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0246810122002200120002004200314113141110837510162007200620052009* 2008
*Projected Sources: ICSC, Colliers Research
MARKET INDICATORS
VACANCYNET ABSORPTIONCONSTRUCTIONRENTAL RATE
* Projected
SPRING2009FALL2009*
U.S. RETAIL MARKETSUMMARY STATISTICS
FIRST QUARTER 2009
COLLIERS INTERNATIONAL 1
www.colliers.com
Highlights
COLLIERS INTERNATIONAL | NORTH AMERICA
LARGE CENTER OPENINGS (2000 – 2009)
Vacancy Rate Q1 2009 (Change fromQ4 2008): 10.17% (+0.52%)Absorption Q1 2009(Million Square Feet): -9.3New Construction CompletionsQ1 2009 (Million Square Feet): 6.0Under Construction Activity(Million Square Feet): 11.7Asking Rents Per Square Foot(Change from Q4 2008) ShoppingCenter Space: $18.01 (-1.52%)
(Continued on page 3)
Colliers International 2009 • Colliers International is a worldwide affiliation of independently owned and operated companies.
Despite“Green Shoots” – Retail Real Estate Faces Huge Challenges
As this report went to press, retailers and landlords alike were facing the most challenging retaillandscape of the past fifty years. The apparent stabilization of the stock market and recentearnings from a number of key banks give hope that the worst of “The Great Recession” may bebehind us. However, even if the most optimistic forecasts for economic growth by the end of the year come true, the fact remains that there is still more pain to come for the retail sector.The Conference Board’s Consumer Confidence Index surged in April to 39.2, up from 26.9 inMarch. This marks the second consecutive month in which Consumer Confidence movedupward, but keep in mind that the February 2009 reading of 25.3 was the lowest since the Indexwas created in 1967 (the Canadian Consumer Confidence Index has followed a similar pattern,but not to the same extent). This uptick comes even as news that the United States’ GDPdropped by a sizable 6.1% during the first quarter of this year—its second biggest drop(following fourth quarter 2008) in 26 years.The real question for retailers is whether improving consumer confidence will translate intoincreasedconsumerspending.Thishasnothappenedyet—nordoweexpectittoforsometime.Consumer confidence may have improved in March, but purchases actually dropped 0.2% fromFebruary to March. If anything, the recent boost in consumer confidence may simply be a signthat consumers have reached a “psychological bottom” after months of terrible economic news.Though there is a growing amount of evidence that the economic freefall is over, the economyis likely to limp along for the balance of this year. In the meantime, rising unemployment willcontinue to be a significant drag on consumer spending.
Unemployment is expected to continue to rise in both the U.S. and Canada through at leastthe first quarter of 2010.
U.S. unemployment is forecast to peak in the 10% range by early next year. Canadian unemployment is expected to peak near 9%. That being said, there are a numberof U.S. cities where the local jobless rate has already hit double digits. Unfortunately, becauseunemployment is a lagging indicator of economic performance, these numbers are likely to stayhigh even as the economy returns to what we expect will be modest levels of growth next year.
RETAIL | SPRING | 2009
 
INVENTORY* NEW NEW CURRENTLY ABSORPTION VACANCY VACANCY QUOTEDMARCH 31,2009 SUPPLY SUPPLY UNDER ABSORPTION Q1 2009 RATE (%) RATE (%) RENT (U.S.$PSF)MARKET (SF) 2008 (SF) Q1 2009 (SF) CONSTRUCTION (SF) 2008 (SF) (SF) DEC 31,2008 MARCH 31,2009 MARCH 31,2009
2 COLLIERS INTERNATIONAL
