Retail: Evolution or Revolution? Chris Macke Senior Real Estate Strategist March 18, 2013
CBRE Page 2 I Will Focus On Two Forces
And One Question Mark = or CBRE Page 3
CBRE Page 4
Which Retailer Is More Vulnerable to E-Commerce? Or Or Or Or Or CBRE Page 5
Which Portfolio Should You Pay More for? A Or B CBRE Page 6
Stress Testing Comes to Retail Retailer E-Commerce Exposure Rating (RECER) tool A rating/ranking tool that assesses individual retailer e- commerce vulnerability, the RECER tool Rate individual retailers based on their current e-commerce exposure Rate national retailers based on their estimated future e-commerce exposure CBRE Page 7 % of portfolio income highly exposed to e- commerce? % of portfolio anchor tenants exposed to e-commerce?
CBRE Page 8
Healthcare Spending Healthcare costs eating up larger and larger share of PCE s 25% 20% 15% 16.0% % Spent on Healthcare 20.1% 10% 5% 0% 1992 2011 CBRE Page 9
50% Greater Than E-Commerce Sales Source: U.S. Census Bureau, B.E.A., CBRE Global Research and Consulting CBRE Page 10
CBRE Page 11 Retailers Capitalizing On This
What The Future Holds At A Minimum Source: Internet Retailer ( http://www.internetretailer.com/2012/02/27/e-retail-spending-increase-45-2016), B.E.A., CBRE Global Research and Consulting CBRE Page 12
CBRE Page 13 Enter The Baby Boomers
Baby Boomers Always On The Move Moved to suburbs and suburban retail flourished. Retailers like Sears who followed them prospered and became dominant CBRE Page 14
Now Moving Into Lower Spending Segments CBRE Page 15 Source: Bureau of Labor Statistics ( BLS )
And More of Their Spending Will Be Healthcare Related 8 7 6 5 4 3 2 1 0 Source: DCD # of MD Visits Annually Per Pa:ent 7.4 4.6 55-64 65+ CBRE Page 16
Impact Downward pressure on retail spending = Increased spending on healthcare CBRE Page 17
Follow The Money MEDTAIL + CBRE Page 18
Medtail = Complementary Parking Needs What do medical providers need? Significant parking ratios What do shopping centers provide? Significant parking ratios? CBRE Page 19
Medtail = Increased Daytime Traffic When do shopping centers need more traffic? M-F 9-3 When do medical providers generate the majority of their traffic? M-F 9-5.and it is CAPTIVE traffic. CBRE Page 20
Medtail Not Just About Baby Boomers Dentists Orthodontists Optometrists Pediatricians etc. CBRE Page 21
Medtail Not Just About Doctors Hearing Aid Centers Medical Supply Stores Physical Therapy Centers Wellness Centers CBRE Page 22
Medtail Not Just About Run Down Centers CBRE Page 23
Medtail Can Increase Trade Areas Healthcare plans often require people to travel outside their usual shopping areas to go to in plan medical providers. As a result shopping centers can draw from larger areas. CBRE Page 24
Medtail Can Address Hard To Lease Suites Due to the destination nature of healthcare providers shopping center suites with inferior visibility, limited signage, narrow dimensions and/or poor positioning such as in elbows can be logical locations for healthcare providers. CBRE Page 25
Medtail Can Increase Center Cash Flow Stability Medical providers generally sign longer term leases and have a higher retention rate CBRE Page 26
Follow The Money + CBRE Page 27
Christopher Macke Chris comes to CBRE with more than 20 years of real estate experience. His experience includes real estate development, financing, acquisitions and advising various regulatory agencies. He is a Senior Real Estate Strategist for the Investment Consulting group within the America s Research team. Chris delivers investment opinions and insights to institutional investors with the aim of helping them develop a house view. Chris holds a B.A. in Political Science from the University of Southern California, where he specialized in political campaign strategy and finance. He earned a Masters of Business Administration from Indiana University s Kelley School of Business specializing in Finance. chris.macke@cbre.com CBRE Page 28
Commercial Real Estate Services, Worldwide Thank You www.cbre.com CBRE Global Research and Consulting 260 Franklin Street, Suite 400 Boston, MA 02110 Tel: 617.912.5200 Fax: 617.912.5240