The KeyPoint Report

Retail Real Estate Trends & Analysis 2015

Eastern MA/Greater Boston

©2015 KEYPOINT PARTNERS, LLC, BURLINGTON, MA

Special Section: 10-Year Restaurant Report

On the covers: Wegmans, one of several major grocers who expanded in the region Methodology: The data for this study includes all public retail space in the study area except for a few exclusions discussed below. The information in our database has been compiled from a variety of sources. A member of KeyPoint Partners’ research staff has visited each store/shopping center in order to verify and/ or acquire the necessary information. The area for each space is obtained from sources deemed reliable, such as the owner or leasing agent, is paced off by our researchers or otherwise measured. Retail categories and SIC Codes are obtained from a leading business database, InfoUSA, when available. Each entry is field verified or determined by our research staff. In general, public retail space is characterized as all space currently, or most recently, utilized in selling or renting retail goods and/or services to the public. There are no size restrictions for stores or shopping centers. Certain retail classifications are excluded, including automobile dealerships, gasoline service stations, automobile repair shops and quasi-retail services, such as stock brokers, real estate agents, insurance agents, etc., unless such establishments are located in shopping centers containing typical retail tenants. In some cases wholesale or quasi-retail establishments have been included in the database if information from InfoUSA or our field research indicates that goods and/or services are being offered to the public from the location. Some establishments available to the public but typically serving primarily the needs of other users of a facility, such as a cafeteria in an office building or a beauty salon located inside a hotel, may also be excluded. Demographic information used in this study was provided by Scan/US.

Custom Retail Market Research KeyPoint Partners provides retail research consulting services ranging from preliminary desktop assessments to comprehensive evaluations which integrate field investigation and quantitative analysis for a variety of retail location and store types. The heart of our research superiority is our powerful, proprietary GRIID™. Is there a custom retail market research project we can do for you? Call Bob Sheehan, Vice President of Research at 781.418.6248, or email him at [email protected].

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©2015 KEYPOINT PARTNERS, LLC, BURLINGTON, MA

KeyPoint Partners, LLC One Burlington Woods Drive, Burlington, MA 01803 Tel 781.273.5555 Fax 781.272.8408

KeyPoint Partners, LLC One Burlington Woods Drive, Burlington, MA 01803 Tel 781.273.5555 Fax 781.272.8408

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[email protected]

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About this Report: This KeyPoint Report examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during the year ending May 2015. Thisstudy includes 189 cities and towns, representing more than 3,500 square miles (44% of Massachusetts’ land area) and approximately 5 million people (76% of the state population). KeyPoint Partners’ GRIID™ database maintains detailed information on virtually all retail properties in three key regions: Eastern Massachusetts, Southern New Hampshire and Greater Hartford, Connecticut. These markets encompass approximately 44% of all retail space in New England. GRIID™ has information on nearly 260 million square feet of retail space and nearly 60,000 retail establishments. The KeyPoint Reports contain a summary and analysis of market trends and activity for each studied area.

Copyright KeyPoint Partners, LLC, 2015

Submarkets:

2

Highlights: Supply:

Absorption:

Vacancy Rate:

2014: 191.6M

2014: 712,500 SF

2014: 8.5%

Submarket Ranks:

Category Expansion by Square Feet:

193.2M SF City/Town Ranks: #1 Space SF: Boston #1 Low Vacancy: Abington #1 High Vacancy: Lawrence

Category Expansion by Number of Stores: #1 Eating Places (+73)

768,500 SF #1 Space SF: West #1 Low Vacancy: North Shore #1 High Vacancy: Buzzard’s Bay

Retailer Expansion by Square Feet: #1 Target (+277,600)

8.8%

#1 Food/Grocery (+534,400 SF)

Retailer Expansion by Number of Stores: #1 Subway (+8)

