This week on NY Real Estate TV-Michael Stoler Real Estate Report Newsletter-Eleventh Season of “The Stoler Report”-7th Season of Building NY-NY Stories
Retail sales might rise with the doubling of the clothing sales tax exemption.
Beginning, April 1st, purchases of clothing and footwear sold for less than $110 will be exempt from New York State’s four percent sales and use tax. This is double the previous exemption for items of up to $55.
The tax free offer applies to all relevant items purchased in person, over the internet, by phone or by mail.
Unfortunately, while shoppers will be free from the 4 percent tax, those making their purchase in Nassau and Suffolk counties will continue to pay the 4.625 percent local portion of the sales tax, the highest local sales tax percentage in the state.
New York City is one of the nine other counties statewide in eliminating both a state and local tax on clothing on shoes under $110 per item.
The sales tax exemption is expected to save consumers save approximately $210 million statewide, retailers hope that the sales will aid in retail sales.
The Retail Council of New York State, a trade association that represents state retailers, said promotion of the exemption could help clothing stores compete with neighboring states.
Melissa Googas, assistant director of government relations at the Retail Council said, “”The savings, we believe, would resonate better with customers because they wouldn’t be charged any portion of the sales tax, state or local, and retailers would not be forced to compete with the neighboring states who have better sales tax policies,
The garden state of New Jersey does not charge sales tax on clothing. Connecticut, charges 6.35 percent sales tax on the full price of clothing, with sales tax at 7 percent for individual purchases costing $1,000 or more for clothing and footwear.
Restaurant Outlook for 2012 is positive, aided by increase in volume of beer sales.
With the economy improving, more people are visiting their local restaurants and helping the economy grow.
The National Restaurant Association Restaurant Performance Index (RPI) a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry continued to improve in January, slightly down from December. Despite the decline, January represented the third consecutive month stood above 100, which signifies expansion in the index of key industry indicators.
Fifty-six percent of restaurant operators reported a same-store sales gain between January 2011 and January 2012, while only 26 percent reported a same-store sales decline.
Forty-six percent of restaurant operators reported higher customer traffic levels between January 2011 and January 2012, while 30 percent reported a traffic decline. In December, 57 percent of operators reported higher customer traffic, while just 23 percent reported a traffic decline.
The Expectations Index, which measures restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 102.1 in January - essentially unchanged from December’s level of 102.3. January marked the fifth consecutive month that the Expectations Index stood above 100, which represents an optimistic outlook among restaurant operators for business conditions in the months ahead.
Fifty-three percent expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 51 percent who reported similarly last month. In comparison, only seven percent of operators expect their sales volume in six months to be lower than it was during the same period in the previous year.
Thirty-seven percent said they expect economic conditions to improve in six months, down slightly from 39 percent last month. Only 11 percent of operators said they expect economic conditions to worsen.
The Beer Institute released new data showing that the value of beer sales in restaurants rose more than 9 percent in 2011, totaling about $23.6 billion in sales, according to a report in FastCasual.com.
With restaurants responsible for nearly 24 percent of total beer sales in 2011, they represented the largest share of on-premise sales last year. Beer retail sales in restaurants jumped from $21.6 billion in 2010 to nearly $23.6 billion in 2011.
“Restaurants are having an enormous impact in introducing the many great brands of beer to consumers,” said Joe McClain, president of the Beer Institute. “Restaurant patrons are trying new brands and styles on draft and bringing that new brand loyalty to off-premise retail channels. The boost in restaurant beer sales shows there is a beer for every palate.”
The boost in restaurant beer sales coincides with a period of growth in the restaurant industry. Overall, beer sales rose more than 2 percent in 2011, surpassing $98 billion in total retail sales. According to market research company Nielsen, the increase in sales revenue can be attributed to the high-end beer business. The sale of imports, crafts and above-premium beers sold off-premise was up nearly 3 percent.
The National Restaurant Association its Restaurant Industry Forecast in which it projects total industry sales of $631.8 billion for 2012, up 3.5 percent from 2011.
While the U.S. restaurant industry is expected to grow this year, operators remain challenged by food costs, building and maintaining sales volumes and the economy. The restaurant industry may also be challenged by the rapid increase in the cost of gasoline resulting in a change in consumer sentiment to eat out, coupled with higher food and operating costs.
The NRA reports that in 2011, wholesale food prices were up 8 percent, the highest annual gain in more than 30 years. In 2012, the NRA expects prices to grow by 4 percent.
