult due to retailers looking for any leverage to negotiate economic incentives or a change in lease terms. We are also seeing many of the big box tenants downsizing / rightsizing stores by up to 25 percent of their previous sizes. We are also seeing tenants take second generation spaces that they would not have considered in the past or that are not according to their typical prototype. We continue to see tenants that were historically mall tenants coming out into the power centers and also many medical office uses coming out of office buildings into grocery anchored centers. Most of the developments you are seeing around the city that have come out of the ground over the last 18 months have either been on the drawing board before the recession or are additional phases to centers that were put on hold previously based on market conditions. We are seeing some new projects being announced by the supermarkets, smaller specialty grocers and large discounters but in much smaller developments than before. Many of the proposed deals in this market are freestanding big box deals or deals with very little small shop space. Much of the activity has been in the more urban infill locations or in suburban areas where density already exists.

Goldstein: Very few new developments have come online this year and that is a welcome trend allowing the market to absorb the supply of space already built. Downsizing by anchors like Best Buy adds to the additional inventory of vacant space.

Read: Power center development has slowed significantly and we don’t see any new projects coming out of the ground in 2012. Grocery store development continues to be the golden ring with HEB, Kroger, and Walmart competing for market share. HEB has been aggressive on strategic land acquisition in the Greater Houston Area and has several future developments in land inventory. Though online retail only currently accounts for 10 percent of all retail sales, it is growing at a rate of 10 to 15 percent per year and has created a focus with the bricks and sticks retailers on downsizing prototypes. This trend in online sales also puts a value premium on grocery store anchored retail that traditionally has a tenant mix of daily needs retailers, service users and restaurants that are not significantly impacted by online retail. The urban core has several mixed-use developments and redevelopment projects currently under construction, with additional projects planned to break ground within the next 12 months. The demand for “close in” new apartment units is driving the mixed-use development which benefits from a retail component that increases apartment rental rates, accelerates lease up and contributes to the return on high priced land. West Ave, a mixed-use project at Westheimer and Kirby streets that features a good mix of restaurants, soft goods retail, and service/office tenants, has been successful with effective apartment occupancy above 92 percent and good velocity on the retail lease up. At least four other projects will break ground inside the loop within the next 6 months.

Wilson: As for trends, one of the great lessons we learned from an economic downturn is that we need to return to the fundamentals of retail development — building anchored shopping centers with credit tenants and a limited amount of spec space. Prior to the downturn, it was fairly common to see unanchored strip centers being built mid-block at inferior intersections. This trend has ceased to simply because lenders won’t finance these types of properties and they have proven to be too challenging to lease in down economies. As times improve, it is important to remember these lessons to prevent repeating the same mistakes in the future. There are a few major developments that have come online this year or are being planned for next year. Speaking specifically for Fidelis Realty Partners, we recently completed development on a 200,000-square-foot center anchored by Academy Sports and Burlington Coat Factory in Humble. We are also currently working on a 125,000-square-foot power center in Cinco Ranch. We are also beginning to work on an 18-acre redevelopment of an existing multifamily site located at San Felipe and Fountain View, which will be mixed-use but predominantly feature retail.

TREB: What submarkets are performing best? What types of retail product?

Baker: The markets undoubtedly shining in Houston are on the west side, Katy and Cinco Ranch. These areas are looking to sustain the most growth and retailers are showing consistent interest as a result. Additionally, retailers in The Woodlands are doing very well. Grocers and restaurants are large categories of high performing retail in this extremely competitive market. We’re consistently seeing in most categories of retail that those who have traded down in market and those who have maintained performance as luxury are doing best, which explains why Tiffany’s and the outlets are doing so well. It’s those with price points in the middle who are struggling.

Crump: The dominate grocer and/or soft goods-anchored centers in the various submarkets have performed much better than the smaller unanchored strips. We have also seen that the centers and strips located in the more dense population bases have fared better as the retailer is no longer chasing the new center on the edge of the trade area. We have also seen well-located big box vacancies and small shop space release quicker and has remained in high demand from retailer looking to expand or enter theses tighter centers/submarkets. Demand seems stronger near the core of the city.

