AMERICAN DEMOGRAPHICS 2015

NORTHEAST: SLOW BUT Sure

“[Things are] still strong here because you have a lot of major metros—New York, Boston, and Philadelphia—and big-income households where they have a lot of discretionary income to spend.”

— RYAN SEVERINO, senior economist with Reis, Inc., a leading provider of commercial real estate information

ECONOMIC OVERVIEW

The post-recession economy in the burgeoning Northeast region continues to grow, which is inspiring consumer confidence here. And with good reason: Home values in the Northeast are moving upwards and the unemployment rate continues to decline—it is finally back in line with the jobless rate of the overall U.S.

“What we’ve seen over the course of the past year has been an improvement in consumers’ confidence levels across the board,” says Lynn Franco, director of economic indicators at The Conference Board, an independent business membership and research association.

JOBLESS RATE

The Northeastern Unites States’ unemployment rate gradually continues to decline—it was reported at 5.4% in June 2015, according to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS). This is on par with the jobless rate of 5.6% reported here from January through May 2015—and a marked improvement from the region’s 10-year high of 8.9% in February 2010. It is also a healthy decline from the jobless rate of 6.1% recorded in the region in June 2014.

NORTHEAST STATES

Breaking down this densely populated region, there are some areas that clearly fared better than others. In fact, the New England states had the lowest jobless rates of this region, as well as some of the lowest unemployment rates in the country. Standout states include Vermont, which had a notably low jobless rate of 3.6% in June 2015, according to the BLS. Just to the east, New Hampshire boasted an unemployment rate of 3.8%. Massachusetts (4.6%) and Maine (4.7%) also reported rock-bottom jobless rates.

While their own individual employment outlooks are on the upswing from 2014, other Northeast states, such as Rhode Island (5.9%), New York (5.7%), and New Jersey (6.1%) exhibited higher unemployment rates.

CONSUMER CONFIDENCE

Consumers across the country are feeling more confident about the economy than they have in a long time. In fact, the Consumer Confidence Index (CCI) for the U.S. rang in at 95.4 (1985=100) in May 2015—up significantly from 83 in May 2014.

Confidence is rising similarly in the Northeast, but with a bit of a mixed outlook.

While the Northeast’s New England states reported an impressively confident CCI of 107.6 in May 2015, the CCI in the Middle Atlantic states was 80.2. This number for the Middle Atlantic—which includes New York, New Jersey, Rhode Island, and Pennsylvania—is the lowest CCI reported in the entire country.

COST OF GOODS

Inflation continues to decrease nicely in the Northeast, where the Consumer Price Index (CPI/the prices paid by urban consumers for a representative basket of goods and services) for all urban consumers dipped down by .4% in June 2015 over June 2014.

At the same time, the overall U.S. CPI increased by 0.3% from June 2014 to June 2015, according to the BLS.

RETAIL REAL ESTATE

Retail real estate rents in the Northeast—already some of the highest in the country—are on the slow rise. Vacancy rates remain stable compared to last year, as well as lower than the U.S. rates as a whole.

VACANCY RATES

The story has not changed. The Northeast reported the same vacancy rate for the second quarter of 2015 (8.8%) as it did for the first quarters of 2012 and 2014, according to according to Reis, Inc., a New York City-based firm that provides forecasts of vacancy, rent, and inventory rates in the retail real estate market.

While the region’s vacancy rate for retail real estate continues to fare better than the rate for the entire U.S.—10.1% reported for the second quarter of 2015—further growth in this region is coming at a snail’s pace.

RENTS

The scenario is similar with retail real estate rents in this region. Asking rents were reported at $21.31 in the second quarter of 2015, up just slightly from the asking rents of $20.91 reported for the Q1 in 2014.

Slow and steady has been the theme for the past several years—average asking rents here came in at $20.54 in the first quarter of 2013 and $20.41 in the first quarter of 2012.

METRO MARKETS

Which of the Northeast’s urban sprawls are recovering the fastest? While some fared better than others, the region’s major metros are exhibiting slow-but-sure growth.

CITIES TO WATCH

Big city improvements in retail real estate were hard to come by in the first quarter of 2015. But, this region’s cities already exhibit lower interest rates and higher asking rents than much of the rest of the U.S., so growth is less noticeable.

Positive change was hard won in the metros of Northern New Jersey (remaining stable at a 5.5% vacancy rate in the 2nd quarters of 2015 and 2014), Boston (down slightly to 6.5% in Q2 2015 from 6.6% in Q2 2014) and Baltimore (up to 6.6% in Q2 2015 from 6.3% in Q2 2014).

However, on the economic and job outlook front, some cities revealed themselves as true standouts. Philadelphia has seen a nice decline in unemployment, reporting a jobless rate of 6.8% in May 2015 as compared to 9.5% in May 2013. Maine’s Portland/South Portland reported an impressively low jobless rate of 3.8% in May 2015 as compared to 4.6% in May 2014, according to the BLS. In addition, Boston has also seen positive growth with a jobless rate of 3.8% in May 2015 and vacancy rate of 6.5%.

FASHION TRENDS

Style is big business here in the more affluent, professional-populated Northeast. This region adopts trends quickly, but remains focused on sophistication.

Roseanne Morrison, fashion director at The Doneger Group, a New York City-based trend forecasting service, points to color choices as one of the biggest differentiators among the country’s many regions. “In the Northeast, it’s black and neutrals with one pop color,” she says.

One of the strongest fashion trends for Fall 2015 for this region is “Modern Geometry,” a Fall 2015 theme defined by the Doneger Group. This style direction includes multi-colored geometric shapes and quirky prints and patterns. In the Northeast, this trend will be interpreted in a sleeker, more glamorous way.

This region is potentially the most optimistic—or strategic—as it leads the nation in expanding to include frames in both higher price points (32%) AND lower price points (11%). Less than half of the Northeast plans to remain the same in terms of product—at 42% of respondents, this is fairly flat from last year.

NORTHEAST in focus

LENS MARKET

FREE-FORM: Though like every region in the U.S. it is seeing steady growth year-to-year, the Northeast yo-yos in its ranking with other regions regarding sales of free-form/digitally produced lenses. Last year it tied for first in the nation, this year it is last, with ECPs reporting that 48% of their lens sales are free-form or digital designs. That said, the region still outperformed 2014’s sales percentage by 11%, making up for the barely 1% growth it saw from 2013-14, so no tears for the Northeast.

MATERIALS AND EXTRAS: Polycarbonate still reigns supreme in the land of steady habits, cited as the “most used” lens material by 65% of ECPs in the Northeast. That figure represents a 5% growth over last year’s numbers. Regular plastic is the next most-used lens material here, with high-index and Trivex neck-and-neck for third. Like the rest of the nation, AR is the most-sold lens “extra” here, with 85% of ECPs here citing it as such (a healthy 5% increase over last year). Next popular is photochromics, and then polarized lenses. Though the popularity of photochromics fell by 5% from last year, polarized lenses saw a 3% jump.

PRESBYOPES: There are more presbyopes here than single vision wearers, as survey respondents report 49% of their lens sales are PALs, while 45% are single vision lenses.

GOING DIGITAL: Maybe it’s because of its many metro hubs, but awareness of blue light exposure and digital eye strain is strong in the Northeast. Nearly 36% of ECPs report that category as their fastest-growing specialty category.

FRAME MATERIALS: A LOOK AT THE LATEST IN FRAME SALES AND TRENDS IN THE NORTHEAST

PERENNIAL FAVORITES

Evergreen eyewear rules in the North. Once again patients here lead the nation in refills of existing eyewear with new Rx lenses. While representing 17% of refills reported by respondents, this upswing still hasn’t reached the four-year norm of 19%.

ON THE EDGE: NORTHEAST REGION