Atlanta, GA 129,463,000 3,091,000 195,000 403,000 33,000 (761,000) 12.4 13.0 15.23Baltimore, MD 44,142,000 213,000 486,000 92,000 (16,000) (116,000) 6.6 7.8 18.90Boston, MA 83,112,000 1,007,000 53,000 451,000 771,000 (196,000) 7.6 7.9 16.42Charlotte, NC 21,562,000 430,000 0 83,000 73,000 (213,000) 9.1 10.5 15.91Chicago, IL 163,027,000 3,464,000 125,000 308,000 1,783,000 (268,000) 10.9 10.9 17.30Cincinnati, OH 31,362,000 246,000 30,000 48,000 700,000 (97,000) 11.4 12.2 12.16Cleveland, OH 47,423,000 415,000 24,000 70,000 79,000 106,000 11.8 10.6 12.61Columbus, OH 28,691,000 758,000 25,000 175,000 428,000 99,000 15.5 15.9 11.75Dallas/Ft.Worth,TX 143,102,000 2,801,000 356,000 1,646,000 2,738,000 230,000 13.2 13.2 14.19Denver, CO 63,964,000 376,000 82,000 137,000 104,000 (225,000) 10.5 11.0 15.61Detroit, MI 71,559,000 522,000 101,000 294,000 21,000 (3,000) 14.2 14.5 13.62Greenville/Spartanburg, SC 28,215,000 128,000 0 0 180,000 (135,000) 10.5 10.9 10.28Hartford, CT 40,963,000 378,000 8,000 329,000 66,000 (253,000) 8.1 8.8 14.32Houston,TX 137,479,000 2,451,000 319,000 662,000 613,000 287,000 12.9 12.9 15.25Indianapolis, IN 36,272,000 215,000 45,000 101,000 110,000 (74,000) 13.7 13.6 12.50 Jacksonville, FL 33,384,000 859,000 113,000 166,000 (366,000) (74,000) 10.3 10.8 15.63Kansas City, MO-KS 38,609,000 413,000 3,000 132,000 (99,000) (54,000) 12.7 12.9 13.26LasVegas, NV 48,879,000 2,256,000 63,000 467,000 302,000 (638,000) 11.4 13.0 23.02
LosAngeles - Inland Empire,CA
79,187,000 3,387,000 313,000 1,044,000 1,017,000 (645,000) 9.6 10.9 20.52Los Angeles, CA 132,713,000 1,464,000 534,000 582,000 (1,055,000) (538,000) 5.2 5.9 25.89Memphis,TN 28,176,000 773,000 19,000 78,000 544,000 11,000 13.6 13.6 11.05Miami/Dade County, FL 43,192,000 2,137,000 19,000 256,000 1,177,000 (93,000) 5.5 5.6 26.04Milwaukee,WI 32,711,000 792,000 5,000 47,000 750,000 (41,000) 11.4 11.1 13.61Minneapolis, MN 53,168,000 418,000 12,000 0 (155,000) (313,000) 9.9 10.3 14.26Nashville,TN 29,511,000 581,000 7,000 320,000 429,000 (338,000) 9.0 10.2 15.12New Jersey - Northern 92,138,000 1,238,000 50,000 97,000 367,000 (926,000) 7.2 8.1 20.49Oakland/East Bay, CA 40,509,000 292,000 0 25,000 21,000 (229,000) 5.9 6.3 29.73Orange County, CA 57,948,000 292,000 121,000 159,000 (421,000) (274,000) 4.4 5.1 26.68Orlando, FL 59,777,000 1,724,000 143,000 279,000 702,000 (269,000) 8.6 9.3 17.03Palm Beach County, FL 33,480,000 272,000 232,000 0 (166,000) (102,000) 8.5 9.5 20.53Philadelphia, PA 144,307,000 1,238,000 474,000 302,000 854,000 (451,000) 9.5 9.7 15.17Phoenix,AZ 99,753,000 3,166,000 533,000 763,000 392,000 (617,000) 11.2 12.5 18.32Portland, OR 32,719,000 844,000 24,000 41,000 428,000 (64,000) 7.1 7.4 19.11
Raleigh/Durham/Chapel Hill,NC
35,005,000 592,000 106,000 601,000 393,000 (207,000) 8.4 8.9 16.24Sacramento, CA 48,988,000 362,000 62,000 116,000 (861,000) (576,000) 10.7 12.3 21.16San Diego, CA 54,163,000 161,000 116,000 131,000 (360,000) (455,000) 5.4 6.5 23.57San Francisco, CA 10,548,000 0 0 0 53,000 (51,000) 2.3 3.7 31.86San Jose/South Bay, CA 29,748,000 150,000 0 55,000 (171,000) (232,000) 4.4 5.4 30.43Seattle/Puget Sound,WA 55,978,000 1,534,000 221,000 160,000 981,000 (99,000) 6.8 7.5 21.15St. Louis, MO 47,687,000 293,000 40,000 376,000 199,000 (160,000) 11.9 12.4 12.61Tampa/St Petersburg, FL 81,046,000 1,810,000 357,000 207,000 446,000 122,000 8.7 8.9 15.36Washington, DC 77,746,000 1,407,000 579,000 456,000 118,000 (347,000) 5.7 6.8 22.53
U.S.Total 2,591,407,000 44,949,000 5,995,000 11,661,000 13,202,000 (9,277,000) 9.65 10.17 18.01
*Community and Neighborhood CentersSource: CoStar, Colliers Research
RETAIL SURVEY SPRING 2009NORTH AMERICA
 
COLLIERS INTERNATIONAL 3