Cities & Towns in the Study Area by Submarket: North Shore: Amesbury, Beverly, Danvers, Essex, Gloucester, Hamilton, Ipswich, Lynn, Manchester, Marblehead, Nahant, Newbury, Newburyport, Peabody, Rockport, Rowley, Salem, Salisbury, Saugus, Swampscott, Topsfield, Wenham, North Andover, Boxford, Georgetown, Groveland, Haverhill, Lawrence, Lynnfield, Melrose, Merrimac, Methuen, Middleton, North: Andover, North Reading, Reading, Stoneham, Tewksbury, Wakefield, West Newbury, Wilmington, Winchester, Woburn Northwest: Acton, Ayer, Bedford, Billerica, Boxborough, Burlington, Carlisle, Chelmsford, Concord, Dracut, Dunstable, Groton, Harvard, Lancaster, Leominster, Lexington, Lincoln, Littleton, Lowell, Lunenburg, Pepperell, Shirley, Townsend, Tyngsborough, Westford West: Ashland, Berlin, Bolton, Boylston, Clinton, Framingham, Grafton, Holliston, Hopkinton, Hudson, Marlborough, Maynard, Natick, Needham, Newton, Northborough, Northbridge, Sherborn, Shrewsbury, Southborough, Sterling, Stow, Sudbury, Upton, Waltham, Wayland, Wellesley, West Boylston, Westborough, Weston Southwest: Attleboro, Bellingham, Blackstone, Dedham, Dover, Foxborough, Franklin, Hopedale, Mansfield, Medfield, Medway, Mendon, Milford, Millis, Millville, Norfolk, North Attleborough, Norwood, Plainville, Sharon, Uxbridge, Walpole, Westwood, Wrentham South: Abington, Avon, Berkley, Braintree, Bridgewater, Brockton, Canton, Dighton, East Bridgewater, Easton, Holbrook, Lakeville, Middleborough, Norton, Randolph, Raynham, Rehoboth, Seekonk, Stoughton, Taunton, West Bridgewater, Whitman South Shore: Carver, Cohasset, Duxbury, Halifax, Hanover, Hanson, Hingham, Hull, Kingston, Marshfield, Norwell, Pembroke, Plymouth, Plympton, Rockland, Scituate, Weymouth Buzzards Bay: Acushnet, Dartmouth, Fairhaven, Fall River, Freetown, Marion, Mattapoisett, New Bedford, Rochester, Somerset, Swansea, Wareham, Westport City of Boston: Boston Inner Suburbs: Arlington, Belmont, Brookline, Cambridge, Chelsea, Everett, Malden, Medford, Milton, Quincy, Revere, Somerville, Watertown, Winthrop 3

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Observations:

Figure 1: Summary

Special Feature: This year’s Report, in addition to our usual detailed summary of market activity for the last year, includes a special feature: an analysis of major changes that have occurred in the restaurant category since 2005. Here are our comments and observations on activity during the latest year:

This year, the total retail real estate inventory was 193.2 million square feet, a gain of 1.6 million square feet, or 0.9%.

Category

2015

Total Market Size (Square Feet)

2014 %Change

193,199,900 191,558,000

0.9%

Total Number of Retail Properties

19,600

19,800

-0.8%

Total Number of Retail Establishments

46,000

46,300

-0.6%

17,076,900

16,203,500

5.4%

Vacant Stores

5,900

5,700

3.2%

Vacancy Rate

8.8%

8.5%

3.7%

Total Retail Space Per Capita

38.9

38.6

0.9%

Retail Property Average Size

9,800

9,700

1.4%

Retail Store Average Size

4,200

4,200

0.0%

Total Market Vacancy Square Feet

Vacancy & Absorption: The year-end regional vacancy rate was 8.8%, a moderate increase from a rate of 8.5% in 2014. Total vacancy in the region is approximately 17.1 million square feet, a gain of 873,000 square feet. At the same time, new retail projects in the region resulted in significant positive absorption of 768,500 square feet for the year.

Figure 2: Submarkets The Southwest submarket experienced the largest percentage gain in square footage, largely attributable to the opening of Westwood’s University Station and a new Market Basket in Attleboro. The West and Northwest ranked second and third, benefitting from the Market Basket-anchored 1265 Main project in Waltham and the Wegmans-anchored 3rd Avenue development in Burlington.

