Commerce CRG Mid-Year - Qtr2 2006 Market
Review Washington Co., Las Vegas, Clark Co. Office,
Industrial & Retail Markets
Market – Washington
Market – Las
Source: Colliers Commerce CRG Qtr2 2006
Improving strategic planning: A McKinsey
Executives say their companies could be a lot
more effective at developing a strategy and
implementing strategic plans, and they suggest some
areas for improvement.
Note: This is written for the Private Sector but I
believe strongly that these findings are equally
important for the Public Sector. BS/BR
Strategic planning is critical to the continued
success of any organization, yet fewer than half of
the executives who responded to a new online
survey conducted by The McKinsey Quarterly1 say
that they are satisfied with their company's approach
to planning strategy. Further, although more than
three-quarters of the respondents report that their
company has a formal strategic-planning process,
fewer than a quarter say that the process is key to
making their most important decisions; senior
executives—most important, the CEO—drive decision
making. The executives also raise significant
concerns about the way their company executes the
strategy, communicates it, aligns the organization
with it, and measures performance against it.
More than half of all respondents say that at their
company the important strategic decisions are made
by a small group of senior managers, including the
CEO. Perspectives vary on who leads this decision
making. Thirty-nine percent of those with a strategic-
planning process in place say that the CEO leads
their company's process. However, in one of many
notable differences between C-level executives2 and
other survey respondents, 46 percent of the C-level
respondents say that the CEO (or the person holding
an equivalent position) leads the process. Only 34
percent of other executives concur; they are much
more likely to attribute leadership to a chief strategy
officer or a strategy group that exists at the
corporate or business unit level.
No matter who leads the decision making, executives
at companies that make good use of a formal process
seem to be more satisfied with strategic planning.
Among respondents whose companies have a formal
process, more than half say it plays a significant role
in developing corporate strategy. That percentage is
far higher—79 percent—among those who also say
they are satisfied with their company's approach to
strategy development. There is additional support for
the conclusion that using a formal process leads to
greater satisfaction: compared with only 16 percent
of respondents who report dissatisfaction with their
company's approach, 55 percent of those who are
satisfied say that their strategic-planning group is
among the most influential groups in making strategic
Most respondents say that their company's board of
directors focuses on a few roles in planning strategy.
Boards are seen to be most active in challenging
strategy during the development process and in
approving the final strategy (Exhibit 3). Only 25
percent of respondents say that their board is
actively involved in developing the content of the
Apparently, most respondents find the current role of
their board satisfactory: only 7 percent believe that
greater involvement by the board would improve their
company's strategic planning. However, this view
may be shortsighted. Respondents who are satisfied
with their company's approach to strategic planning
are twice as likely as dissatisfied respondents to say
their boards help develop strategy. In addition,
boards where respondents are satisfied are twice as
likely to monitor the company's progress against the
strategic plan and three times as likely to spend time
identifying key strategic issues facing the company.
Failure to launch
A significant number of respondents express concern
about executing strategy. Some 28 percent say that
their company produces a strategic plan that reflects
the company's goals and challenges but is not
effective. Another 14 percent say the strategy and
plans for executing it are not necessarily aligned with
each other. The experiences of executives whose
companies have formal planning processes and who
are satisfied with the results may explain how their
companies have avoided these pitfalls. Among these
respondents, 67 percent say aligning management
with the strategy is an element of the strategic-
planning process; only 40 percent of dissatisfied
executives say so. Similarly, 78 percent of those who
are satisfied, compared with only 26 percent of those
who are dissatisfied, say their process leads to
explicit objectives that are communicated well
throughout the company.
These concerns are reflected in respondents'
suggestions for improving their company's approach
to strategy development. Their top two suggestions
are improving the company's alignment with the
strategic plan and developing a method to monitor
progress against the plan.
Room for improvement
Monitoring progress is an area where many
executives see room for improvement. Only 56
percent of respondents say that their company
currently tracks the execution of its strategic
initiatives. Whether or not respondents are in a
strategic-planning group, they agree that a top
priority for such groups is spending more time
developing these metrics.