A weak labor market will not be the only factor to negativelyimpact consumer spending in the coming months. CommerceDepartment numbers show that personal incomes declined inMarch for the fifth time in the last six months. Thanks to thebleak employment picture, wage growth is non-existent and willnot significantly improve for at least 12 – 18 months.Meanwhile, the uncertain economic outlook has inspired theAmerican consumer to do something that they have not donein years…save. In April 2008, the personal savings rate forAmericans stood at 0.0%. This number now stands at 4.2%.According to statistics from the U.S. Bureau of EconomicAnalysis, the personal savings rate in the U.S. hovered in the0.0% to 1.0% range from 2005 to early 2008. This numberactually hit an astounding –2.7% mark in August of 2008.That, of course, was in the days of cheap and abundant credit,long before the asset bubble burst. While this newfound prudenceis something that is good for consumers in the long run, it is yetanother factor behind reduced consumer spending.In many ways, the current downturn has all of the markings of “the perfect storm” for retailers. Starting in the mid-1990’sAmerican consumers began to rely increasingly on home equityloans to fund their lifestyles. The assumption of eternally cheapand abundant credit turned out to not only be short-sighted,but highly misguided. Unfortunately consumers were not theonly ones working with this assumption. Much of the retailexpansion of the past decade was based upon the expectation of consumer spending levels that were simply not sustainable.The shrinking consumer dollar has essentially left the retailmarketplace overbuilt.As a result, the retail world is in the midst of one of the greatestperiods of contraction in decades. In the past 18 months alone,we have seen major retailers like the Bombay Company, CircuitCity, Costco Home Stores, Goody’s, Gottschalk’s, Home DepotExpo Design Centers, Levitz, Linens ‘n Things, Mervyn’s, SharperImage, Steve & Barry’s, Virgin MegaStores, Wickes Furniture andothers disappear outright.
Retailers are facing the challenge of not only decreased sales ina weak economy, but a credit market that remains challengedwith little to no capital available for reorganization.
Because of this, Chapter 11 reorganization in recent months has become littlemore than a delaying action before total liquidation. For retailerslike Filene’s Basement, Ritz Camera or Z Galleries who haverecently sought Chapter 11 reorganization, significant doubtsremain as to whether they will be able to successfully emerge.Mostchainswillcontinuethetrendofshutteringunderperforminglocations that began in 2008. This goes for both healthy andstrugglingretailers. Thebadnewsisthatthistrendofconsolidationis far from over. There will be many more store closings in thecoming months ahead. Though today’s challenging economicclimate will prove to be most difficult for weaker concepts orchains that are highly leveraged, the reality remains that thefallout could spread to otherwise well-run retailers thanks toplunging sales.Thehealthofthecreditmarketswillbeahugedeterminantinthesurvival of many players in 2009. The good news is that they areno longer totally frozen—as was the case in late 2008. The badnews is that they remain “slushy”—at best. The survival of manyretailers “on the edge” will depend largely upon how long it takesfor the credit markets to return to a semblance of normalcy.For many, the wait will prove to be too long.
      A    n    n    u    a      l      P    e    r    c    e    n     t      C      h    a    n    g    e      (      %      )
0.02.04.06.08.010.0
 Jan. July Jan.JulyJan. July Jan. JulyJan.JulyJan. JulyJan.July Jan. July Jan.March
2001 200220032004 2005 2006 2007 2008
Source: US Census Bureau
2009-4.0-2.0-6.0
RETAIL SALES, LESS AUTOS AND PARTS
RETAIL SURVEY SPRING 2009NORTH AMERICA
-48.4
      A    n    n    u    a      l      T    o     t    a      l      R    e     t    u    r    n    s      %
010203040502001200019992003200246.823.09.67.818.06.730.413.721.117.1Private EquityPublic Equity-10-2020062005200420082007-11.840.020.011.813.429.013.5-15.8-4.1
*First Quarter Returns Only ** YTD March ReturnsSource: National Council of Real Estate Investment Fiduciaries, National Association of Real Estate Investment Trusts
2009-4.3* -36.6** -50-40-30
U.S. RETAIL REAL ESTATE INVESTMENT PERFORMANCE (1999 – 2009)
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