Because of this continued inflation, the NRA predicts menu prices to increase 2.7 percent this year, compared to 2.4 percent last year. Commodities most affected by rising costs include:
- Flour, 22 percent
- Coffee, 18 percent
- Eggs, 17 percent
- Beef, 15 percent
- Butter, 13 percent
- Pork, 12 percent
- Sugar, 11 percent
NRA reports that the national restaurant count is approaching 1 million, with 970,000 current units open. Also, 48 percent of all food dollars are spent away from home, up from 25 percent in 1955.
Dawn Sweeney, president and CEO of the NRA, said, “As our nation slowly recovers from the economic downturn, restaurants continue to be a vital part of American lifestyles and our nation’s economy. Restaurant job growth is expected to outpace the overall economy for the 13th straight year, and it’s clear the restaurant industry is once again proving to be a significant economic stimulant and strong engine for job creation.”
The industry is expected to gain back all of the jobs lost during the recession early this year. The overall economy, however, isn’t expected to be back at pre-recession employment levels until 2014.
The NRA expects Full service restaurants will be up 2.9 percent from 2011, while the quick-service segment is expected to grow by 3.1 percent, generating $174 billion compared to $169 billion.
The fastest growing segments include military food service, at 6 percent, and retail host, such as grocery stores and convenience stores, at 5.9 percent.
The NRA expects 10,000 new eating and drinking establishments to open this year, bringing the industry total to 970,000 locations.
Another retail segment leaving the marketplace-the music industry
For the baby boomers, once upon a time there were records, the LP, the long playing vinyl. The LP was followed by the “45”, a seven inch record. Records were replaced by eight tracks and in 1983 the implementation of the compact disc, or CD. Retailers including Sam Goody, HMV, Tower Records Virgin Megastores and national chains were the beneficiary of these products selling them to the mass market.
The retail environment has changed and the music industry’s future is here. The CD’s are out and digital downloads of music are in. The digital download explosion has resulted in the loss of another prominent retail establishment.
According to Nielsen Co and Billboard’s “2011 Music Industry Report, digital music sales accounted for a greater percentage of purchases than physical sales. Consumers purchased 1.27 billion digital tracks last years, which accounted for 50.3% of all music sales. Digital track sales increased 8.5% in 2011, while physical sales decline 5%.
Last year, 112 digital songs sold more than 1 million downloads, the first time more than 100 digital songs surpassed the million download mark. Digital albums accounted for 31% of all album sales, up from 26% in 2010 and 5.5% in 2006.
Retail REITs love the New York Marketplace
Real estate investment trusts especially companies who own and manage retail shopping centers from around the nation continue to seek investment opportunities in the tri state area.
Earlier this year, Regency Center, a national developer, owner and operator of grocery anchored and community shopping centers, acquired its first property in New York. The REIT with its co-investment partner First Washington Realty, Inc. acquired the 141,382 square foot Lake Grove Commons, located at 110-150 New Moriches Road in Lake Grove, New York for $72.5 million, or about $564 per square foot.
The grocery anchor shopping center built in 2008 developed by Blumenfeld Development Group is fully leased to six national tenants. It is anchored by Whole Foods, the retailer’s only location in Suffolk County, along with LA Fitness and PETCO.
The purchase of Lake Grove Commons is Regency’s first asset in New York State. The company also owns the 103,892 square foot Plaza Square center anchored by ShopRite, in Wayne, New Jersey.
It was only a few years ago when another national real estate investment trust entered in the New York marketplace. In October 2009, Florida based Equity One purchased the 400,000 square foot Westbury Plaza at Old Country Road in Westbury New York. The REIT paid $103.7 million for the retail center anchored by Wal-Mart and Costco. The following month, it closed on the purchase of a 22 acre property, which previously served as the headquarters for Avis Rent a Car. The company is currently in the development of The Gallery at Westbury Plaza, a 330,000 square retail center which is scheduled to open in the fall of 2012.
Equity One entered in the New York City market in September 2010, when it purchased the 27,700 square foot retail condominium at 1175 Third Avenue between East 68th and East 69th Street. The entire space is occupied by Food Emporium on a triple net lease.
In May 2011, Equity One paid $55 million for a fee interest in a retail condominium located at 161 West 16th Street. The 56,870 square foot site on the east side of Seventh Avenue between West 16th and West 17th street is currently occupied by Loehmann’s. Prior to Loehmann’s tenancy, the space was occupied by the original Barneys New York store.
TO WATCH REIT MARKETPLACE CLICK HERE