Executives' concerns about executing and aligning
strategy are likely exacerbated by a perceived lack
of integration between the company's strategic-
planning group and its human-resources group. When
asked to consider strategic planning's integration
with several major corporate functions, respondents
rank HR as second-to-last in terms of degree of
integration. Respondents who are dissatisfied with
their company's strategic planning see the least
integration. Of these, only 14 percent say planning is
completely or mostly integrated with HR, and 59
percent say the two groups are integrated slightly or
not at all.
Companies don't particularly focus their strategic
planning on new opportunities for growth. Fewer than
half of all respondents say that their company's
approach includes identifying growth opportunities
outside the core business. Among those who use a
formal planning process, just 57 percent say that this
process is substantially integrated with their
company's business-development function. In
addition, respondents don't see business
development as a top priority for strategic decision
makers to spend more time on.
Respondents at companies with formal planning
processes describe the qualities of those processes
in a variety of ways. That variety leads to a
surprising lack of focus on some issues that are often
considered central to strategy making. For instance,
only 53 percent of respondents say that their
process focuses on their company's most important
strategic issues, rather than on tactical issues.
(Similarly, responding to a separate question, only 55
percent of respondents say that issues, rather than
a calendar-based planning cycle, drive their
company's approach to strategic planning.) And
among those who are dissatisfied with the process,
only 23 percent say strategic planning leads to
decisions that allow the company to meet its goals
Where you stand depends on where you
The way executives characterize their strategic-
planning process depends considerably on their rank.
C-level executives have a generally rosier
assessment of the process. In addition, they are
more likely, by a margin of 53 to 46 percent, to be
satisfied with the overall approach. However, the
relatively low number of C-level executives who say
the process ensures that participants receive
worthwhile analyses and information at appropriate
times dovetails with another finding of the survey: C-
level executives—and no other respondents—think
internal consulting should be one of the highest
priorities for strategic-planning groups to spend more
time on than they do now.
A sizable share of respondents say that their
conversations during the planning process are
substantive and lively—unless they are dissatisfied.
Indeed, among respondents dissatisfied with their
company's strategic-planning approach, 28 percent
say that their company's strategic discussions
include no such positive elements.
With and without a seat at the
Just as executives of different ranks have different
perspectives on the formal process, the survey
respondents have remarkably different views on what
strategic-planning groups do, depending on whether
or not they participate in one themselves. This
disparity appears to underline the problems with
communication about strategy that executives note
elsewhere. The biggest disagreement concerns
whether strategy groups perform internal consulting:
two-thirds of respondents who are in a strategy
group, compared with 29 percent of others, report
spending time on this activity.
In addition, C-level respondents are less likely than
others are to say their strategy group spends its
time on internal consulting and far more likely to say
that's what the group should be spending time on.
For them, internal consulting is the second-highest
priority, while for non-C-level respondents, it falls to
Read Full Article:
Source: McKinsey& Co.
The Rite Real Estate Play?
Drug store operator Rite Aid’s $3.4 billion
proposed acquisition of 337 Brooks and 1,521 Eckerd
stores is a bold bid to catch industry leaders CVS
and Walgreen’s—and that could be good news for net
The deal is critical to Rite Aid's continued
recovery from accounting fraud and other missteps
under former CEO Martin Glass. For investors, the
expansion could mean more buying opportunities if
Rite Aid ups its sale/leaseback pool. Drug stores are
popular targets for 1031 exchangers and other small
Walgreens and CVS currently account for 90
percent of available net lease supply in the category
and fetch prices of $392.04 and $352.44 per square
foot, respectively, according to net lease real estate
investment firm Boulder Group. Rite Aid, despite a
stock of more than 3,000 U.S. stores, has very few
sites up for sale. It is among a group of several
chains accounting for just 2.6 percent of current
available supply. Eckerd, meanwhile, represents
about 7.8 percent of the supply and gets an average
$320.63 per square foot.
The deal will also expand Rite Aid’s presence in
markets where investment interest in drug stores has
been the strongest. According to the Boulder Group
numbers, 67 percent of the 543 currently available
properties are located in 10 states: Texas, Florida,
California, Georgia, Illinois, Pennsylvania, Ohio,
Indiana, North Carolina and Alabama.
The acquisition will bring Rite Aid’s portfolio to
5,000 stores in 51 states, with the Eckerd chain
providing the company with exposure on the West
Coast and in the South, and the Brooks division
covering the New England market. Rite Aid will invest
approximately $500 million to upgrade the newly
acquired stores, with plans to open another 800 to
1,000 locations in the next five years.
