Looking into the Lion’s Mouth

If you’re peeking at the news between slats in your fingers, scared to see where the S&P 500 sits or what’s happening with the NASDAQ, the Dow and the price of oil, you’re quite obviously not alone. Each day is a frightening new one, and no one – not even economists – are quite sure what’s going to happen next.

As the retailers began reporting quarterly results over the last day or two, it was clear that current events hadn’t yet made their presence known. Most of the expected categories – discount, warehouse – performed better than expected, with both sales and profits up year-over-year. But a thread of caution ran through every report. “We’re concerned about the months ahead” was the underlying theme.

I talked to Andy Graiser, co-president and CEO of DJM Realty, about what to expect over the next few months as back-to-school plays out and holiday shopping begins. (If his name sounds familiar, Andy has been in the news a great deal of late, as Gordon Brothers’ DJM and Hilco Real Estate dispose of all the Borders locations.)

I asked Andy what we can expect, from a real estate perspective, through the rest of this year and early into 2012.

“I still expect healthy retailers to continue to cleanse the bottom 5% to 10% of their portfolios,” he told me, “as well as to continue to move into box sizes which are more efficient.” He said that he is seeing good demand in the outlets as well as solid demand for 12,000-sq.-ft. -to 15,000-sq.-ft. locations in strip centers. Expect the restaurants to continue to struggle, he cautioned, while discount food operations and the dollar sectors enjoy continued strength. “That said, I am still concerned with consumer confidence going into back-to-school and Christmas,” he added. Amen.