KeyPoint Partners, LLC

Region

4

2015 SF %Change 2015 Vacancy 2014 Vacancy

Buzzard’s Bay

14,272,700

0.0%

12.3%

12.5%

City of Boston

18,803,000

0.8%

8.7%

7.9%

Inner Suburbs 22,752,800

0.9%

9.0%

8.6%

North

16,011,400

0.6%

11.1%

11.0%

North Shore

19,964,300

0.6%

6.7%

6.8%

Northwest

17,807,200

1.6%

7.1%

6.4%

South

23,351,800

0.3%

9.5%

8.9%

South Shore

13,591,500

0.4%

10.8%

9.3%

Southwest

20,482,000

2.1%

6.9%

6.3%

West

26,163,200

1.1%

8.0%

8.5%

No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change in price, rental or other conditions, or withdrawal without notice.

Eastern Massachusetts/Greater Boston 2015

Supply, Occupancy, & Absorption (Figure 1, Page 4): This year Eastern Massachusetts inventory inched up to 193.2 million square feet, a gain of 0.9% - a sign that new retail development continued some momentum from a year ago. At the same time, vacant retail space in the region increased 873,400 square feet. National and regional chains continue to close stores, as we saw a year ago when the rate jumped from 7.8% to 8.5%. Major contributors to the higher vacancy rate this year range from small tenant closings such as Radio Shack and Coldwater Creek to large department store units such as Sears, Kmart, and JCPenney. Nevertheless, net retail absorption ended the year up, at 768,500 square feet, 56,000 square feet higher than last year. Regional Submarkets (Figure 2, Page 4): The Southwest submarket experienced the largest percentage increase in square footage, gaining 2.1%, which was largely attributable to the opening of University Station in Westwood and a new Market Basket in Attleboro. The West and Northwest ranked second and third, benefitting from the Market Basket-anchored 1265 Main project in Waltham and the Wegmansanchored 3rd Avenue development and other smaller projects in Burlington. The largest increase in vacancy, from 9.3% to 10.8%, occurred in the South Shore as JCPenney closing at Hanover Mall and Sears closing at Kingston Collection took their toll on this market. The Buzzards Bay vacancy rate declined from a year ago from 12.5% to 12.3% but remains the highest in Eastern Massachusetts. The North submarket is not far behind at 11.1%. The North Shore has the lowest rate in the region at 6.7%. Individual Town Rankings (Figure 3, Page 6): The top 10 largest towns remain intact from a year ago, but with a little juggling. Boston and Cambridge again hold the one and two positions. Brockton moved up one spot and is now ranked third, overtaking Natick. Burlington sits in fifth place, followed by Saugus, Danvers, and Framingham. Fall River and Braintree complete the top ten. Among communities with at least 500,000 square feet of retail space, Abington remains on top of the rankings for lowest vacancy rate in the region. Two smaller towns added enough new retail space this year to get them into the top 10 for lowest vacancy rate: Westwood, as a result of the University Station opening, and Concord. Lexington, Chelmsford, Mansfield, Braintree, and Acton are also newcomers to this top ten ranking. Seven of the top ten towns with the highest vacancy rates repeat from last year. Only Hanover, Kingston, and Middleton are new to the list. JCPenney and Sears Once again, Boston retains #1 rank in retail supply closings were the cause of the former two towns moving up in the ranking. Vacancy by Tenant Size (Figure 4, Page 6): In recent years, a general trend in Eastern Massachusetts was the increase in vacancy rates among smaller stores, which was largely attributable to mom-and-pop stores that could not recover from the Great Recession. This size category also experienced a rise in vacancy rates this year, but this time national and regional chains were a major contributor. Radio Shack in particular impacted these categories - spaces under 2,500 square feet saw an increase from 13.1% to 13.5%, while the 2,500-4,999 square foot categories increased from 10.9% to 11.7%. The electronics chain impacted both. The 10,000-24,999 square foot bracket also experienced a significant vacancy rate increase from 7.3% to 8.0%, resulting mainly from store closings by Staples and The Mill Stores. Occupancy also slipped in categories under 10,000 square feet. Conversely, some larger categories gained. Market Basket openings helped push up the 50,000-99,999 square foot segment. Target, Wegmans, and Wal-Mart all had a hand in the occupancy share gain in the category above 100,000 square feet, but JCPenney and Kmart closings resulted in a bump in the vacancy rate within that category. Retailer Activity (Figure 5, Page 8): With respect to expansion by square footage, among the top growing retailers in Eastern Massachusetts, Target nosed out Market Basket for the most new space to the region, adding 277,600 square feet with new stores in Wilmington and Westwood. Market Basket would have taken the top spot with four new stores in Littleton, Revere, Attleboro, and Waltham, but closed one of its two Westford stores (a move that was anticipated), netting the chain 254,400 square feet for the year. Wegmans continued its one-a-year market expansion with a new store in Burlington, placing it third. Wal-Mart added a Supercenter in Saugus, which ranked it 4th.