Goldstein: The Woodlands, West Houston/Cinco Ranch/Grand Parkway and the Inner Loop/River Oaks/West University/Bellaire areas are the most desirable.

Restaurants are leading the way — international concepts and healthy fare are popular startups. Medical users are more prevalent in retail spaces (emergency clinics, cosmetic practices, schools, etc.).

Read: The submarkets performing best in the overall Houston market are the Inner Loop, Katy-Grand Parkway Corridor, Cypress — 290 Corridor, and The Woodlands. The demand inside the loop is driven by strong incomes, strong densities of both population and employment, and lack of available real estate. In addition to the proposed mixed-use retail, “inside the loopers” will see Walmart open their first store in the urban core at the intersection of Interstate 10 and Yale in the Washington Heights submarket. The retail development in the Katy/Cypress/Woodlands markets is driven by continued home growth and high demand for daily needs shopping, service retail and medical. Grocery store anchored retail and medical development are the most active product types in these suburban markets. Continued home growth has created new store opportunities for grocers such as HEB, Kroger, Walmart and Whole Foods. Cinco Ranch in Katy was the No. 1 master-planned community in the country for new home sales in 2010. As a result, Cinco Ranch will add a Randall’s, Kroger and Whole Foods in 2012. The Woodlands will benefit from the biggest employment shift in Houston with the recent announcement of Exxon moving their corporate headquarters to the south side of the master-planned community. This employment gain is another example of why The Woodlands is defined as the as the most complete master-planned community in the greater Houston area and has become the model for developers around the country.

Wilson: Class A retail product is clearly performing the best, and all product classes below that have proven difficult to lease, finance, and sell. Suburban markets such as Katy, The Woodlands, Sugar Land and Baybrook are very active as well as are infill locations inside the loop and in the Galleria. In general, retail that is located around mid-to-high income demographics in established trade area is thriving.

TREB: What, if any, major retailers have entered/exited Houston?

Baker: Nordstrom Rack has come into the market to open a 30,000-square-foot store at Post Oak Boulevard and Westheimer Road, and a 35,000-square-foot store at Highway 6 and Highway 59 in Sugarland, and are planning to continue expansion in Houston. The retailer is doing very well with its lower pricing structure. Additionally, Ross Dress For Less is expanding its dd’s concept in the market. They’ve signed four leases at about 20,000-25,000 square feet each, which opened September 24th. CompUSA, who left the market during the downturn is now coming back, and major discount grocers like Aldi and Trader Joe’s are showing interest.

Crump: On the niche grocer side we have seen new tenants to the Houston market like Sprouts and Trader Joes looking for space. We continue to see HEB, Kroger and Walmart selectively looking for infill locations and holes in their market coverage. Yogurt, dental and burgers have been the hottest concepts filling space on the small shop side. Restaurants, beauty and medical related uses seem to be the more prevalent uses doing deals. Luckily we have not seen many retailers leaving the Houston market other than those like Borders who have filed bankruptcy in recent years. Generally speaking retailers are doing well in Texas.

Goldstein: Few major retailers have completely exited the Houston market. However, there are a few: Krispy Kreme Donuts finally bit the dust as well as Spence Diamonds. Restaurants have been the primary driver in retail expansion. Two majors, one retailer and the other a restaurant chain, are entering/re-entering the market: Trader Joe’s and Bennigan’s.

Read: Several specialty grocers have committed to new stores in the Houston Market – Mi Tienda (HEB Hispanic grocery concept), Joe V’s (HEB warehouse foods concept), Aldi (discount small venue warehouse concept), and Sprouts. Trader Joe’s has also appeared on several site plans, but has yet to commit to their first store. Other retailers entering the market include Neiman Marcus Last Call, American Girl, H&M, Santikos Theater, Equinox and Foundry. Many big box retailers are downsizing existing stores, creating excess space to sublease. In the Houston market, Office Depot, Ashley Furniture, Best Buy, Old Navy, Sears, and Sports Authority are examples of big box chains planning to scale back. In an increasingly competitive environment where the consumer can cross-shop pricing from inside the store with the use of mobile devices, retailers are looking for ways to reduce operating costs and to improve efficiency in store design in an effort to maintain profit margins.

