Excerpts  from Cassidy Turley’s National 2014 Retail Review

Cassidy Turley is reporting that heading into this year’s holiday shopping season analysts were exceedingly cautious with their holiday sales forecast. Last year most of us predicted sales growth in the 3.5% to 4.5% range. The average increase in retail sales over the holidays has averaged 3.2% over the past decade. Those numbers include a brutal 2008 when, at the front end of the recession, sales recorded a rare decline of -2.8%, and they fell by another 1.2% during the dismal 2009 shopping season. Since that time, they have consistently been posting increases of 3.0% or more.

2013 was supposed to be the breakout year. Having weathered the policy-induced distractions of the fiscal cliff, sequester and government shutdown, the economy appeared to be picking up. From January through August of last year, the U.S. averaged 197,000 new jobs per month. By September, the month when most analysts release their predictions, the unemployment rate had fallen to 7.2% (its lowest level since December 2008 when jobs were hemorrhaging at a pace of 700,000 per month). Meanwhile, the Conference Board’s Consumer Confidence Index hit 82 in August of last year. This was the highest reading for this metric since January 2008—a full nine months before the near financial collapse that set off the Great Recession.

And so analysts were optimistic last year. GDP was up. Job growth was at its highest levels in eight years. Home prices were rebounding solidly. Confidence and consumer spending were posting solid and consistent gains. So it only seemed natural that these positive indicators for the overall economy would translate

into the strongest sales gains seen so far in the post-recession era. But what happened? Sales growth for the 2013 holiday shopping season came in at a humdrum 3.3%. Better than the ten-year average of 3.2%, but disappointing for an industry that had expected something more. Ultimately a short shopping season (blame the calendar for that one), terrible weather in most of the country and a still-cash-strapped consumer were blamed.

Burned last year, many analysts waited until October before releasing their 2014 forecasts; we didn’t. In September we predicted sales growth of 3.5%, an improvement over 2013 totals but a relatively modest one. Our rationale was that while there is a case for bullishness, this would be tempered by a shorter sales season and a few other factors. From Thanksgiving through Christmas Eve, there are 28 shopping days this year. Last year’s 26 days was the shortest possible period. The longest possible period is 32 days. According to the International Council of Shopping Centers, since 1993 when the holiday sales season has measured 28 days, the market has averaged sales growth of 2.8%.

Supporting the case for optimism is that the economy is far stronger this year than it was last year. GDP for Q3 2014 came in at 3.9%, well above the advance estimate of 3.5%. This follows an extremely strong Q2 in which GDP grew by a robust 4.6%. And the momentum hasn’t let up. Heading into the final quarter of 2014, we were tracking growth in the 3% to 4% range.

Current levels of job creation are at the strongest that we have seen in 15 years. The U.S. economy added an average of 229,000 jobs per month from January through October 2014. Employment growth has been positive for 49 consecutive months,

Business and consumer confidence are at their highest levels in eight years as well. The Conference Board’s Consumer Confidence Index stood at 89 as of November. Though this is down slightly from October’s reading of 94, this metric is expected to

climb significantly in December thanks to the impact of falling gas prices. October’s reading was the highest level that the market has recorded since 2007.

So why weren’t we more aggressive with our forecast back in September? After all, household, corporate and bank balance sheets are all in fantastic shape by nearly every metric. The reason is that though wage pressures have picked up in many U.S. markets, overall wage growth numbers have remained relatively weak so

far. Though American consumers are generally in a better spot than where they were one year ago, this last issue is critical. After all, the signs were also all positive in 2013. Ultimately, consumers remained fairly conservative when it came to holiday shopping. We anticipated something similar for 2014.

But this was back in September before what appeared to be a short-term trend of falling gasoline prices evolved into a full-blown price war between Saudi and domestic shale oil producers. Based on the impact of this trend, we see our initial estimate of 3.5% as being too conservative. Thanks to the economic boost that falling gas prices will give American consumers, we now anticipate final sales numbers for the 2014 holiday sales season to come in somewhere between 4.0% and 4.5%.

Over the past few weeks a number of other major holiday sales forecasts have been released. Nielsen predicted 1.9% sales growth. Wells Fargo’s economist forecast an increase of 3.9%, while Fitch hedged their bets with a prediction of 3.0% to 4.0%. Kiplinger forecasts 4.0%, Deloitte puts it somewhere between 4.0% and 4.5% and the National Retail Federation has predicted sales growth of 4.1%

Click here for the full Winter 2014 Retail Review from Cassidy Turley.

