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Consumers were cautious spenders on discretionary items during the first quarter due to the sequester and expiration of the payroll tax cut. Consumer consumption accounted for 3.2 percent of GDP during the first quarter. Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University (GSU), predicts that figure will decrease to 1.9 percent during the second quarter and fall further to 1.7 percent during the third quarter of this year. While consumer spending remains modest, the main problem facing the nation’s economy revolves around the federal budget, said Dhawan during his presentation at GSU’s student center the morning of Wednesday, May 22. “The biggest [question] is will we have a budget by fall of this year,” asked the forecaster. “I may be an optimistic fool, but I have a presumption that we will.” In late March, the Democrat-controlled Senate passed its first formal budget proposal in four years. The non-binding plan for the 2014 budget calls for $1 trillion in tax increases. While the Senate proposal effectively reduces the deficit over 10 years, it stands in sharp contrast to the House budget proposal. A budget deal would provide corporations with a measure of certainty about their tax rates, …

LAS VEGAS — The grocery industry has undergone a major transformation during the past five to 10 years due to changing demographics and shopping patterns, says Joseph McKeska, senior vice president of real estate for Bi-Lo Winn-Dixie, which operates approximately 700 grocery stores with $10 billion in annual sales. “You have a much broader ethnic mix around the country and that is going to continue to accelerate over time,” remarked McKeska at Retail Trends 2013, an hour-long program hosted by Marcus & Millichap at the Renaissance Las Vegas Hotel on Monday during the ICSC RECon show. What’s more, consumers are taking full advantage of all the options available to them today, ranging from traditional grocers to warehouse clubs to specialty stores to even dollar stores. Joseph McKeska (center) of Bi-Lo Winn-Dixie talks about the state of the grocery business during Retail Trends 2013 hosted by Marcus & Millichap at ICSC RECon in Las Vegas. Ten years ago, consumers generally would select one grocery store as their primary place to shop and identify a second store to pick up a few other items. “Today people are shopping in three or four different stores because they are watching cooking shows on the …

Experiences like dining out, watching a movie or participating in community events continue to be the main reasons people prefer the mall to online shopping, according to the Glimcher Retail Monitor, the first in a series of periodic surveys on the behavior of shoppers in today’s changing environment. Glimcher Realty Trust (NYSE: GRT) designed the inaugural survey to understand why people come to the mall. The results were released Monday during RECon 2013 in Las Vegas. “The way consumers enjoy the mall has changed. Today, the mall is a destination, offering more than just retail,” says Michael Glimcher, chairman of the board and CEO of Columbus, Ohio-based Glimcher. The real estate investment trust owns material interests in and manages 29 properties with total gross leasable area totaling approximately 21.6 million square feet. “While shopping will always be the primary reason people go to the mall, the survey supported our notion that going to the mall is about the experiences — whether that’s having a salad and a glass of wine with your girlfriends or enjoying a movie on a Friday night. People want a mix of retail, restaurants and entertainment,” adds Glimcher. C&T Marketing Group, on behalf of Glimcher Realty …

By Matt Valley Will the U.S. economy avoid a fourth consecutive mid-year slowdown? If the nonfarm payroll employment report for April is a harbinger of what’s to come, there will be no rerun this year. Employers added 165,000 net new payroll jobs overall in April, according to the Bureau of Labor Statistics (BLS), including 176,000 in the private sector. Just as significant, the job gains for the prior two months were revised upward by a combined 114,000 jobs. But economic headwinds still persist. Data on factory orders and international trade have softened recently, and retail sales remain choppy, according to Bob Bach, national director of market analytics for Newmark Grubb Knight Frank. “Moreover, sequester-related spending cuts, which are unfolding gradually, will knock about 0.6 points off of gross domestic product this year,” adds Bach. Real gross domestic product in the United States increased at an estimated annual rate of 2.5 percent in the first quarter of 2013. In each of the past three years, relatively solid GDP growth early in the year has been followed by a slowdown in either the second or third quarter. In some ways, the April jobs report was a mixed bag. One positive sign is …