Copyright 2015 KeyPoint Partners, LLC

Continued on page 7

5

Eastern Massachusetts/Greater Boston 2015

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The KeyPoint Report Figure 3: City & Town Rankings

The City of Boston again leads the region in total retail inventory. Cambridge holds its #2 ranking, while Brockton jumped ahead of Natick for third place this year. Several of the region’s retail hubs combine retail space in two towns, such as Natick/Framingham and Danvers/Peabody, encompassing 7.1 million and 6.6 million square feet respectively. These represent the two largest super-regional markets. Abington, Westwood, and Lexington were healthiest by vacancy rate, all below 3.0%. None of the top ten had rates above 3.6%. The highest vacancy rate was found in Lawrence at 21.1%. An unlikely runner-up was Hanover at 20.5%, resulting largely from the JCPenney closing at Hanover Mall.

Most Space SF

Highest Vacancy* Prior Rank

Boston

18,803,000

Lawrence

21.1%

4

Cambridge

4,486,700

Hanover

20.5%

Brockton

3,710,100

Malden

Natick

3,704,000

Burlington

Lowest Vacancy* Prior Rank Abington

2.1%

1

13

Westwood

2.2%

NA

19.9%

1

Lexington

2.8%

21

New Bedford

19.4%

6

Bridgewater

3.0%

6

3,603,100

Haverhill

19.3%

2

Concord

3.0%

NA

Saugus

3,477,500

Taunton

19.1%

5

Chelmsford

3.2%

12

Danvers

3,399,600

Kingston

18.4%

14

Hingham

3.4%

5

Framingham

3,382,500

North Reading

18.3%

3

Mansfield

3.6%

19

Fall River

3,333,600

West Bridgewater

17.9%

9

Braintree

3.6%

26

Braintree

3,315,600

Middleton

15.5%

17

Acton

3.6%

28

Target led expansion by SF in the region The retailer closing the most space in Eastern Massachusetts was JCPenney, dropping more than 200,000 square feet by vacating its Taunton and Hanover stores. Work Out World declined 155,400 square feet, reducing its footprint by six locations, although most were converted to other brand health clubs. The Mill Stores ranked third, closing five stores in the region (it still operates stores on Cape Cod). Subway led the way with respect to increased store count, adding eight locations. Massage Envy, Starbucks, and Dunkin Donuts all tied for second, each with six new stores. The runaway loser for unit reduction was Radio Shack, which closed 37 locations. Staples was a distant second with 10 store closings, followed by Wet Seal with seven.

*For cities and towns with 500,000 square feet or more of retail space. NOTE: For towns with supply close to the threshold, 1 large vacant space can account for high vacancy percentage, without necessarily indicating market health.

Figure 4: Market Composition & Vacancy by Tenant Size Similar to last year, the only size classification to show improvement during the year occurred within the 25,000-49,999 square foot range. Several new store openings in Westford and Burlington, and the replacement of a former Burlington Coat Factory with India Market in Shrewsbury, accounted largely for the lower vacancy rate in this category. JCPenney and Kmart closings in Taunton and Milford, respectively, caused a spike in the vacancy rate among 100,000-199,999 square foot segment. Small units under 5,000 square feet also showed higher vacancy rates.

