West: Rocky Real Estate
When it comes to the overall unemployment picture, the West region is the "winner." Part of that is, of course, due to its fast growth and population spike over the last decade
San Diego
ECONOMIC OVERVIEW
Unemployment rates in April 2009 soared to a high of 9.7 percent, up from 5.5 percent just one year prior, reports the Bureau of Labor Statistics. Parts of California are, in fact, experiencing recession-like unemployment rates of 25 percent.
SOME RELIEF
Bringing a modicum of relief, the Consumer Price Index (the prices paid by urban consumers for a representative basket of goods and services) in the West decreased by 0.7 percent from April 2008 to April 2009.
BIG SPENDERS.
Surprisingly, consumers in the West are not limiting their purchasing as much as those in other regions. "Even though each region is experiencing its own problems—and the West's issue is housing—consumers in the West are not pulling back so much," says Pam Goodfellow, a senior analyst at BIGresearch.
Just 42 percent of consumers in this region say they have become more budget conscious, according to a consumer survey conducted by BIGresearch in May 2009. However, 46.2 percent say they have become more practical and realistic in their purchases, up from 33.8 percent in May 2007.
Los Angeles
GDP
The West does not have a good showing in terms of its Gross Domestic Product (GDP). While California did come in on the country's high end, states such as Idaho, Montana, Wyoming, and the Dakotas had low GDPs compared with most other states across the country, reports the Bureau of Economic Analysis.
RETAIL REAL ESTATE
Despite its housing problems, when it comes to retail real estate, the West is faring better than all other regions in the U.S. "It has the lowest vacancy at 7.6 percent," confirms Chris Stanley, a research associate at commercial real estate trend watchers, Reis, Inc.
DETERIORATING SITUATION
Stanley warns, however, that "the West region has been deteriorating at a rapid pace, with a 12-month increase in vacancy rates."
| OPTICAL FILE |
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| LENS MARKET This region has the highest Trivex sales, with 26 percent of ECPs preferring them to other premium lens options. • 1.67. However, only 38 percent gave 1.67 the nod in the premium category, giving the West the lowest preference for 1.67. • 1.74. Additionally the West has the highest 1.74 sales (8 percent of premium product), perhaps because of a higher incidence of high-power Rx's and patients who want and will pay for the premium cosmetics and comfort of 1.74's thinness and lightness. • PALS. Surprisingly, this region is second lowest in PAL preference (67 percent) over standard multifocals. This may be because of second-pair sales in the other category (8 percent), or even a segment of traditionalists that still sell and desire standard multifocals and want to keep eyewear costs low. EDGING STATS With significantly higher percentage of practices not edging in-house (71 percent), the West clearly relies on wholesale labs more than other regions. With high AR support (77 percent prefer it to other lens treatments), as well as the nation's highest 1.74 material sales, perhaps Western dispensers selling ultra-premium products want the responsibility of spoilage costs on wholesale labs, not themselves. 15% …same as last year 6% …more than last year 8% …less than last year 71% …don't edge in-house FRAME FOCUS The California (and Arizona and New Mexico, etc.) sun and outdoor lifestyles for this region make the West the national leader in sunwear purchases as a second pair. • MATERIALS: Metal holds a comfortable lead (52 percent) over plastic (26 percent) and rimless eyewear (15 percent). • PURCHASE PATTERNS: Refillers represent more than a quarter of optical consumers in the West as 29 percent of patients opt to refill their current eyewear with new lenses while 71 percent go for new eyewear. • SECOND PAIRS: Sun safety carries the day with 79 percent of second-pair sales. Other second-pair choices are: 11 percent casual eyewear; 8 percent office, occupational, and computer eyewear; and 3 percent clips. • PRICING: More than any other region, the West's product ranges have remained the same. Strong managed vision care may explain why 70 percent of respondents' frame variety stayed the same this year, while 15 percent are adding higher-priced options, 6 percent are adding lower-priced options, and 9 percent are adding both. |
HIGH RENT
The West region also had the highest asking rent at $23.38 during the first quarter of 2009, according to Reis. This dollar amount is higher than the average asking rent of $19.41. "This is historically consistent, as the West region consists mainly of wealthier metros with higher costs of living," adds Stanley.
METRO MARKETS
Though the future doesn't look so bright for much of the West region, there are some silver linings.
LIFESTYLE FORMAT
Some areas of the West are seeing a growth in one retail format—the outdoor lifestyle center. According to Erin Hershkowitz, a spokeswoman with the International Council of Shopping Centers, outdoor "lifestyle centers" have proliferated in the more affluent and more touristy areas of this region. "We see a lot in places with warmer climates like Phoenix and Arizona, Los Angeles, and San Diego," she says.
Seattle
BOTTOMING OUT
Looking ahead, "The best-performing metro will be San Bernardino/Riverside with a five-year effective rent growth of just 1 percent. This is in line with our expectations that the markets that have been hit the hardest may bottom out first and recover sooner, depending of course on a general economic turnaround occurring in early 2010," says Stanley.
BRIGHT SPOTS
Besides San Bernardino/Riverside, other areas to watch include those that made the Reis list of top-ranked metros in retail real estate inventory growth: Portland, Albuquerque, Tucson, Salt Lake City, and Ventura County.
FASHION TRENDS
The emerging prominence of L.A. onto the fashion scene has elevated the status of the entire West.
CITY OF ANGELS
"New York has always been the capital of fashion for the U.S. and now more than ever we are looking at Los Angeles in this way," says Rita Nakouzi, director of the U.S. office of Promostyl, a trend forecasting service.
Still, the vibe is different in the West—you won't find the ubiquitous black that infiltrates the Northeast. "The West has always had more of a casual feel and a freedom with color," says Nakouzi. "There are certain styles that will always fit more on the West Coast that wouldn't fit anywhere else as well."
EYEWEAR INFLUENCE
The West's refined sense of style has also filtered into eyewear design. The outdoorsy athleticism of the West has helped propagate both futuristic and athletic-inspired shields and larger shapes in eyewear, even while much of today's newness is in smaller shapes.
LENS TINTS
The West's passion for color has also influenced eyewear. "Things like colored reflective lenses and rose-tinted lenses are something that is still totally new to the younger consumer," says Paula Correri, a fashion editor with the Tobe Report. EB
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