Barring unforeseen jolts to the national economy or consumer psyches, industry experts are predicting a strong 2015 holiday season for U.S. retailers and the shopping centers that house them.
The commercial brokerage firm Cushman & Wakefield recently projected a 4.1 percent boost in nationwide retail sales over last year, reaching nearly $627 billion, with around $80 billion of that to be spent online.
Similarly, the National Retail Federation forecast called for total holiday spending of $630.5 billion, for a year-over-year jump of 3.7 percent — well above the average 2.5 percent increase of the past 10 years.
Two More Days
With consumer sentiment generally improved from a year ago, and two more shopping days on the calendar between Thanksgiving and Christmas Eve, the obvious beneficiaries will include places such as Simon Property Group’s Fashion Valley, San Diego County’s largest regional mall with more than 200 stores spanning 1.7 million square feet.
Marketing director Chris Lane said Fashion Valley had an unusual number of retailers open new stores within the past month, which by themselves should increase foot traffic heading into the prime shopping season. Eight newbies — including clothing and accessory sellers Tory Burch and Kitson, and a pop-up location of doll retailer American Girl — will be joined before month’s end by the second local mall store for eco-friendly luxury carmaker Tesla Motors.
Lane said the concentration of openings just before the holidays is atypical, as the Mission Valley mall usually gets those spread throughout the year, but not surprising given the property’s traditionally long waiting list of retail and restaurant companies looking to locate there.
The list reflects a San Diego retail space supply that has long been among the tightest for major U.S. metro regions. Brokerage company CBRE Group Inc. reported an overall county vacancy rate of 5.8 percent at the end of the third quarter, with Central San Diego at 3.3 percent.
The region’s average asking lease rate rose for the sixth consecutive quarter, ending the third quarter at $2.10 per square foot — up 16.7 percent from a year ago. The price spike has been driven by rising demand from national and regional store chains and restaurants, and limited new retail center construction underway or in the pipeline for high-demand markets.
Good Neighbors: Restaurants
Increasingly, said CBRE senior associate Carrie Bobb, center operators are bringing in new locations of established, independently run San Diego and Southern California-based upscale restaurants. Those venues have loyal clientele who draw regular foot traffic and increase impulse purchases at retail stores located in the same centers, during holiday and nonholiday periods.
“Having a restaurant as a co-tenant is becoming important for a lot of retailers,” said Bobb, noting the trend is reflected at centers such as Coast Income Properties’ new Village at Pacific Highlands Ranch near Carmel Valley. It is likely to play a significant role in future tenant signings at La Costa Town Square in Carlsbad, acquired recently and being redeveloped by Terramar Retail Centers.
Bobb said a few retailers — such as See’s Candy and clothing retailer Kit and Ace — continue to experiment with temporary local pop-up stores during the Christmas shopping season, though the trend is still not as prevalent in San Diego or elsewhere as it is during the pre-Halloween period.
John Jennings, senior director in the San Diego office of Cushman & Wakefield, said the county’s major shopping centers have recently taken crucial steps to add nonretail social and entertainment amenities, providing a strong alternative to online shopping during and beyond the holiday season.
“Those people who are out shopping are also going to spend money at restaurants, the movies and some of these other businesses that are based on experiences,” he said.
Space Age Parking Advances
In addition to the new stores — taking its vacancy rate to near zero — Fashion Valley this holiday season will deploy a brand new parking management system using sensors that send constantly updated information to LED screens placed throughout the property, directing drivers to areas where spaces are available.