WEST: Troubled Waters
Still experiencing the hangover of the wild boom days in the early 2000s, the West is recovering slowly on the job and real estate fronts but filled with hope for the future
ECONOMIC OVERVIEW
Clobbered by unemployment and beleaguered by low consumer confidence, the West appears to be in need of a modern-day gold rush.
JOB LOSS
The West has levitated well above the country's jobless rate for the past year, with unemployment rates ranging from 10.6 percent in November 2009 to 10.9 percent in April 2010, according to the Bureau of Labor Statistics (BLS). California was one of the biggest anchor states for this problem; it reported a jobless rate of 12.6 percent in April 2010. Nevada experienced an even higher unemployment rate of 13.7 percent for the same time frame. On the flip side, Montana revealed low unemployment figures—in April, the jobless rate was 7.1 percent, which was up from 6.6 percent in November 2009.
San Francisco
CONFIDENCE QUOTIENT
Did the soaring jobless rates sink consumer confidence in the West? Not as much as might have been expected. About 32 percent of Westerners queried for the BIGresearch Consumer Intentions & Actions Survey felt “Confident/Very Confident” about the chances for a strong economy in the next six months. This number was only slightly lower than those who felt the same in the other U.S. regions. This is nearly a 10-point jump in confidence over April 2008, when 22.8 percent of people surveyed felt the same way.
Denver
SPENDING OUTLOOK
The carefree attitude of the West may be what's keeping the populace here a bit more positive. Still, over 46 percent say they have become more budget conscious and 58.5 percent have focused more on what they “need” versus what they “want” in the past six months.
Practicality also comes into play for Westerners. Over 30 percent say they plan to increase their savings in the next three months and more than 50 percent say they have become more practical and realistic in their purchases in the last six months. Almost 36 percent say they plan to decrease their overall spending in the next three months.
COST OF GOODS
The West's Consumer Price Index (CPI/the prices paid by urban consumers for a representative basket of goods and services) edged up 0.2 percent in April, which is similar to the increase seen in other regions, according to the BLS. This jump is a result of increases in energy, transportation, and gasoline prices.
OPTICAL FILELENS MARKETComputer vision was named by six out of 10 Western respondents as their fastest-growing area of specialty care. That's more than in any other region. The West also led the nation in the area of tints—with five percent of respondents citing tints as their most-sold add on. Perhaps those tints are geared toward computer users' visual comfort. • SPECIALTY MIX. In addition to citing a dynamic computer vision specialty outlook, the West logged the most varied responses for other fastest-growing specialty care categories, including low vision (12 percent), medical, specialty contact lenses, and sunwear. • FREEFORM. The West also increased its percentage of free-form produced lens usage—up from 17 percent in 2009 to 22 percent in 2010. • PREMIUM PICKS. In premium lens materials, the West holds the number-two spot in preferences for poly and 1.60; for 1.67, the West falls third, at 22 percent. |
FRAME FOCUSWhile the mix of frame categories didn't change too much from last year to this year, Western frame business has certainly felt some big shifts in 2010. MATERIALS: Plastic grew slightly to 29 percent in market share, but metal and rimless were virtually unchanged at 53 percent and 15 percent, respectively. REFILLS: The nationwide movement for new prescription lenses in new eyewear continues in the West, growing by 10 percent this year to 81 percent of prescription eyewear dispensed in the region. SECOND PAIR: Readers and computer glasses are making an appearance in the second-pair sale of the West with a small (6 percent) share of the market. Casual eyewear grew to 18 percent of second-pair sales, taking from sunwear (which fell to 75 percent in 2010 from 79 percent last year). PRICING: After hanging tough on pricing last year, only 43 percent of frame sellers reported staying flat this year, down from 70 percent last year. Instead, the focus in the West is on more affordable options, with expansions to lower (19 percent) and both higher and lower (24 percent) pricing, while again 15 percent expanded to higher price points. |
EDGING STATSThe West held steady here, processing 41 percent of its edging work in-office. That's the same as last year. By way of comparison, only the Midwest does less in-office lens processing than the West. |
25%…same as last year 9%…more than last year 7%…less than last year 59%…don't edge in-house |
RETAIL REAL ESTATE
Despite its unemployment woes, the West lays claim to relatively low vacancy rates and higher asking rents compared with other regions. Like the Northeast, this region's affluent, dense metro areas saved the day.
VACANCY RATES
In the first quarter of 2010, the West reported slightly higher vacancy rates (9.1 percent) than the Northeast's lowest rate (9 percent) of all the regions, according to Reis, Inc., a commercial real estate trend forecasting firm.
Still, the West's rate is significantly higher today than it was two years ago in the first quarter of 2008 when it rang in at 5.4 percent.
“They have seen rents decline here, but we are seeing structurally lower vacancy rates and rent declines because there are more dense metros in the West,” says Reis economist Ryan Severino.
Phoenix
Cyber SellingONLINE SALES by ECP respondents to our survey: 79%…don't sell any products online 21%…sell contact lenses online 26%…plan to sell online within two years |
RENTS
The dense metros in the West helped keep asking rents higher than all other regions. Asking rent in the first quarter of 2010 was $24.13 per square foot here, according to Reis. This number was even higher than the Northeast, which revealed an asking rent of $20.29 per square foot for the same time period. Rents in the West have also remained relatively stable over the past few years.
METRO MARKETS
While both the retail and residential real estate markets declined in the previously booming metros like Las Vegas and Phoenix, the West does also have a few strong-performing areas.
CITIES TO WATCH
An outpost of retail real estate growth in the West, Denver saw vacancy rates drop in the first quarter of 2010. The Mile-High City also boasted one of the top same-building sales in the country—a 23,000-square-foot retail building, which sold for $7.8 million.
The East Bay/Oakland area in Northern California is another bright spot with vacancy rates of 5.7 percent and a rental rate of $22.65, one of the highest average retail rents in the country. In Southern California, Los Angeles had a vacancy rate of 5.3 percent.
San Francisco has an astoundingly low vacancy rate (3.2 percent); this metro also commands one of the highest rental rates in the country, $32.07 per square foot.
Lastly, Portland Ore., is another place to watch as it also continues to deliver one of the lowest vacancy rates in the country (6 percent).
FASHION TRENDS
The laid-back attitude made famous in Southern California permeates the style scene of the West.
“The lifestyle in LA., the beach culture, and the way that people live influences it. It's about a more easy breezy approach to dressing,” says Rita Nakouzi, director of Promostyl Americas. “For example, people embrace all these jersey pieces that you layer.”
She adds that different areas within the region have variations on the theme. “In Northern California, the wine country and the lifestyle of the hiker are the influence—it's not as laid back there,” she says.
The upcoming fall season's retro silhouettes will be a must-have trend in the West. “This trend includes gorgeous separates that are focused on romance, refined fabrics, craftsmanship, and heritage.” Nakouzi adds: “They are investment pieces.” EB
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