Tenant Size

KeyPoint Partners, LLC

Observations Continued

6

Market Share 2015 Market Share 2014 Vacancy 2015 Vacancy 2014

Less Than 2,500 SF

20.2%

20.4%

13.5%

13.1%

2,500 to 4,999 SF

15.8%

15.9%

11.7%

10.9%

5,000 to 9,999 SF

12.7%

12.8%

10.6%

10.6%

10,000 to 24,999 SF

14.3%

14.3%

8.0%

7.3%

25,000 to 49,999 SF

10.4%

10.5%

7.0%

7.5%

50,000 to 99,999 SF

11.2%

11.0%

6.6%

6.6%

100,000 to 199,999 SF

13.7%

13.5%

2.3%

1.4%

200,000 SF and above

1.7%

1.7%

0.0%

0.0%

No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change in price, rental or other conditions, or withdrawal without notice.

Retail Categories (Figure 6, Page 9): It was a notable year for grocers as this category dominated the field in adding square footage to the region. More than a half million square feet was added to the grocery category by virtue of Wegmans, Whole Foods, Roche Bros. and four new Market Basket units (it was just a matter of time before Artie T. got back to work!). Amusement and Recreation, a category that had gone mostly unnoticed until last year, ended up in second place again with the openings of King’s, Sky Zone, and K1 Speed, an indoor go-cart concept at the rejuvenated Kingston Collection (formerly Independence Mall) in Kingston. Losing ground was the Electronics category, attributable to Radio Shack closings and the closing of Best Buy at Landmark Center in Boston. Office and Stationary Supplies also took a blow, primarily the result of Staples store closings. Home Furnishings came in third as a result of The Rug Dept. closing its two stores, which operated under the same family ownership as Building 19 prior to its liquidation. With respect to store count, Restaurants, a perennial favorite for making the list, topped all categories with 73 additional locations. Health & Fitness Services slid into second place, adding 32 units, followed by Medical & Dental Services, adding 25 lo-

Copyright 2015 KeyPoint Partners, LLC

Continued on page 9

7

Eastern Massachusetts/Greater Boston 2015

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Figure 5: Retailer Activity

Figure 6: Retail Category Activity

The region encompasses approximately 46,000 retail establishments, representing approximately 26,800 unique retailers. The following summarizes these by the degree of expansion or contraction.

Tenants in GRIID™ represent nearly 600 unique business classifications; we have aggregated similar business types into larger retail categories, and summarized these by the degree of expansion or contraction.

Expansion by SF

Expansion by SF

Contraction by SF

Category

New

Retailer

New

Total

Retailer

Contracted Total

Target

277,600

4,236,800

J C Penney

207,900

927,000

Food Stores - Grocery

534,400 20,603,300

Market Basket

254,400

2,562,500

Work-Out-World

155,400

311,200

Amusement & Recreation

247,100

Wegman’s

136,400

344,400

Mill Stores

140,900

0

Health & Fitness Services

230,000

Wal-Mart

114,400

4,423,300

The Rug Dept.

