Kroll Bond Rating Agency Releases Retail PropertyBeat Report: “Off-Price & Urban Retail Charge Ahead”

Kroll Bond Rating Agency (KBRA) released its next edition of PropertyBeat, which is focused on the retail market. These periodic reports provide key takeaways concerning the trends shaping the underlying commercial real estate (CRE) property markets defined as Primary Markets (KPrime) by KBRA. KBRA’s PropertyBeat utilized CoStar Realty Information, Inc. to compile its dataset of properties.

It has been a long and sluggish post-recessionary recovery for the retail sector. Hardest hit have been those centers in oversupplied retail markets that are competing for the same shopper. Leading the retail recovery have been off-price centers and retail projects in urban locations. In the off-price segment, outlet centers have been in the expansion phase as developers build and expand existing centers, disregarding industry concerns of oversaturation.

Major department stores such as Bloomingdales (Outlet), Neiman Marcus (Last Call), Nordstrom’s (Rack), and Saks Fifth Avenue (Off 5th) have established a major presence in outlet centers. Macy’s (Backstage) and Kohl’s (Off Aisle) announced that they will be testing the outlet center format in the second half of this year in and around the NYC metropolitan area. Urban retail has benefited from the inflow of young professionals and Baby Boomers who are returning back to the cities they left after starting families.

There have been positive signs over the last few months, including stronger job growth and higher wages that could stimulate consumer spending. Increased spending should help stimulate retail demand and support better retail fundamentals. However, what has become evident in the current real estate recovery is that performance results will vary by retail format and location.

To view the full report, please click here: www.krollbondratings.com/show_report/2485.

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