News and Events
Survival of the Fittest
Amid thousands of store closures, shopping center owners take bold steps to retain tenants.
May 1, 2008 National Real Estate Investor Joe Gose
For years, economists warned that the annual rise in consumer spending wasn't a permanent condition, but those concerns largely fell on deaf ears. Retailers continued to ring up sales at a healthy clip. In fact, in 2005 and 2006, total retail sales grew 6.6% and 6.2%, respectively, according to the International Council of Shopping Centers (ICSC).
But a series of economic setbacks has put a damper on the retail party. A spike in home foreclosures tied to the subprime mortgage meltdown in 2007 has led to a crisis of confidence in the bond markets and slowed lending activity. Foreclosure filings on nearly 234,700 properties in March showed a 57% increase over the prior year. Meanwhile, the combination of rising gas and food prices and lost jobs has taken its toll on the American consumer's psyche and wallet. The average price of gasoline nationwide rose nearly 20 cents over two weeks in April to $3.50 a gallon. The cost of food was expected to rise up to 4.5% this year after increasing 4% in 2007, while workers' wages generally aren't keeping pace.