Wilson: Nordstrom Rack, Trader Joe’s and Aldi are all retailers entering the Houston market. The most notable exit from the market is Borders, which has declared Chapter 7 bankruptcy and is currently liquidating.

TREB: What is vacancy like? Are rental rates holding steady?

Baker: Vacancy in Houston is about 10 to 11 percent and decreasing. Houston, on a per capita basis, has about 30 to 40 percent more retail than most markets similar in size. If you discount those ill-conceived projects from the 1980s that every market has, our vacancy rate is even lower. There is a delta as it relates to rental rates. Where there is a strong co-tenancy, we’re seeing an increase in rental rates. There’s a flat to downward slide in rental rates where co-tenancy is poor or properties are unanchored or poorly anchored.

Crump: As mentioned before, rental rates and vacancy on well positioned and anchored centers remain strong. We are seeing more growth in our renewal rates than in our new lease deals. As occupancy increases landlords should begin to see rental rates increase as well for good space. We have seen occupancy for our Houston portfolio increase about 140 bps since third quarter of last year.

Goldstein: Market occupancy is hanging in the high 80s percentage-wise. Rates have stabilized with less concessions/reductions with existing tenants. There is still stress in some suburban markets where rates are trending down in un-anchored strips.

Read: Overall occupancy is increasing due to very little new product being developed. Most of the big box space vacated by bankrupt chains such as Linens ‘N Things, Circuit City, and Borders has been absorbed by direct competitors and/or multiple tenants as the space is quite often being subdivided. Rental rates are also benefitting from a lack of new product and in some cases are increasing where demand exists from several competitors in the same category competing for the same space. Generally landlords are finding themselves funding higher tenant improvement dollars to achieve the same rental rates. The Class B and C centers have seen the most significant increase in vacancy mostly due to a tenant mix made up of under-capitalized mom and pop shops.

Wilson: Rental rates for non big box spaces in Class A product are on the rise, in some instances surpassing the pre-recession levels due to a lack of supply on the market. One of the most common statements we hear from tenant rep brokers is there is very little available Class A space on the market, and there is a high level of demand from retailers looking to expand which in turn causes rents to rise. Rental rates for available big boxes in the market have risen somewhat but not to the same extent as the smaller players, mainly due to the availability of big boxes in other parts of the country.

TREB: How is the second half of the year performing compared to the first half? Is there more activity/optimism?

Baker: By the second quarter, we were seeing a major uptick in optimism, and for the second half of the year we’re seeing activity increase significantly. There is renewed tenant interest in the market that should point toward a strong finish in 2011 and a special 2012.

Crump: Activity and optimism seems to fluctuate with the global economic concerns, both good and bad. The brokers we work closely with in the marketplace seem to be optimistic and busy with retailer tours so we view this as a positive sign for deals to come. Much of our business the second half of the year has been national, regional and franchised deals with very few startups. This is a trend we are seeing across the country the second half of the year versus last year and into the first part of this year. Financing and overall economic worries affect smaller business much more than the larger well capitalized business. We have very good assets, a strong platform coupled with seasoned dealmakers who remain focused on finding opportunities for both types of users within the portfolio and marketplace.

Goldstein: The second half should be improving because of advanced economic growth. Undo caution is still dominating certain investors outlook because of unwillingness to recognize the progress Houston is making. However, the second half should be productive.

Read: 2011 has been a rebound year for our brokerage business and our projects. Our brokers did more gross volume in the first six months of 2011 than they did for the entire year in 2010. We have seen a similar increase in volume of new leases in our own portfolio. However, a significant amount of our leasing activity has been from non-traditional retail tenants — medical users (emergency care, physician’s clinics, dialysis, diagnostic, and dentist) and more traditional office tenants looking for a street front presence.

Wilson: While performance is roughly the same, there is significantly less optimism than there was several months ago due to the uncertainty of our national monetary and fiscal policies, the lack of leadership coming out of Washington and the great amount of uncertainty in Europe. Our goals, as always are to develop fundamentally sound shopping centers and to keep our existing shopping centers leased with quality merchants and increasing vacancy where possible.