The following leases were reported during the week of October 27-31, 2014 to the Phoenix Lease Report:

RETAIL – NWC of MAYO BLVD. and SCOTTSDALE RD., SCOTTSDALE, AZ.
Mary Ridberg and Rommie Mojahed of Sperry Van Ness, LLC, represented Potato Barn to lease 22,252-square-feet of retail space at Scottsdale 101 Retail, located at the NWC of Mayo Blvd. and Scottsdale Road in Scottsdale.

INDUSTRIAL – 7345 E. EVANS RD., SCOTTSDALE, AZ.
Kent Circle Investments, LLC (Scott Seldin, manager) announces M Group Scenic Studios, Inc. has leased an 11,438-sqauer-feet of industrial space at Evans Airpark Center. M Group Scenic Studios, Inc. specializes in large-scale national and international events. The landlord, Kent Circle Investments, LLC was represented by Jim Keeley, Colliers International. M Group Studios, Inc. was represented by Troy Wuedring, Caliber Commercial Group. Kent Circle Investments purchased Evans Airpark Center at 7345 E. Evans Road December 2013. The property is situated on 2.395 acres at the southwest edge of Scottsdale Airport’s runway.

RETAIL – 1660 S. ALMA SCHOOL RD., MESA, AZ.
Mary Ridberg, Rommie Mojahed and Beau Flahart of Sperry Van Ness, LLC, represented the landlord at Fiesta Crossing in the 5,116-square-foot lease to Living by the Word Church.   Fiesta Crossing is located at 1660 S. Alma School Road in Mesa.  Jody Dents of US Preferred Realty represented the tenant.

RETAIL – 4232 E. CHANDLER BLVD., AHWATUKEE, AZ.
Shari A. Tucker-Gasser and Trenton McCullough of Sperry Van Ness, LLC, represented the landlord at Mountain Park Square, located at 4232 E. Chandler Blvd. in Ahwatukee, in the leasing of a 5,012-square-foot space to Hi Health.  The space was leased to the former Secreto’s restaurant.

OFFICE – 15841 N. 77^TH ST., SCOTTSDALE, AZ.
Justin Horwitz of Sperry Van Ness, LLC, represented Amer-X-Security in the leasing of 4,358-square-feet of office space at 15841 N. 77th Street in Scottsdale.  Mike Kane of Colliers represented the landlord in the transaction.

RETAIL – 3061 W. APACHE TRAIL, APACHE JUNCTION, AZ.
Kings Ranch Dental leased 3,000-square-feet of retail space at Apache Trail Plaza. Apache Trail is located at 3061 W. Apache Trail in Apache Junction. Beau Flahart of Sperry Van Ness, LLC, represented the landlord.

RETAIL – 485 S. WATSON RD., BUCKEYE, AZ.
Firehouse Subs opened their newest location at Watson Marketplace, located at 485 S. Watson Rd. in Buckeye. Mary Ridberg and Rommie Mojahed of Sperry Van Ness, LLC, represented Firehouse Subs in the 2,300-sqauer-feet, 120 month lease.

RETAIL – 9820 W. LOWER BUCKEYE RD., TILLESON, AZ.
Fix it Wireless, LLC dba Metro PCS leased 2,000-square-feet of retail space at Pecan Promenade, located at 9820 W. Lower Buckeye Road in Tolleson.  Beau Flahart of Sperry Van Ness, LLC, represented the tenant and Brad Douglas of Cassidy Turley represented the landlord.

RETAIL – 1437 E. MAIN ST., MESA, AZ.
Baja Tacos leased 1,800-square-feet of restaurant retail space at Barkley Center, located at 1437 E. Main Street in Mesa. Beau Flahart of Sperry Van Ness, LLC, represented the landlord.

RETAIL – 2822 N. 32^ND ST., PHOENIX, AZ.
Larry Charles leased 1,200-square-feet of retail space at Plaza 32, located at 2822 N. 32nd Street in Phoenix. Mary Ridberg and Carrick Sears of Sperry Van Ness, LLC, represented the landlord.

