September 18th 2006

In This Issue

Jon Springmeyer - New Bonneville Research VP


Economic Notes:

This Weeks Leads



Coldwell Banker Commercial Mid-Year - Qtr2 2006 Retail Market Review

Retail Market by Sector & Type – Salt Lake County Q2 2006
Sector/Type Asked RentsQ2 2006 VacancyQ2 2006 Total SF
Northeast 5,306,200
Anchorless Center$15.6310.29% 740,142
Neighborhood Center$27.970.77% 338,873
Community Center$17.492.90% 2,248,615
Regional Center---
Central East 6,549,752
Anchorless Center$15.137.10% 1,232,793
Neighborhood Center$10.7513.80% 1,475,391
Community Center$19.3713.62% 2,180,662
Regional Center---
Regional Mall-- 1,160,906
Southeast 9,081,849
Anchorless Center$16.2514.66% 899,377
Neighborhood Center$14.1315.20% 1,469,979
Community Center$16.164.02% 3,782,729
Regional Center---
Regional Mall-- 1,235,644
Northwest 597,012
Anchorless Center$9.4512.72% 155,495
Neighborhood Center$10.0013.65% 219,831
Community Center$14.002.53% 221,686
Regional Center---
Regional Center-- -
Central West 5,882,617
Anchorless Center$13.129.87% 430,385
Neighborhood Center$14.944.82% 834,923
Community Center$13.033.72% 3,261,929
Regional Center$17.0016.82% 755,583
Regional Mall-0.17% 599,797
Southwest 4,265,094
Anchorless Center$14.0824.11% 423,628
Neighborhood Center$6.1222.69% 955,429
Community Center$13.7210.04% 1,486,037
Regional Center$30.001.62% 1,400,000
Regional Mall-- -
Source: Coldwell Banker Commercial NRT Qtr2 2006

The Rise of the Green Consumer

It is now a decade since Unilever stopped providing refill pouches for its washing liquid in the UK owing to lack of demand. But it seems that consumers' forgotten environmental conscience is reawakening.

Ecover, a private company based in Belgium that makes ecological washing and cleaning products, says sales are growing at the rate of 20 per cent per year in the UK, its biggest market, reaching 35m ($66m) last year. The company is building a new factory in France to keep up with demand.

A string of household names - including General Electric, Wal-Mart, and Unilever - have been lining up to show off their green credentials in an effort to woo customers, at least at the high end of the market.

"This is becoming a lifestyle choice," says Stephen Parker, managing director of Cred, an environmental consultancy. "We are a consumer- driven society, and consumption is often a more reliable way of seeing what society wants than politics these days."

The UK's Institute of Grocery Distribution reports that sales of "ethical" products are increasing by 7.5 per cent a year, compared with 4.2 per cent for conventional products.

General Electric, the US conglomerate, became the biggest company to "go green" last year, when chief executive Jeff Immelt announced a new push into providing goods that minimize damage to the environment. Mr Immelt insisted there were profits to be made in the market for goods from wind turbines to energy-saving light bulbs.

The results have been clear at GE, which announced in May that revenues from products and services under its Ecomagination brand - for environmental products - had risen from $6.2bn in 2004 to $10.1bn in 2005.

One of the more recent converts to the "green" consumer's cause has been Wal-Mart, the US retail group better known for protests against its employment practices than its environmental concern.

Lee Scott, chief executive, has pledged to invest $500m in "sustainability" projects and to reduce by 30 per cent the energy used in the company's stores, reduce solid waste by a quarter and double the fuel efficiency of the company's vehicle fleet within 10 years.

These companies are driven not just by the desire to cash in on increasing environmental awareness among customers.

There is a practical incentive for companies to act, independently of what consumers think.

Rising fuel bills mean reduced energy use will save companies money, with the attendant bonus of cutting greenhouse gas emissions associated with the burning of fossil fuels.

Companies are also keen to pre-empt any strengthening of environmental regulations, particularly moves to curb greenhouse gas emissions.

The UK government, for instance, is considering a proposal to extend carbon dioxide emissions trading to retailers and other businesses.

US states led by California are forging ahead with plans to limit emissions and bypass the federal government's reluctance to take precautionary measures against climate change.

Against this backdrop, companies warn that customers will make ecologically friendly choices only if they believe they will get the same results from products as they do at present.

