2012 Retail Outlook is Conservative

Economic uncertainty is causing retailers to be cautious as they plan for 2012, according to Colliers International’s 3Q11 Retail Highlights report. Colliers expects many companies to re-evaluate and raise estimates at least once next year. Muted expectations for holiday sales, especially compared with last year’s unexpectedly strong numbers, are also contributing to retailers’ wait-and-see attitude.

In the meantime, the report notes, retailers are hinting at cuts in capital expenditures for new store locations, although very few have revealed their plans. Year-over-year growth in 2010 and 2011 resulted from real­ized operational efficiencies and improved inventory management, so options for 2012 are limited. Thus, reducing capital expenditures to preserve liquidity still appears to be a good solution, according to the report.

Through year-end, net retail absorption is expected to decline following a strong third quarter, while operating metrics should stay relatively flat. Intense competition for high-profile tenants among landlords also may cause retail rents to fall in some markets.