“While the [deal] will give Rite Aid important
economies of scale in a low-margin industry, it will
also create a highly leveraged firm with under-
performing stores that faces tremendous competitive
threats over the long run,” Corwin writes. “The
number of stores will compare favorably to Walgreens
and CVS; the economies of those stores,
collectively, will not.”
Source: Retail Traffic
Office, Industrial & Retail Studies - Washington
County & Las Vegas
Improving Strategic Planning
|New Bonneville Research VP
Bonneville Research is exited to announce the
appointment of Jon Springmeyer as a new Vice
For the past 5 years Jon has managed Excel
Construction and Commercial/Retail properties for
Before Amsource, Jon
spent five years with Salt Lake County Parks and
Recreation as a director of recreation centers,
fitness centers, and outdoor aquatics centers.
Jon is a licensed Real Estate Agent and will take
the lead on Urban Renewal Projects for Bonneville
clients as well as funding/feasibility
studies for recreation/community facilities.
Terrific first week!
Thanks to all who offered congratulations to
both of us!
- Chain Store Sales
- Chain store sales posted their second
consecutive gain in the week ending September 2,
gaining 0.3%, according to the ICSC. Year-over-year
growth accelerated to 3.9%, the best growth in ten
weeks. Cooler weather and lower gasoline prices
contributed to the recent improvement.
- MBA Mortgage Applications Survey
- Mortgage demand increased 1.8% in the week
ending September 1. The increase was entirely in
purchase applications, which jumped 3.7%. Refinance
applications decreased 0.9%.
- Construction Spending (C30)
- Construction spending decreased 1.2% in
July, following downward revisions in the two
previous months. Private construction decreased
1.3%, entirely due to weakening residential
construction. In addition, public construction
- Oil and Gas Inventories
- Crude oil inventories fell 2.2 million barrels for
the week ending September 1, according to the
Energy Information Administration, significantly above
expectations of a 1.3 million barrel drop. Gasoline
inventories however rose 0.7 million barrels for the
week, against expectations of a 0.8 million barrel
draw. Crude imports fell sharply last week even as
refinery activity edged up, driving the larger than
expected draw. This report will temporarily stall the
bearish trend in the market.
- Business Employment Dynamics
- Consistent with BLS net employment trends,
gross job creation weakened during the fourth
quarter of last year compared to the prior two
quarters. The economy created 7.8 million jobs.
However, the number of jobs lost also fell, to 7.267
million, from 7.427 million during the third quarter.
Accordingly, the rate of job creation and job
destruction weakened also.
- Consumer Credit (G19)
- Consumer credit increased $5.5 billion or 2.8%
at an annual rate in July. The details of the report
show that the latest increase in consumer credit was
driven by gains in both nonrevolving and revolving
- Wholesale Trade (MWTR)
- Wholesale inventories were slightly above
consensus expectations, coming in up 0.8% for July.
Wholesale sales were up 0.4%, and the I/S ratio
remained at 1.15.
- Vehicle Sales
- Vehicle sales declined more than expected in
August, to a seasonally adjusted annualized rate of
16.1 million units. Of the six major automakers, only
Toyota managed to increase its sales over last year,
growing at a lofty 11.5%. The others suffered
moderate year-to-year losses, except for Ford,
whose sales dropped 16.5% from last August.
- Global Semiconductor Sales
- Global semiconductor sales rose by 1.8% in
July to a level of $20.10 billion on a three-month
moving average basis. Global billings are now 11.5%
higher than in July 2005.
- ISM Index
- The national ISM manufacturing index was
virtually unchanged in August, ringing in at 54.5 from
54.7 one month ago. This matched our forecast and
signals that the manufacturing industry remains in
good shape despite a slowing of the broader
- ISM Non-Mfg. Index
- Business activity in the non-manufacturing
sectors of the economy accelerated in August, rising
2.2 points to 57%. This growth was stronger than
consensus sentiments anticipated.
- Global Business Confidence Survey
- Businesses have grown increasingly nervous
this summer. Business sentiment has fallen sharply
since early June to its lowest level since the fall of
2003. Confidence has declined the most in North
America and among real estate firms and retailers.