A case in point is P&G's "Cool Clean" campaigns in western Europe and North America for its laundry detergent - named Ariel in Europe and Tide in the US - which tell consumers they should lower the temperature at which they wash clothes to save energy.

"Consumers want better products that deliver a better experience. Sustainability has to be an additional benefit," said Gianni Ciserani, managing director of P&G UK & Ireland.

"Whenever sustainable products come with trade- off on performance, we win some [consumers] but we lose others."

Companies have another reason to beware. A previous wave of green consumerism in the 1970s fizzled out, as consumers lost interest.

Just as Unilever stopped providing refill pouches 10 years ago, today's "green" wave could also break if consumers lose interest or the economy falters.

Source: The Financial Times Limited 2006

Hotel Sales Market Humming Along

The rush to buy hotel properties is not slowing down and investors will not soon quench their thirst for investment grade hotels.

According to Jones Lang LaSalle Hotels, there are five buyers for every two sellers in the U.S. hotel market. And nearly half (or 45.9%) of all respondents want to buy assets in 21 of the 26 surveyed markets in North and South America. The survey polled the 2,000 largest hotel investors and owners in the world.

“Across the Americas, the low yield environment over the last two years has been sustained, with cap rates softening by a mere 10 basis points over the course of the last six months [up] to 8.5%,” says Arthur Adler, managing director and chief executive officer (Americas) for JLL Hotels.

To some investors at least, it seems that prices can’t climb much higher—even in the face of such strong demand. The HISS Survey found that 18.9% of polled investors, the highest level recorded in the survey’s six-year history, are looking to exploit capital appreciation by selling their assets. Their willingness to sell assets into this market could help drag sky-high pricing closer to the ground.

Certain markets stand out. For example, more than half of respondents indicated a desire to buy hotels in Hawaii, Vancouver, San Francisco and Los Angeles, Washington, D.C., New York and Chicago. Their interest in these markets hinges on the perception that coastal cities will yield strong performance over the next few years.

Why are these the hot spots? Vancouver, which is a new entrant to the top “buy” market in the survey, will host the 2010 Winter Olympics. On the opposite coast, New York City is poised to boost its already soaring occupancy rate in coming years; the city has been a net loser of hotel rooms, thanks to scant construction and condo conversions. One reason is a lack of new hotel rooms in the city, a trend that has also boosted the national hotel market in recent years. San Francisco and Washington, D.C. are likely to lure an increasing number of domestic and foreign tourists over the next few years, say hotel sources.

The only possible cloud on the horizon is accelerating construction Investors in the HISS Survey indicate greater intentions to develop new hotels since last year. New supply (as a % of inventory) is expected to grow by 1.6% and 2.6% during 2006 and 2007 respectively. Demand should hold firm with this new supply. Yet rising construction costs may keep a damper on new supply: Only 10.8% of polled investors intend to build new projects in 2007. This mixed assessment suggests that new supply won’t be a major problem for at least another three years.

The three markets expected to absorb the most new room supply in the near future are Buenos Aires, the Caribbean and Mexico City. Nearly 28% of respondents indicated a desire to build new hotel projects in the Argentinean capital, followed by 23.4% in the Caribbean and 21.2% in Mexico City.

“ New supply has really quelled due to high construction costs,” says Paider of JLL Hotels. “It’s still cheaper to buy versus develop hotels.”

Source: National Real Estate Investor


Retail Studies - Salt Lake County

Rise of the Green Consumer!

Hotels are Back!

  • Jon Springmeyer - New Bonneville Research VP
    • For the past 5 years Jon has managed Excel Construction and Commercial/Retail properties for Amsouce Development.
    • 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.
    • Jon will take the lead on Urban Renewal Projects for Bonneville clients as well as funding/feasibility studies for recreation/community facilities.
    • Second week was better than the first!
    • Made first payroll!!

  • Grants:
  • Promote Bicycle Use!

    • Bikes Belong
    • POSTED: 9/12/2006
    • FUNDING SOURCE: Bikes Belong
    • ELIGIBILITY: Nonprofits
    • $ AVAILABLE: N.A.
    • MAX GRANT SIZE: $10,000
    • DEADLINE: 11/27/06
    • CONTACT INFORMATION: http://bikesbelong.org
    • DESCRIPTION: Grants to encourage ridership growth, promote bicycling, build political support, leverage funding and support bicycle advocacy.

