u.s. economic, capital markets, and retail
TRANSCRIPT
U.S. Economic, Capital Markets, and Retail
Market Overview and Outlook – Retail Trends 2015
U.S. Economic Overview and Outlook
-2.7
-1.8
-0.9
0.0
0.9
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
Qu
art
erl
y J
ob
Gro
wth
(M
illio
ns)
* Through 1Q
** Through April
Sources: Marcus & Millichap Research Services, BLS
+8.2 Million +11.7 Million**
-8.7
Million
Steady Employment Gains Have
Pushed the Economy Into Expansion Mode
$2.0
$2.5
$3.0
$3.5
$4.0
01 03 05 07 09 11 13 15*
Reta
il S
ale
s (
$ T
rillio
ns)
Trailing 12-Month Retail Sales Excl. Auto and Gas
+18%
* Through April – excludes food and energy
Sources: Marcus & Millichap Research Services, U.S. Census Bureau
U.S. Core Retail Sales Well Past Prior PeakProviding Strong Footing to the U.S. Economy
National Employment Rank by MetroY-O-Y Absolute Change Through March 2015
Top 10Metros
Absolute Change
PercentChange
Dallas-Ft. Worth 116,900 3.6%
New York 107,900 2.7%
Los Angeles 101,300 2.4%
Houston 85,200 2.9%
Atlanta 82,600 3.3%
Chicago 64,900 1.4%
Seattle 64,800 3.6%
Inland Empire 55,700 4.4%
Phoenix 54,700 3.0%
San Jose 53,000 5.3%
U.S. Total 3,089,000 2.2%
Bottom 10Metros
Absolute Change
PercentChange
Milwaukee 8,000 1.0%
Cleveland 11,400 1.1%
St. Louis 14,800 1.1%
Cincinnati 15,500 1.5%
Jacksonville 15,500 2.5%
Palm Beach 21,100 3.8%
Columbus 21,500 2.1%
Austin 22,900 2.5%
Las Vegas 23,600 2.7%
Indianapolis 24,700 2.5%
U.S. Total 3,089,000 2.2%
Sources: Marcus & Millichap Research Services, BLS
Retail Supply and Demand
Overview and Outlook
9.4%
10.1%
10.6%
13.5%
16.3%
17.7%
19.0%
20.8%
32.4%
43.8%
0% 12% 24% 36% 48%
General Merchandise
Sporting Goods
Furniture & Electronics
Miscellaneous
Grocery
Building Materials
Apparel
Health/Personal
Restaurants/Bars
Nonstore Retailers
Perc
en
t o
f S
ale
s
Post-Recession Retail Sales by Store Type;eCommerce Gaining Share of Retail Sales
Post-Recession Growth
* Through March
Excludes auto and gas sales
Sources: Marcus & Millichap Research Services, U.S. Census Bureau
Change from April 2010 to April 2015
0%
3%
6%
9%
12%
2005
2015
*
E-Sales Share
1.3
1.4
1.5
1.6
1.7
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
$0
$60
$120
$180
$240Inventory to Sales Ratio: Retailers
Corporate Profits-Retail Trade
Rati
o o
f In
ven
tory
to
Sale
s
Sources: Marcus & Millichap Research Services, Census Bureau, BEA
Co
rpo
rate
Pro
fits-R
eta
il Tra
de ($
Bil. S
AA
R)
Retailers’ Profits Have Soared Past Prior Peak
as Operations Have Improved
0
50
100
150
200
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15*
5%
6%
7%
8%
9%
Completions Vacancy Rate
Co
mp
leti
on
s (
Mil.
of
Sq
. F
t.)
Avera
ge V
acan
cy R
ate
Retail Vacancies Have Dropped Thanks to
Minimal New Construction…..For Now
* Forecast
Sources: Marcus & Millichap Research Services, CoStar Group, Inc.
Retail Vacancy Rate Rank by Metro1Q 2015
Top 10
Markets
1Q 2015
Vacancy
YOY
Bps Chg.
San Francisco 2.2% -20
Boston 3.5% -40
Miami 3.9% -10
San Jose 4.0% -50
New York 4.1% -10
Oakland 4.3% -70
San Diego 4.3% -60
Orange County 4.5% -90
Salt Lake City 4.7% 0
Los Angeles 4.9% -40
U.S. Average 6.6% -40
Bottom 10
Markets
1Q 2015
Vacancy
YOY
Bps Chg.
Las Vegas 10.9% 0
Phoenix 10.3% -90
Detroit 9.7% -50
Sacramento 9.2% -70
Inland Empire 9.2% -30
Atlanta 8.9% -70
Chicago 8.9% -50
Cleveland 8.6% -60
Kansas City 8.2% -50
Cincinnati 7.8% -80
U.S. Average 6.6% -40
Sources: Marcus & Millichap Research Services, CoStar Group, Inc.
$10
$20
$30
$40
$50
$60
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
Grocery Stores Bars and Restaurants
35%
43%
49%
Boomers
Gen X
Millennials
To
tal S
ale
s (
Billio
ns)
* Through April
** As of 2014
Sources: Marcus & Millichap Research Services, U.S. Census Bureau,
“Outlook on the Millennial Consumer 2014” report, The Heartman Group, Pew Research, Morgan Stanley
Consumers Spend More on Dining Out Than
on Groceries for the First Time Ever
Millennials prefer fast-casual dining and local restaurants
Millennials now rank as the largest generation in the labor force
Eat Out at Least Once Per Week**:
U.S. Capital Markets
Overview and Outlook
0%
1%
2%
3%
4%
5%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
Core Inflation Wage Growth
Core Inflation Restrained
Wage Growth Beginning to Pick Up
* Through 1Q
Sources: Marcus & Millichap Research Services, BLS
Rate
National Single- and Multi-Tenant Retail
Price and Cap Rates
$0
$80
$160
$240
$320
01 03 05 07 09 11 13 15*
6%
7%
8%
9%
10%
Average Price Cap Rate
$0
$50
$100
$150
$200
01 03 05 07 09 11 13 15*
6%
7%
8%
9%
10%
Average Price Cap Rate
Single-Tenant Multi-Tenant
* Through 1Q
Includes sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics
Av
era
ge
Pri
ce
Pe
r S
qu
are
Fo
ot
Av
era
ge
Pri
ce
Pe
r S
qu
are
Fo
ot
Av
era
ge
Ca
p R
ate
Av
era
ge
Ca
p R
ate
6%
7%
8%
9%
10%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
*
Primary Secondary Tertiary
Avera
ge C
ap
Rate
* Through 1Q
Includes sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics
Yields Driving Capital to Secondary Markets;
Value-Add Investments
U.S. Economic, Capital Markets, and Retail
Market Overview and Outlook – Retail Trends 2015
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