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Comments by:Tony MaranoCEO, the AmericasCushman & WakefieldNew York, NY

Last week’s Feedback Poll saw visitors to the website agreeing largely with the less than happy news that the retail sector would slow in 2007 compared to other real estate sectors. In fact, some 58% said we should expect the sector to turn sluggish. The Poll was inspired by a survey conducted by PricewaterhouseCoopers and revealed at ULI’s fall meeting. If, however, the survey seemed to see the glass as half-empty. (The complete interview appears on GlobeSt.RETAIL.)

“As I understand the ULI commentary, it was pre-August, and the second half has seen some changes. We see retail sales growth slowing a bit–maybe 4 to 5% annually rather than the 6% increase we’ve seen in the past two years. But we still expect to see solid growth on balance for 2007. Generally that growth should be straight across the board within all retail sectors within 100 bp one way or the other.

“The October unemployment level was the lowest in five years, personal income has increased consistently by 5% or more for the past 10 years and I see that continuing, although consumer spending has increased year-over-year, the rate of growth has decelerated somewhat over the second half of this year. There is some impact from such forces as oil prices, but my sense is more one of stabilization than further deceleration.

“In terms of concerns, ever since 9/11, everyone asterisks anything they say in terms of predictions, but most of the indicators are positive or stable. If interest rates continue to decline, that’s a stabilizing if not a positive influence. The elections are coming up, and people are talking about a change of control in the House, and that can certainly have an impact. But sans a significant event, I think we’re seeing stabilization.

“In terms of geography, we’re seeing significant strength in the New York area, especially when you see rents go over $1300 a sf in areas such as Madison and Fifth Ave, which is unprecedented. By comparison, class A office space in New York is between $80 and a $125 per sf. The per-square-foot sales in those stores have to be pretty strong.

“Elsewhere, LA, at least on the west side, is very strong; and San Francisco and Chicago seem to be doing well, as are Miami and Tampa. Dallas and Boston have been fairly strong. So most of the major CBDs are doing well. The northwest is a little slushy but we see it turning around.

“Internationally, Mexico City is doing well, San Paolo and Toronto are hot. Overseas, Hong Kong, Shanghai, Beijing and India all seem to be doing well. There’s a little slowdown in London, but Germany is off the charts and the Eastern bloc countries, Wausau particularly, are showing very strong indicators.

“Moscow’s growth has been tremendous. And that surprised me. And we’re starting to see some activity in St Petersburg and that is a positive surprise as well.

In all, there are a number of indicators that lead me to believe that retail will have another strong year in 2007. It might not be the same growth rate we’ve seen in the past two years, but it’s still going to be very positive, and in our planning for next year I’ve been using the variables I just mentioned.”

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