TREB: What are your goals for the remainder of the year?

Baker: We want to continue to think long term. We’re looking at every part of our business, from technology to people. We hope to continue to increase our market knowledge and strengthen our client relationships. We’re encouraged and looking forward to 2012.

Crump: We are focused on getting as many of our tenants under construction today open for the holidays. We have several larger retailers including Kohl’s, Marshalls, Nordstrom Rack and Saks opening in the fourth quarter in the Houston market. We are already focused on our 2012 pipeline, which is already shaping up to be quite strong. We remain focused on our acquisition and disposition goals for the year and remain committed to our new development program within each market.

Goldstein: Doing more of what I’ve done so far working for lenders, special services and private clients to deliver properties to that market with investor appeal and demand.

Read: A direct benefit of the contraction in our industry has been our ability to increase our market share and make several strategic hires of seasoned professionals. In the last 2 years we have doubled our third party management and leasing contracts and significantly increased our tenant representation business.

Wilson: Our goals through the end of this year are to continue to pursue strategic user driven development, broaden our third party management and leasing platform, increase our tenant rep accounts and add several key employees and brokers.

TREB: Do you believe things will turn around in your market in 2012? Why or why not?

Baker: The Houston market isn’t in need of a drastic turnaround. We experienced a slight downward tick and slowdown in new construction, which allowed us to catch up. The next wave of activity should reflect the beginning of new construction and an increase in new projects.

Crump: It is hard to tell what will happen next year as much of our deal volume will depend on how the retailers do this holiday season and their open to buy for the coming year. We have signed a good number of deals this year that will open next year. If the economic pulse stays the same or improves somewhat I think we will have a good 2012/2013. Retailers who are public need to expand / grow and those that have been on the sidelines have missed some good opportunity for lower rent deals the past couple of years. Today there is little new development of any significance coming out of the ground and will continue to be light for several years so good existing product type should see an increase in occupancy and cash flow. If we can avoid a double dip recession and more bankruptcies things could be quite good for 2012 and beyond. Our grocery-anchored product type has performed well over the past couple of years given it is made up of tenants who for the most part provide basic goods and services. Much of our success in the coming years will depend on the consumer.

Goldstein: Things have already turned in Houston. 2012 should be a continuation of that trend.

Read: While there is continued talk of a double dip, it is imprudent to keep waiting for an upswing. It is time to invest and to “expand out” of current circumstances. Texas is undoubtedly going to be in the spotlight between now and November 2012. On the upside, Texas has fared relatively well since the economic downturn. According to the president of The Federal Reserve Bank of Dallas, 37 percent of new jobs since June 2009 were created in Texas. Additionally, Houston is credited with creating one out of every 20 U.S. jobs. Though challenges remain, Houston persistently outperforms the rest of the country and the outlook remains optimistic. Job growth is fundamental to Texas’ recovery. Overall, retail jobs in Texas are up 1.9 percent while nationally the retail sector is experiencing a downturn of 7.2 percent. Houston is also adding new retail-trade jobs, posting an increase of 5,900 jobs since July 2010. Although the consumer is cautious, Houston is benefiting from a resurgence of inner loop development. The city is also home to four of the nation’s upper income, top-selling, master-planned communities, indicating that Houston is positioned for recovery.

Wilson: While there is a great amount of uncertainly, much more than existed 6 months ago, I think the economy in Houston will continue to improve which will make development in Houston viable.

By ANNAMARIA ANDRIOTIS

As reported in SmartMoney 11/10/1

Patience often pays off during the holiday shopping season. But people who wait too long to make big-ticket purchases this year may end up paying higher prices.

Retail experts say consumers who hold off on holiday shopping until the last two weeks of December are most at risk of missing deals. By then, most discounts on electronics and home appliances will be smaller, says Jeff Green, an independent retail consultant in Phoenix, Ariz. “Year-end” car sales are also thinning; cash-back offers on many SUVs and pickup trucks are now less than half what they were a month ago, according to Edmunds.com. Domestic airline ticket prices for Thanksgiving, meanwhile, are already up 6% from year ago — two percentage points higher than in September — according to Travelocity.