RETAIL – MESA VISTA PLAZA, MESA, AZ.
Mary Ridberg, Rommie Mojahed and Beau Flahart of Sperry Van Ness, LLC, represented the landlord at Mesa Vista Plaza in the leasing of 1,155-square-feet of retail space to tenant Nguyen Nail Salon, who was represented by Scott Teerink of MEB Commercial Management Group, LLC.

OFFICE – 8687 E. VIA DE VENTURA, SCOTTSDALE, AZ.
Justin Horwitz and Nicole Ridberg of Sperry Van Ness, LLC, represented the landlord at Ventura Gateway, located at 8687 E. Via De Ventura in Scottsdale, to lease 990-square-feet of office space to Developmental & Educational Psychological Services.  The tenant was represented by Gregg Sherman of Cassidy Turley.

OFFICE – 8687 E. VIA DE VENTURA, SCOTTSDALE, AZ.
New to Ventura Gateway, The Law Offices of David Baker.  Justin Horwitz and Nicole Ridberg of Sperry Van Ness, LLC, represented the landlord and Colby Everett of Cassidy Turley represented the tenant.

Phoenix, AZ– Goodyear Gateway South, the ±221 acre industrial zoned park being developed by EJM Development Co. just north of the Phoenix Goodyear Airport, has announced its first user. Michael Lewis Co. (MLCo) has purchased a 30-acre parcel for development. The financial terms of the transaction were not disclosed.

Pat Feeney, Dan Calihan and Rusty Kennedy with CBRE’s Phoenix office represented EJM Development in the transaction. MLCo was represented by Andy Cloud with Cassidy Turley.

MLCo is a global provider of in-flight and catering products, logistics and supply chain management solutions. MLCo plans to build a ±250,000-square-foot warehouse and distribution facility on the newly-purchased, 30-acre parcel at Goodyear Gateway South, taking advantage of the park’s foreign trade zone (FTZ) designation. This facility marks an expansion for the company in metropolitan Phoenix. The new facility will increase the company’s current operation and will feature a combination of refrigerated space, dry storage and office space.

“This purchase and planned facility is a great example of the draw of an FTZ designation,” said Fred Stiles, Regional Director with EJM Development Co. “FTZ status allows metropolitan Phoenix to compete for companies doing business internationally. What’s more, in Arizona there is an additional tax benefit for properties in FTZs that allows for significant reductions in both real and personal property tax.”

“We are thrilled to have Michael Lewis Co. locate in Goodyear” said Mayor Georgia Lord. “This addition to our business community will bring with it more than 100 jobs and helps us launch one of our premier employment corridors – the Goodyear Gateway South development. We appreciate EJM Development’s investment in infrastructure on this property. As a result of our strong partnership with them, we are confident we will continue to see industry investment in this area and additional jobs for our City.”

This land purchase comes just months after EJM Development broke ground on significant infrastructure at Goodyear Gateway South. In May of this year the developer began work on $5 million worth of construction on streets and utilities, which is nearing completion and should be finished by year’s end. The street improvements include full width 143rd Avenue from Van Buren Street to Yuma Road and improvements to Yuma Road, as well as a traffic signal at 143rd and Van Buren.

“EJM strategically laid the framework for the Goodyear Gateway South,” said CBRE’s Feeney. “The West Valley has emerged as the next epicenter of major commercial development in metropolitan Phoenix and major employers are looking to locate and expand in the Valley. It’s important that we are able to offer high-quality, industrial-zoned, shovel-ready sites. The development of infrastructure, streets and utilities at Goodyear Gateway South is a major step toward being ready for incoming users.”

The ±221-acre, foreign trade zone-approved Goodyear Gateway South is ideally situated for users that transport goods intra- and inter-state. Additionally, the park provides companies access to the talented, deep and productive workforce living in the immediate area, while freeways put it within an hour of all 3.8 million workers in Greater Phoenix. Goodyear Gateway South is part of the larger ±350 Airport Gateway at Goodyear master-planned community. At build-out, Airport Gateway will feature approximately 3 million square feet of planned industrial/work space at Goodyear Gateway South and at Goodyear Gateway North, home of the Cancer Treatment Centers of America’s state of the art medical treatment facility, an additional 2.5 million square feet of upscale regional retail, hotel, office and medical office uses.