Expectations regarding the business outlook six
months hence have turned notably dour. Confidence
is highest and firm in South America. High-tech and
natural resource firms are less confident than they
were earlier in the year, but they remain generally
upbeat. The most positive message in the survey is
that pricing pressures while still high are abating.
These survey results suggest that global economic
growth has slipped below its potential.
- Productivity and Costs
- As expected, productivity growth for the
second quarter was revised higher. Nonfarm business
productivity grew 1.6% (SAAR), compared to 1.1% in
the preliminary release. Growth in unit labor costs
was revised much higher, to 4.9% (SAAR) from 4.2%;
this was much more than the consensus expected.
Output, hours and real labor costs were all revised
up. The big jump in unit labor costs raises concerns
about inflationary pressures from the job market.
|This Weeks Leads
- Talbots, a 1,000-unit chain operates locations
nationwide, and in Canada and internationally.
- The stores, selling accessories, clothes and
shoes, occupy spaces of 4,000 sq.ft. in
freestanding locations, malls, strip centers and
- Growth opportunities are sought nationwide, and
in Canada and internationally during the coming
For details, contact:
- Dick O’Connell
- 211 South Ridge Street, Suite 100
- Rye Brook, NY 10573
- 914-934-8877, Fax 914-934-9136
- Website: www.talbots.com
- The Zone
- The Zone Entertainment trades as The Zone at
two locations throughout Canada.
- The entertainment centers, which are a
combination of bowling alleys and brew pubs,
occupy spaces of 30,000 sq.ft. to 50,000 sq.ft. in
malls, lifestyle centers and freestanding locations.
- Growth opportunities are sought throughout the
western U.S. during the coming 18 months,
with representation by Nexus Realty Co.
- Typical leases run 10 to 20 years.
- For more information, contact:
- Dale Clark
- Nexus Realty Co.
- 285 17th Street, Suite 22
- West Vancouver, Canada V7V 3S6
- Fax 604-922-6893
Factory, Island Fun and Jungle Fun
- Retail Concepts International trades as Fun
Factory, Island Fun and Jungle Fun at 23 locations
- The entertainment centers, which create custom-
themed environments that include games, billiards,
food, retail and rides,
occupy spaces of 2,000 sq.ft. to 12,000 sq.ft. in
entertainment, lifestyle, specialty and tourist centers
- Plans call for six openings throughout the western
region during the coming 18 months.
- Typical leases run five to 10 years. A vanilla shell
- Preferred demographics include a population of
100,000 within two miles
earning $60,000 as the average household income.
- Preferred cotenants include movie theaters and
- For more information, contact:
- Retail Concepts International
- 4050 Tarrybrae Terrace
- Tarzana, CA 91356
- Fax 818-758-9380
- Email: firstname.lastname@example.org
- Web site: www.funfactorygames.com.
- Great Escape Theatres
- Great Escape Theatres, a 20-unit chain, operates
locations throughout GA, IN, KY, MO, NE, OH, PA,
TN, TX and WV.
- The theaters occupy spaces of 40,000 sq.ft. to
80,000 sq.ft. in malls and entertainment, lifestyle and
- Plans call for 11 openings east of the Rocky
Mountains during the coming 18 months, with
representation by Aliance Management. Typical
leases run 15 to 20 years with options. Preferred
demographics include a population of 150,000 within
10 miles earning $70,000 as the average household
- AMC, Regal, Cinemark and National Amusements
are cited as competition.
- For details, contact:
- Anne Ragains
- c/o Aliance Management
- 300 Professional Court, Suite 200
- New Albany, IN 47150
- 812-945-4006, Fax 812-945-4076
- Email: email@example.com
- Web site:
- Pomodoro Cucina Italiana
- Pomodoro Cucina Italiana operates 45 locations
- The Italian restaurants occupy spaces of 2,800
sq.ft. to 3,000 sq.ft.
in endcap, entertainment, lifestyle and neighborhood
- Growth opportunities are sought throughout CA
during the coming 18 months,
with representation by NAI Capital Commercial.
- For more information, contact:
- Gary Morris
- NAI Capital Commercial
- 16001 Ventura Boulevard, Suite 200
- Encino, CA 91436
- Fax 818-905-2425
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