The trend of rising prices is a sharp reversal from previous years, when retailers and manufacturers were eager to lower prices to unload excess inventory. But this year they’re less stocked, experts say, and so are less inclined to offer big discounts. This all comes as more Americans are looking to make big-ticket purchases in the next few months. On some of those products, demand is now higher than it was before the recession. In October, more consumers said they plan to a buy car, home appliances, or a computer over the next few months than they did in October 2007, according to BIGResearch, which tracks retail trends.

To be sure, not all last-minute deals are expected to disappear. To begin with, if consumers become gun-shy again, retailers will likely cut prices, says Jason Baker, co-founder and principal at Baker Katz, a Houston-based retail brokerage firm. (The National Retail Federation expects consumer demand this holiday season to be lower than last year, but that includes smaller, everyday products as well, says an NRF spokeswoman.) And some consumers willing to wait until a few days before or after the holidays could find bargains on those items that are still available.

For savvy shoppers, here are three big-ticket holiday purchases that are getting more expensive and ways to save.

Electronics and Appliances

Consumer demand for appliances and computers is up this year. Meanwhile, there isn’t much inventory to go around, especially at the brisk pace electronics have been selling, says Shawn DuBravac, chief economist at the Consumer Electronics Association. “I don’t expect inventory to grow at all — we’re not looking at a surplus of anything across the board,” he says. As a result, consumers may face the likelihood of either not finding the actual products they want in mid-December or not getting a discount, he says.

Some retailers are offering price guarantees that can help consumers save. Consumers who buy electronics (and other items) at Walmart from Nov. 1 through Dec. 25, but then find the same exact product at a lower price at another store, will be able to receive a Walmart gift card for the price difference. For electronics bought between Nov. 13 through Dec. 24 (excluding Thanksgiving Day through Nov. 28), Best Buy says it will match the prices on identical products offered by its competitors.

Car Sales

Traditionally, the best car deals are offered during the year-end car sales season, which starts in October and peaks in December. So far, the opposite seems to be happening for many models. Though deals can vary by location, in October car buyers could get up to $4,000 cash back on the 2011 Chrysler Town & Country, up to $3,500 on the 2011 Dodge Ram Pickup 3500, and up to $3,000 on the 2011 Ford Escape. As of press time, those cash back offers have been scaled back to up to $1,000 in many locations. (To be sure, these deals can change often, so consumers might want to stay on top of incentive changes.)

Part of the problem for shoppers: there’s limited 2011 inventory to choose from, says Alec Gutierrez, manager of vehicle valuation at Kelley Blue Book. Cars are selling relatively fast (car sales are up 9% from a year ago) and car inventory is down (due largely to natural disasters in Asia). That means consumers won’t see all that many 2011 models lingering on the lots. They should also expect fewer choices when it comes to car colors and features, he says. Consumers who have to buy a car by the end of the year and don’t mind these limitations could be best off waiting until the middle of December, says Jeremy Anwyl, CEO at Edmunds.com. That’s when manufacturers could roll out their best deals in order to get rid of any remaining 2011 inventory before the year changes.

Airfare

Experts say waiting until the last minute to book Thanksgiving or holiday airfare in order to get a deal is unlikely to pan out this year . The same holds true for New Year’s and travel well into 2012. That’s largely because airlines are reducing some flights, and less supply often results in higher prices. For example, a Delta spokesman says the company will be reducing capacity next year by about 2% and that much of it will be on its trans-Atlantic routes. Last month, American Airlines said it would retire up to 11 aircraft next year citing the uncertain economic environment in a company statement.

Indeed, some airlines say they expect to have less trouble filling seats next year, says a spokeswoman at Expedia.com. In fact, on some routes, consumer demand is already up. For example, AAA Travel vacation bookings (airfare and hotel purchased as a package) from the U.S. to Europe during the first quarter of 2012 are 15% higher than they were at this point last year for the first quarter of 2011. Similarly, bookings for travel during the second quarter of 2012 are up 21% compared to last year. Travelers should try to search for flights early on and to consider booking airfare when the price appears relatively affordable, says George Hobica, publisher of Airfarewatchdog.com. “I wouldn’t wait until the last minute because that doesn’t really work anymore.”