Real Estate Report Card
The Pain Spreads in Real Estate
Hotels are benefiting from increased tourism, but economic conditions are hurting other sectors of the commercial market.
Retail: Not a Good First Half
TOUGH SELL: Many chains are scaling back while others are seeking bankruptcy protection. An estimated 5,770 retail stores will be closed this year.
For Florida’s retail sector, the first half of the year has been dismal: Consumer spending has dropped, home values have fallen, population growth has slowed and major retailers are retrenching.
“Consumers today are facing credit issues, high gas prices, property tax and insurance issues,” says Lewis Goodkin, president of Goodkin Consulting in Miami and a Florida Trend contributor. “The state of the U.S. economy is directly affecting the retail sector.”
Nationally, several retail chains, including Sharper Image and Linens n Things, have filed for bankruptcy. Others, like Foot Locker and Ann Taylor, are closing dozens of stores, while Lowe’s, Office Depot and other chains are scaling back growth plans. The International Council of Shopping Centers estimates there will be 5,770 U.S. store closings in 2008, up 25% from 2007.
“The retail and restaurant chains are very cautious today,” says attorney Thomas P. Angelo, managing shareholder at Angelo & Banta in Fort Lauderdale, whose clients include national retailers. “And the developers are finding it more difficult to access capital for new retail centers.”
However, Angelo expects an upturn in the fourth quarter as consumer confidence increases and financing becomes easier to come by. “If you look at real estate market cycles, the downturn started in 2005 after Hurricanes Wilma and Katrina,” he says. “Since then, higher insurance and reconstruction costs have hit both retailers and their landlords. If Florida has another quiet hurricane season, that will be good news for the retail market.”