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Mid-Year | 2010

MacKenzie Market Report

Submarket: Retail

Retail Submarket Map
Quarter Highlights
  • In April, the International Council of Shopping Centers posted a 4.5 percent business increase nationwide, bringing its business barometer, a key metric for the retail industry, to 52.6 percent. This was the first time since July 2007 the barometer has crossed 50 percent.
  • Luxury stores are beginning to show a bounce back after customers cut back very sharply in 2008 and 2009.
  • After learning how to market themselves through tweets and status updates, some small companies are taking the next step: selling directly to consumers via social-networking sites by adding e-commerce stores to their Facebook and MySpace pages.
  • Safeway signed a 59,180 square foot (sf) lease at 1012-1015 York Road in Towson bringing life to the vacant space previously occupied by CompUSA and Linens N' Things.
  • Construction has started at the Village South at Waugh Chapel, located in western Anne Arundel County. Slated to open in Summer 2012, the Greenberg Gibbons' project will house a Target, Wegmans, and Dicks Sporting Goods.
  • Planet Fitness will be opening stores in Gaithersburg (14,316 sf), Golden Ring (13,566 sf) and District Heights (18,400 sf).

Market Outlook
By Tom Fidler, MacKenzie Retail

During the first half of 2010, the Retail real estate market has shown early signs of a stabilization following the fallout of the Retail market in 2009. Store closings, comparable store sales, and consumer activity appear to have leveled off and no further substantial events are expected in the near future. Overall, vacancy rates have held steady around 7 percent.

Leasing activity has been maintained by local retail businesses looking to capitalize on the overall reduction in rents and aggressive leasing terms offered by some property owners. In general, new lease transactions are characterized by rent offsets to cap on expenses and by shorter term leases that include kick-out options. Leasing incentives abound and include free rent, higher tenant improvement dollars, fixed or stepped rent, and even percentage rent agreements.

There has been a clear, and likely permanent shift in consumer habits toward value-based retailers that offer discounted merchandise and this "buying down of America" is evidenced by the success of national discount retailers such as Dollar Tree, Walmart, and Sam's Club among others. Moving forward throughout 2010 and beyond, traditional retailers are beginning to accept this reality and are creatively competing by offering unprecedented, if not confusing at times, discounts.

Despite these national trends, the Baltimore Retail market is expected to fare comparatively well because of the strength of the Baltimore-Washington economy, which remains strong in the areas of "meds, eds, and feds", that is healthcare, education, and government. An overall "calming" of the national recession within the local markets has provided for many retailers to get back into the market, identifying potential opportunities for future store openings in 2011 and 2012.

Notable Transactions
Lease

Location Submarket Tenant Amount Leased SF

8200 Perry Hall Blvd
(White Marsh Mall)

White Marsh/Perry Hall Forever 21 197,345
7735-7885 Eastern Ave
(Eastpoint Mall) 		Baltimore County East Shoppers World 47,000
6710-6724 Ritchie Hwy
(Chesapeake Square Shopping Center) 		Baltimore South ShopRite 85,100
6100 Dobbin Rd
(Columbia Crossing II) 		Columbia Toys "R" Us 63,062
3351-3361 Corridor Market Pl
(Corridor Marketplace)		 Ft. Meade Hobby Lobby 55,615
5800 Hillen Rd
(Belvedere Gardens) 		Baltimore City Fresh Food Point 25,000

Sale

Location Submarket Price PSF Size
6100 Dobbin Rd
(Columbia Crossing) 		Columbia $7,275,000 $80.49 90,380
1800-B Belair Rd Harford County $8,400,000 $188.35 20,144
2614-2663 Chapel Lake Dr
(The Village at Waugh Chapel) 		Ft. Meade $72,000,000 $184.62 365,439

*(r) Renewal

**(sub) Sublease

* All information furnished regarding property for sale, rent, exchange or financing is from sources deemed reliable. No representation is made as to the accuracy thereof and all such information is submitted subject to errors, omissions, or changes in conditions, prior sale, lease or withdrawal without notice. All information should be verified to the satisfaction of the person relying thereon. Portions of the base statistics are from CoStar Property data. Data as of 06/2010.