Brent Auberry, Esq. This is not your mother's shopping experience. In the never-ceasing cycle of trying to stay hip and cool (or perhaps just relevant), mall owners in recent years have shifted away from the traditional, inward-facing enclosed mall to today’s outward-facing lifestyle center. This change in design for new shopping centers brings with it a potential change in valuation techniques for older malls. Assessors often apply a modified reproduction cost to malls, basing value on the cost of recreating the property’s identical shape, size, design and layout. A more relevant value is replacement cost, or the cost to replace the asset with a modern shopping center with the same utility. In other words, in certain circumstances assessors should assess large enclosed malls as if they were the less costly, more efficient lifestyle centers that could be developed on the same site. The difference might result in property tax savings for the owner. Lifestyle centers typically range between 150,000 and 500,000 square feet of leasable retail area and include at least 50,000 square feet devoted to upscale national chain stores, according to the International Council of Shopping Centers. Many rely on multiplex theaters or other entertainment components rather than traditional …

Cushman & Wakefield NEW YORK — Positive momentum continued in U.S. industrial markets through the first quarter of 2013 as e-commerce maintained its influence on reshaping industrial distribution strategies and facilities across the U.S., according to Cushman & Wakefield Inc. The overall vacancy rate fell to 8.2 percent in the first quarter, down 80 basis points from a year ago and to the lowest point since the third quarter of 2008. Lakeland, Fla. (4.2 percent), greater Los Angeles (4.4 percent) and Orange County, Calif. (4.7 percent) recorded the lowest vacancy rates in the nation (see chart). Only five out of 37 markets tracked by Cushman & Wakefield reported an increase in vacancies on a year-over-year basis. Warehouse vacancy has now declined for 12 consecutive quarters after peaking in the first quarter of 2010. Consequently, rental rates are now trending up. The U.S. direct weighted average triple-net rental rate today is $5.73, up from $5.59 one year ago and $5.68 at year-end 2012. “Expansion of e-commerce is fueling demand for big-box distribution centers in major distribution hubs, and has triggered an increase in both build-to-suit and speculative development,” says Cushman & Wakefield’s John Morris, leader of industrial services for the Americas. …

Richard P. Rizzuto When life hands you lemons, make lemonade. For those of us involved in the retail real estate sector, that second part should probably be changed to “open a lemonade stand.” The well-known saying echoes the importance of resilience and adaptability in the business world because more often it’s not the strongest who survive, but the ones who are the most responsive to change who can tread the waters. The brick-and-mortar retail model that has worked for years is continuing to evolve and there’s a strong sense of caution in the air. Lenders are willing, but only if retailers extra-qualified. Gone are the days when companies were growing at a rapid pace. For example, a company like Quick Chek, which previously might look to open 40 stores in a year, is now being far more selective and opening only eight in prime locations. Not because they can’t open more, but because they see the value in “less is more” — the quality over quantity mindset. Retailers who are doing well and expanding are ones such as Dollar General, Walmart, Super Target, and Walgreen’s, who have realized that the consumer mindset has shifted with value now being of prime …

Loan delinquency rates are declining, but there are still ample opportunities for investors to purchase distressed commercial properties. Before forking over money for those troubled assets, however, investors should make sure they have suitable real estate experience. Those were some of the observations and tips provided by a panel of experts in distressed real estate on a recent broadcast of the “Commercial Real Estate Show” hosted by Michael Bull, founder and managing broker of Atlanta-based Bull Realty. The show provided an enlightening look at the issues surrounding the acquisition of troubled commercial properties. Topics included CMBS delinquency rates, selling notes and due diligence. Delinquencies Dropping The delinquency rate for U.S. commercial real estate loans in commercial mortgage-backed securities (CMBS) fell to 9.42 percent in February, its lowest level in a year, according to Tom Fink, a senior vice president with the analytics firm Trepp LLC based in New York City. “It’s come down significantly, and we expect to see that number continue to decline,” he said. Investors who acquire those commercial properties still experiencing distress should have plenty of real estate experience, Fink cautioned. “If you’re looking at a distressed property, you’re looking at something that from a real estate …