Steven A. Lieberman & Alan P. Shor
We are clearly on the move. The capital markets, job growth and consumer confidence, all of which directly impact retail sales, indicate that the economy is accelerating at a steady pace. Last year at this time, we felt very optimistic about where the economy was headed, but were also cautious in our business decisions to ensure the economic growth factors were remaining on the right course. As such, we have responsively continued to grow our business through this most recent cycle. We are very fortunate to be based in Texas with our healthy business environment, strong job creation, low taxes and favorable cost of living. Texas remains the strongest of all states as it pertains to our economic recovery since 2007. In our newsletter last Fall, we mentioned that while the economy remained unpredictable, there were many indications that the overall environment was stabilizing, and in a number of areas showing definitive signs of growth. Our business has clearly enjoyed the same. Thanks to our collaborations with our retail clients, property owners, financial partners and governmental entities, we saw productivity across all of our lines of business. Getting back to a macro perspective, the U.S. economy continues to trend upward. The GDP has expanded for the past 10 consecutive quarters, and unemployment is down from mid 9 percent to 8.2 percent – its lowest in three years. We saw positive job growth each month in 2011, which is the first time this has occurred since 2005. We have historically low interest rates, and individuals and corporations have increased savings, lowered debt, and increased retained earnings. Since the fear of a second recession has abated since Fall 2011, optimism has manifested itself in the way of more progressive investor activity and increased consumer spending. On a local level, DFW, Houston, San Antonio, and Austin are four of the top ten markets nationally in favorable business environment and economic health. All have experienced accelerating statistics as a result of rapid employment growth, low costs of living, increased consumer spending, and positive investor sentiment. These major Texas markets are forecasting even better trends for the remainder of 2012, as the overall economy and markets gain momentum. Dallas and Houston are the top two markets in the country in new job creation and boast healthy retail occupancy rates of 90.2 percent and 93.4 percent respectively. Large construction projects are still in the planning stages, but developers are clearly queuing up. It is projected that close to 3.3 million square feet will be developed in Dallas in 2012 [vs. 1.1MM in 2011], and in Houston, 2.1MM square feet in 2012 [vs. 1.9MM in 2011]. Austin, one of the most popular markets in the country, has exceptional opportunities for retail growth. Occupancy stands at 91.1 percent [vs. 90 percent] in 2011. A highly competitive tech industry, strong investor market, urban infill, and suburban population growth is driving what will be approximately 700,000 square feet of new retail space in 2012, [vs. 98,000 square feet] in 2011, a 700% increase. Spending continues to stay in line with job growth in San Antonio. Major oil companies are moving into place to support drilling efforts in the Eagle Ford Shale. Subsequently, housing starts will increase, along with retailer expansion, as the improved housing market will boost retail sales for big ticket items. It is projected that 625,000 square feet of new retail space will come online in 2012, adding to the 674,000 square feet built in 2011. We are excited about the positive gains our primary markets are making. Staying on top of the important factors impacting our global, U.S. and local business markets enable TRC to provide our clients guidance and grow our company. Inside TRC, the last year has brought us several terrific hires, three excellent acquisitions, new construction, development firing back up, participation in our first three IPOs for our Connected Capital group, and the opening of our fourth office [Austin], all of which are tracking toward another record year for our brokerage-advisory-investment services, as our market share and influence continue to grow by significant measure. We currently have 82 team-mates and part of our reinvestment was the hiring of 19 new members to our company. The adds were made in brokerage, finance, research, property management and administration, reflecting how all areas of our business are growing. We continue to upgrade and expand our client base on both the tenant and landlord sides of the equation, enriching our representation of over 225 of the leading retail and restaurant chains in the market; and approximately 25 million square feet of property listings. We ended 2011 with 223 shopping center listings, an increase of 44 shopping centers or 22% over last year. To date, we have now developed 4 shopping centers, acquired another 5, and invested in 8 merchant banking deals. Our national advisory business continues to grow as we are not only engaged to analyze new retail concepts and expansion opportunities from coast to coast, but now represent clients across the border with our entry into Mexico, extending the reach of our business and expanding TRC’s capacity to deliver our clients’ objectives every step of the way. Our property management division, Connected Management Services, is one of our newest operating divisions. It has been a tremendously valuable addition to our business as we provide to our landlords the best of leasing, construction, asset, and property management services. 2011 was the start of what we knew would be a very active period for re-development and acquisition opportunities. We closed, with our partners Lincoln Property and Longwharf, the 391,000sf Village on the Parkway in North Dallas – which will be a major redevelopment and significant investment for us. We also acquired with Invesco as our equity partner, Shackleford Crossings, a 310,000sf shopping center in Little Rock, Arkansas. Our third and most recent acquisition was the purchase of the 94,000sf Towne Centre Plaza in Mesquite with North American Development Group. We are actively pursuing a number of other investments for 2012 and expect to add quality centers to our very strong portfolio. 2011 was a year of steady progress for us; one that gave us the platform to measurably grow and invest in all aspects of our business. We saw great execution by our team and are excited about what lies ahead in 2012, knowing that our investments will continue to provide exceptional opportunities for our clients and returns for our partners. Our goal is to establish TRC as the top retail Brokerage, Advisory and Investment firm in the Southwest, and we are well on our way. Our team, clients and partners continue to play critical roles in helping us achieve our goals. Thank you all for everything you do to make TRC the best. You are extraordinary and as always, we are proud to be on your team.