  • Economic Notes:
    • Chain Store Sales

    • Chain store sales retreated modestly in the week ending September 9, despite support from cooler weather and declining gasoline prices, according to the ICSC. Sales fell 0.3%, and year- over-year growth ticked down to 3.8%. The latter remained the second best in 11 weeks.
    • MBA Mortgage Applications Survey

    • Mortgage demand increased 3.2% in the week ending September 8. Purchase applications increased 5.3% and refinance applications increased 0.1%.
    • Consumer Price Index

    • The seasonally adjusted consumer price index rose 0.2% in August, after a 0.4% increase in July. A much smaller increase in energy prices for the month brought down top-line inflation. The core index, excluding food and energy prices, rose 0.2% in August; this was the second straight month with a 0.2% increase, following four consecutive 0.3% monthly increases in the core CPI. Over the past year core CPI inflation has run at a 2.8% pace. Today’s report is good news on the inflation front.
    • Risk of Recession

    • The Moody’s Economy.com probability of recession rose in August to 21.9%, relative to July’s upwardly revised 20.1%. Inversion of the yield curve is the main factor causing the rapid deterioration in recession risks in the past two months. A moderation in consumer confidence is also weighing on risks. Improvement in equity markets and still-low levels of unemployment insurance claims are limiting the increase in recession risks. The chance of the economy being in recession in six months is clearly rising, although it remains relatively modest.
    • Treasury Budget

    • The unified deficit for August was $64.6 billion, slightly smaller than the CBO’s preliminary estimate of $67 billion. Through the first 11 months of fiscal year 2006 the U.S. has run a unified deficit of $304.3 billion, 14% smaller than at the same point last year.
    • International Trade (FT900)

    • The nominal U.S. trade deficit in goods and services widened in July. The U.S. trade deficit came in at $68.0 billion, which was $3.2 billion more than June's revised $64.8 billion, according to the Bureau of Economic Analysis. In July, exports decreased by $1.2 billion, while imports increased by $1.9 billion. Both changes contributed to the widening of the trade deficit. The goods deficit with China, however, narrowed $0.1 billion to $19.6 billion. Crude oil prices increased in July, which, in return, increased the nation's import bill for crude oil to $20.8 billion.
    • Oil and Gas Inventories

    • Crude oil inventories fell 2.9 million barrels for the week ending September 8, according to the Energy Information Administration, significantly above expectations of a 1.9 million barrel drop. Gasoline inventories rose 0.1 million barrels for the week, as expected, and distillates posted a whopping 4.7 million barrel build, well above the 1.7 million barrel build expected. This is another strongly bearish report, and will keep prices in the mid-$60s this week.
    • Retail Sales (MARTS)

    • Total retail sales rose 0.2% in August, well below July’s 1.4% gain. Auto sales surprisingly contributed to the gain. Non-auto sales were up 0.2%, down from 0.6% in July. Gas station sales fell, as did sales at clothing and department stores. Year- over-year growth accelerated to 6.7% in total but declined to 7.5% excluding autos.
    • Business Inventories (MTIS)

    • Total business inventories increased 0.6% for July, in line with consensus expectations. Inventories at retailers increased 0.4%. Total business sales increased by 0.6%. The total I/S ratio remained unchanged at 1.26.
    • Quarterly Services Survey

    • In the second quarter of 2006, the information industry reported over-the-year revenue increases of 6.2%. Administrative and support and waste management and remediation services revenue increased by 7.8%, and professional, scientific and technical revenue was up 9.4% over the year. Revenues in selected healthcare services increased by 6.0%.
    • ABC News/Washington Post Consumer Comfort Index

    • The ABC News/Washington Post consumer comfort index continues to inch higher. The headline index gained two points to -13 in the week ending September 10. Strength was concentrated in the buying climate and economic components. The indexes other main component, personal finances, surrendered four points in the latest week. Confidence is undoubtedly being nudged higher by lower prices at the pump.
    • World Business Confidence

    • Business sentiment continues to slide. Confidence has fallen sharply since early June to its lowest level since the fall of 2003. Expectations have fallen very sharply and are as low as they have been since the survey began. North American confidence has declined the most, particularly among real estate firms, retailers, and vehicle manufacturers. Confidence is highest and firm in South America. High- tech, natural resource firms and manufacturers 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 fallen below its potential.

