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Shopping Centers Today -> November 2001
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REITS WEIGH EFFECTS OF ATTACKS
By Dave Bodamer
Top
REIT officials say the aftermath of the Sept. 11 attacks on America
will have a sharply varying impact on different retailer and property
categories, with the crisis disrupting an already slowing economy.
Value retailers such as Wal-Mart, Target and Kohl’s — considered strong credits — will do better than specialty apparel and luxury goods sellers, said Milton Cooper, chairman of New Hyde Park, N.Y.-based Kimco Realty Corp., during a late September conference call held by Salomon Smith Barney. Cooper stressed that long-term leases to strong credits hold more merit than short-term leases because, like bonds, they offer stability in times of trouble.
The Mills Corp.’s malls saw brisk traffic, even right after the attacks, but economic uncertainty was discouraging people from buying ahead for the holiday season, reported Laurence C. Siegel, CEO of the Arlingon, Va.-based value megamall developer, another conference participant.
Other centers were busy, too. Traffic at malls two weeks after the attacks exceeded the previous year’s levels by 3.4%, according to the National Retail Traffic Index, compiled by Chicago-based RCT Systems. The reading followed a 65% fall in foot traffic immediately after the Sept. 11 tragedy.
Nevertheless, some leading economic indicators continued slowing during September. The Conference Board, a New York City-based organization that compiles business research, reported that consumer confidence in September dropped to 97.6, compared with 114.0 in August.
The Labor Department released unemployment figures in September that held steady at 4.9%, the same as in August. However, announced layoffs during the month amounted to almost 250,000, almost all following the attacks. During the third quarter more than 600,000 layoffs were announced, a figure that surpasses the annual total for seven years during the 1990s.
Meanwhile, the atrocities may also be propelling Canada more rapidly into recession, attendees heard at the ICSC Canadian Convention, held at Metro Toronto Convention Centre in late September.
“Sept. 11 did not create recession, but it forced financial markets to acknowledge it exists,” said Jeff Rubin, chief economist at CIBC World Markets, financial analysts, Toronto, speaking in a panel discussion. Canada was already in recession and consumer spending was at risk prior to Sept. 11, Rubin said, citing the loss of 35,000 jobs nationwide in the last three months, a double-digit drop in information technology investment and a substantial decline in manufacturing. He predicted it will take government spending in Canada and the United States to bring about a recovery, which he said might not occur until late 2002.
Not surprisingly, airport retail also has struggled in the wake of the tragedy. Sales at shops and restaurants fell 40% in the immediate wake of the events, according to Pauline Armbrust, publisher of Airport Retail News. The numbers have climbed somewhat since then, but Armbrust said first-quarter sales in 2002 will probably only reach 90% of the previous year’s levels.
“Most people are saying that it’s going to take about a year to get back where they were,” Armbrust told SCT. “Some tenants are pushing for some kind of relief in their rents. Every airport is going to have a different level of impact, so in some areas rent relief is not going to be on the agenda. But San Francisco has already allowed some relief.”
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