By STEVEN A. LIEBERMAN & ALAN P. SHOR
As we move into the final quarter, 2015 is on track to supply The Retail Connection another record year. Our team, clients and partners continue to deliver at every point where retail and real estate connect, as we navigate through the real estate markets with unmatched knowledge, experience, capacity and commitment to their success.
We have certainly enjoyed a strong real estate cycle over the last several years and with the vibrant growth of retail and restaurant units, new opportunities continue to emerge. In fact, over the last two years alone, approximately 80,000 new stores have opened across the country. Our markets continue to supply us with incredible opportunities, however optimizing them demands our best.
As we all know, supply and demand are inextricably connected. Nationwide, we have seen net absorption of retail space total 88 million square feet, far outpacing new construction and driving occupancy to 90%, an all-time high. With existing retail space leased and retailers needing additional space to meet their new store expansion objectives, new retail development is necessary to meet this demand. In addition to the 80,000 stores that have opened over the last 24 months, an additional 80,000 stores are projected to open over the next 24 months and we are clearly in a major new construction cycle for retail.
All external measures reflect that new retail and restaurant demand will be with us for a number of years down the road. Comparable store holiday sales predictions, while lowered in the last couple of months, will still be strong at almost 3% this season. Housing, which has been a major part of our economic recovery, has slowed slightly, however, the unemployment rate has remained steady and these indicators remain solid. Further, we anticipate that interest rates will remain low for a while and lower oil costs will continue to favorably impact retail sales, freeing up almost $100 billion in gasoline savings to the consumer. The consumer still feels very good, with the overall consumer confidence rate hovering around 90%.
The Retail Connection knows how fortunate we are to have such incredible relationships, our tenant-driven business model and geographic location all combining to enable us to continue to measurably grow our business in all economic scenarios. Texas continues to lead the country in economic growth, as it ranks #1 in new job creation and population growth. Dallas-Fort Worth, Austin and Houston rank among the top ten markets for commercial property investment. Our unemployment rate, at 5.1%, is well below the national rate and continues to drop. Retail center occupancy rates in Texas’ four major markets is at an all-time high of over 93%, thus triggering new retail development at a much faster rate than the rest of the country. Our surrounding states, including Oklahoma and Arkansas, are showing strong economic growth as well and new developments in these markets are outpacing the rest of the country.
TRC continues to enjoy similar success, growing to over 100 employees in our Dallas, Austin, Houston and San Antonio offices. Driving the expansion strategies of our clients across North America with more than 275 retail|restaurant clients and 300 retail projects totaling more than 28 million square feet of project leasing assignments, our brokerage business continues to thrive, transacting over 5,500 transactions for approximately $6 billion dollars in consideration to date. Connected Development Services has developed | redeveloped over 3.5 million square feet of new retail space and has over 5 million square feet of new retail development projects across Texas, Arkansas and Oklahoma, in our pipeline.
Connected Acquisitions Services has acquired 10 projects totaling over 2 million square feet of shopping centers and has over 1 million sf of acquisitions|redevelopments in its current pipeline. As demand continues to exceed supply, the values of properties have been driven to all-time highs, and as such, we sold 5 of these centers in Q1 and Q2 2015, representing over 1.2 million sf of projects and $325 million in value, returning a weighted 3.5 ERM and 39.5% IRR to these partnerships.
Our merchant banking division, Connected Capital Services, also continues to be active in the market, making two new investments in retail operating companies, our latest being Tiff’s Treats, sweetening our portfolio to 16 investments in this space.
As always, our total commitment to our clients is unwavering and the motivation behind all that we do. We greatly appreciate the invaluable roles our team, clients, and partners play in our successes; and we look forward to all of our collective opportunities ahead.