  • This Weeks Leads
    • Fun Factory, Island Fun and Jungle Fun
    • Retail Concepts International trades as Fun Factory, Island Fun and Jungle Fun at 23 locations nationwide.
    • 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 and malls.
    • Plans call for six openings throughout the western region during the coming 18 months.
    • Typical leases run five to 10 years. A vanilla shell is required.
    • 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 restaurants.
    • For more information, contact:
      • Robert Solomon
      • Retail Concepts International
      • 4050 Tarrybrae Terrace
      • Tarzana, CA 91356
      • 818-757-3999
      • Fax 818-758-9380
      • Email: solomonassoc@adelphia.net
      • Web site: www.funfactorygames.com.
    • Sephora,
    • Sephora, a 130-unit chain operates locations nationwide.
    • The stores, selling make-up, fragrances and skin care products, occupy spaces of 5,500 sq.ft. to 5,800 sq.ft. in upscale malls, lifestyle and strip centers.
    • Plans call for 30 to 40 openings nationwide during the coming 18 months.
    • For details, contact
      • Celia A. Wing
      • Sephora USA, Inc.
      • 525 Market Street, 11th Floor
      • San Francisco, CA 94105
      • 415-284-3300, Fax 415-284-3425
      • Website: www.sephora.com
    • Moe’s Southwest Grill
    • Moe’s Southwest Grill operates 300 locations nationwide.
    • The restaurants, specializing in burritos, tacos, fajitas, quesadillas, nachos and salads, occupy spaces of 2,500 sq.ft. to 3,500 sq.ft. in endcaps, entertainment, lifestyle, power and strip centers and urban/downtown areas.
    • Growth opportunities are sought throughout northern NJ, and New York City and Westchester County in NY during the coming 18 months, with representation by Schuckman Realty, Inc.
    • For more information, contact:
      • Ari Malul
      • Schuckman Realty, Inc.
      • 7600 Jericho Turnpike
      • Woodbury, NY 11797
      • 516-496-8888
      • Fax 516-496-8905
      • Email: arim@schuckmanrealty.com
      • Website: www.schuckmanrealty.com.
    • Naturalizer
    • Famous Footwear trades as Naturalizer.
    • The 200-unit chain operates locations nationwide.
    • The stores, selling women’s footwear and related accessories, occupy spaces of 1,200 sq.ft. in malls and urban/downtown areas.
    • Growth opportunities are sought nationwide during the coming 18 months. Typical leases run 10 years.
    • Preferred cotenants include Ann Taylor, Banana Republic and Casual Corner. Competition is cited as Nine West and Enzo.
    • For details, contact:
      • Scott Jennerich
      • 1200 US Highway 22, Suite 2000
      • Bridgewater, NJ 08807
      • 908-203-4677, Fax 908-725-0296
      • Website: www.famousfootwear.com
    • Elephant Bar Restaurant
    • Elephant Bar Restaurant trades as Elephant Bar Restaurant at 40 locations nationwide.
    • The restaurants occupy spaces of 7,500 sq.ft. to 9,300 sq.ft. in freestanding locations, inline spaces, malls, endcaps and power and entertainment centers.
    • Growth opportunities are sought throughout AZ, CA, FL, IL, IN, NV, MI, OH, PA, TX and Washington, DC.
    • The company will acquire sites and build-to-suit.
    • For more information, contact:
      • Mark Seferian Elephant Bar Restaurant
      • 14241 Firestone Boulevard, Suite 315
      • La Mirada, CA 90638
      • 562-207-6207
      • Fax 562-207-6259
      • Email: mark.seferian@elephantbar.com
      • Web site: www.elephantbar.com.
    • Color Me Mine
    • Color Me Mine Enterprises, Inc. trades as Color Me Mine at 110 locations nationwide and internationally.
    • The specialty stores, which allow customers to paint their own ceramics, occupy spaces of 1,100 sq.ft. to 2,300 sq.ft. in downtown areas and lifestyle centers.
    • Growth opportunities are sought nationwide and internationally during the coming 18 months.
    • Preferred cotenants include bookstores, theaters and restaurants. The company is franchising.
    • For more information, contact:
      • Maria Baker
      • Color Me Mine Enterprises, Inc.
      • 5140 Lankershim Boulevard
      • North Hollywood, CA 91601
      • 818-505-2100, Fax 818-509-9778
      • Email: maria@colormemine.com
      • Web site: www.colormemine.com.

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