Las Vegas Sun

November 20, 2017

Currently: 47° — Complete forecast

From the Publisher:

A brief foray on the commercial side

One of the less tangible benefits of any job is its intellectual stimulation.

In my office, for instance, I’m surrounded by bright co-workers whose questions keep me on my toes. And when I venture outside our doors, I learn things from people smarter than I am, often about issues I previously appreciated little.

The bottled water was flowing at one recent such occasion at the Renaissance Hotel, at the annual Marcus & Millichap Retail Trends 2009 presentation. Marcus & Millichap is the nation’s largest commercial real estate investment services firm, and it holds its annual event in conjunction with RECON, the gathering formerly known as the International Council of Shopping Centers trade show.

Hessam Nadji is the company’s managing director of research services, and I had come to hear him speak about the economy and commercial real estate. When Nadji talks, one can get lost in the nuances and jargon of his industry. And I was there not as a Realtor, but more as an interested party, just as we are all interested parties in the economy these days.

The place was alive with conversation. I didn’t need to eavesdrop to learn that although its problems are still barely visible to consumers — except, of course, for the vacancies starting to pepper local shopping areas — the commercial real estate market is bracing for times that may yet get worse.

I sat down and began to scan a report called “RetailResearch,” published by my hosts, and where some comments on the food industry quickly caught my attention. Food is, after all, an apparent necessity in any economy.

RetailResearch reported that, understandably, families are eating at home more often these days, making the grocery industry one of the few well-performing categories in our current economy. Perhaps accelerated by some unknown aspect of the economy, a change may be under way in grocery stores: Albertsons and Wal-Mart are watching the growing popularity of 115 Fresh & Easy stores that have opened in the U.S., and are now considering their own versions of similar convenience-store concepts. Interesting, especially since Fresh & Easy is not yet profitable.

In the world of fast food, according to RetailResearch, it’s all about value, which means McDonald’s is scoring with its dollar menu, which helped make it one of the few chains to show a sales gain in the first quarter and is leading its competitors to follow suit. McDonald’s also has benefited from its new line of coffee beverages, taking some business from Starbucks both because of pricing reasons and simply because Starbucks isn’t in as many places, having closed about 900 stores nationally in the past 18 months.

The current economy has hit casual-dining restaurants particularly hard, RetailResearch said. Among other closures, the recession has meant the end of 150 corporate-owned Bennigan’s locations and about 40 Ruby Tuesdays nationally. Other restaurants have added discounted offerings to menus. Chili’s, the Cheesecake Factory and T.G.I. Friday’s are among restaurants that have added lower-cost meals.

After an introduction, Nadji began his brief presentation by describing the extent of job losses in the U.S., noting that roughly 500,000 more people became unemployed in April alone.

“This is the framework under which we’re now operating,” he said.

As he moved through his comments, he pointed to a screen with charts of things such as unemployment statistics and retail space vacancies. Las Vegas, unfortunately, now held a poor ranking on these, a stark change from the charts we looked at in the past decade.

Things are different in this recession, Nadji said. In past recessions, consumers generally kept on spending. But this time around, as a result of the convergence of a tight credit market, housing challenges and job losses, “the consumer has been shut off.” As with a few other people I’ve heard recently, including some conservative bankers, Nadji believes the federal stimulus package will help, “as money works its way into the economy. Stimuli will work. They just take time to work.

“When you have a crisis of this magnitude, you have to do something,” he said.

Nadji noted that in the past few months alone, savings deposits have increased dramatically. Consumers aren’t spending, he said, and they won’t do so until they regain trust in the system.

When that date arrives is anybody’s guess, but if you’re among the people forced to watch for bargains like the dollar menu, it really can’t come soon enough.

Bruce Spotleson is group publisher of In Business Las Vegas.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy