Market Awareness: Acting vs. Reacting

Paving and pavement maintenance contractors (and the manufacturers and producers that supply them) have had a good post-Great Recession run, and while there are plenty of reasons to expect that run to continue (see the “State of the Industry” report starting on page 58) it’s good policy to pay attention to what’s going on in your local market.

This comes to mind because of what has been a year-long spate of brick-and-mortar store closings – and they aren’t of boutique stores but the closings of large space-absorbing businesses that frequently anchor the commercial properties you deal with.

At press time the list looks like this:

• JC Penney, closing 130-140 stores
• Macy’s, identified 68 of the 100 stores it plans to close
• Sears, closing 150 stores (including 108 Kmarts)

And that follows on the heels of last year’s shuttering of The Limited (250 locations) and Sports Authority (more than 450 locations). And now there’s news that Nordstrom’s, while not yet making drastic cuts, is considering at least some consolidations.

These large retail outlets not only bring in the shoppers the malls and strip centers need (though clearly that’s less of a contribution than in the past), they contribute significant lease dollars to the property, enabling its pavement to be swept, striped, repaired – whatever is needed.

When those large businesses vacate, the property’s operating budget takes a hit. Fewer tenants and more vacancies means fewer lease dollars flowing in. That means property managers have less money to handle the day-to-day operations of the retail center and must pay closer attention to what they’re getting done (and to what they’re paying for what they’re getting done).

We’ve all seen this before – and have survived it, too, should it even get to that point – but the key now is to be vigilant about what’s going on in your market. Only then can you effectively act on what you see instead of reacting to what’s already happened.