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Retail Sales Growing, For Now?

December, 2018
by Karl Niehaus, President, CREI

Commercial Overview:

LOS ANGELES IS LEGALIZING STREET VENDING, with regulations. Effective Jan 1st, 2019 vendors will be allowed to sell products on the street. Retail property owners have fought against street vending because vendors can block and discourage potential customers from entering retail stores, making the sites less desirable and pushing down rents. The approval was however granted based on safety concerns. Before vendors created public safety concerns from several different perspectives: sidewalks are made impassable due to the number of vendors congregating, and pedestrians were forced off sidewalks and into the streets. The new law will regulate street vending and permits will be required.

Economic Overview:

RETAIL SALES GROWING, FOR NOW? Retail sales are expected to rise between 3.8% to 4.4%, to more than $3.8 trillion in 2019 according to National Retail Fund (NRF). In 2018, a healthy economy, high consumer confidence, low unemployment and rising wages gave consumers the confidence to shop and splash out on retailers' annual bargains during the holiday season. "The biggest priority is to ensure that our economy continues to grow and to avoid self-inflicted wounds. It's time for artificial problems like trade wars and shutdowns to end, and to focus on prosperity not politics," said Matthew Shaw, NRF President in a statement. The government's tariff war with China has forced many retailers to stockpile inventory from China to avoid higher tariffs that may kick in this year. NRF Chief Economist Jack Kleinhenz also stated, that retailers so far have been able to reduce the impact but that retailers and consumers would likely have to pay higher prices for certain purchases if tariffs on $200 billion in Chinese products rise from 10% to 25% in March. The additional costs will have a negative affect on sales and thus potentially also retail rents

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