122,400

0

National Wholesale Liquidators

89,400

173,900

Staples

106,200

977,700

O’Reilly Auto Parts

88,900

95,300

KMart

100,700

Cabela’s

88,000

88,000

Sears

Marshall’s

76,900

1,511,100

Burlington Coat Factory

66,000

729,600

CVS Pharmacy

61,300

2,973,500

Expansion by # Stores Retailer

KeyPoint Partners, LLC

Contraction by SF

Total

Category

Contracted Total

Electronic Stores

-119,800

965,800

4,490,300

Office & Stationery Supplies

-106,400

1,246,500

7,490,400

Home Furnishings

-89,800

2,842,900

Eating Places

170,700 22,878,700

Apparel - Women’s

-84,900

2,863,900

Apparel - Family

127,200

6,592,300

Cleaners & Laundry Services

-57,300

2,208,300

1,060,800

Medical & Dental Services

112,100

1,632,900

Furniture Stores

-56,400

4,579,800

80,000

2,381,200

Department Stores

83,400 21,850,100

Gift, Novelty and Souvenir Shops -55,500

1,925,000

Ten X Club

76,200

0

Pet Shops & Pet Supply Stores

62,500

1,315,700

Book Stores

-52,700

647,700

Kam-Man Foods

38,000

80,000

Auto & Home Supply

43,200

2,921,900

Jewelry

-33,100

778,600

Best Buy

35,600

746,000

Telephone Equipment

41,600

854,200

Paint, Glass & Wallpaper

-29,200

401,500

Contraction by # Stores New Total Retailer

Expansion by # Stores

Contracted Total

Category

Contraction by # Stores New Total Category

Contracted Total

Radio Shack

37

43

Eating Places

73 9,073

Beauty Salons and Services

-62

4,846

23

Staples

10

47

Health & Fitness Services

32 1,243

Electronic Stores

-35

115

6

143

Wet Seal

7

5

Medical & Dental Services

25

679

Gift, Novelty and Souvenir Shops

-31

603

Dunkin Donuts

6

610

Work-Out-World

6

11

Tobacco Stores and Stands

22

98

Furniture Stores

-26

418

O’Reilly Auto Parts

5

8

Quizno’s Subs

5

2

Telephone Equipment

13

439

Florists

-18

365

Uniqlo

5

5

Mill Stores

5

0

Food Stores - Grocery

8 1,836

Cleaners & Laundry Services

-17

1,235

Petsmart

4

21

Coldwater Creek

5

0

Apparel - Family

7

596

Jewelry

-16

495

Chatime

4

4

Crumbs Bake Shop

5

1

Drinking Places

6

371

Variety Stores

-16

649

Cumberland Farms

4

89

7-Eleven

5

118

Computer & Software Stores

6

140

Shoe Stores

-14

396

Francesca’s

4

16

Hollywood Tans

5

0

Pet Shops & Pet Supply Stores

5

199

Book Stores

-12

140

Subway Sandwiches & Salads

8

206

Massage Envy

6

Starbucks Coffee

NOTE: All figures shown above are NET

8

No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change in price, rental or other conditions, or withdrawal without notice.

Observations Continued cations. This is a relevant finding as more and more non-retail users become viable replacements in shopping center venues. Declining in number was Beauty Salons and Services, dropping 62 units. Electronics lost 35 stores, reflecting the Radio Shack impact. Gift, Novelty and Souvenir Shops ended in third place, decreasing by 31 units. Conclusions: As we continue to acclimate to a multi-channel world, those of us who live primarily in the brick-and-mortar segment of the retail spectrum increasingly feel its effects. Shopping center development has slowed, store footprints are shrinking, vacancy rates are stagnating, retail chains continue to consolidate, and some retail categories are fading away. At the same time we now see viable non-retail users occupying traditional retail spaces, such as medical and dental tenants. We see entertainment venues like King’s and Sky Zone eating up large blocks of shopping center space. We see retailers broadening merchandise offerings to offset sales declines in core lines, such as Barnes & Noble expanding into educational toys and games and other non-book categories. We see restaurant concepts expanding throughout the region such as Chipotle, Boloco, b. good, and now Shake Shack and Smashburger (see our Restaurant Special Feature on Page 11). And we see retailers expanding in-store customer services to help differentiate the brick-and-mortar purchasing experience from less personal encounters on the internet. While we indicated that development has slowed, it assuredly has a pulse. We experienced exciting new openings this year in Burlington at the Wegmans-anchored 3rd Avenue project and in Westwood at University Station with its complementary mix of Target, Ulta, Nordstrom Rack, Bonefish Grill and Smashburger, and a soon-to-open Wegmans, among many others. Grocery chains were busy growing as we saw with Market Basket, Whole Foods and Roche Bros. in addition to Wegmans. Health clubs in the region continue to expand as do entertainment venues. A preference study conducted last year by the A. T. Kearney management consulting firm showed that 90% of shoppers across all generations still prefer a physical store. They like to shop with other shoppers, touch stuff, and enjoy the atmosphere. No one would argue that shopping habits aren’t changing, but it appears that, in this new omni-channel retail world, brick-and-mortar remains the backbone of the shopping experience. Bob Sheehan Vice President of Research [email protected]

Copyright 2015 KeyPoint Partners, LLC

9

Special Section: A Ten-Year Look at Restaurants Significant Change Among Major Restaurant Chains in 10 Years

Figure 1: Restaurant Store Count Change 2005-2015 Restaurant counts: 2005: 6,179 2010: 6,391 2015: 6,946

80

60

Most units added: Subway Chipotle Panera

At right, restaurant chains tracked (includes chains with 10 or more regional locations:

In the past ten years a number of restaurant chains have come and gone but the absolute number of restaurants has trended up. In 2005, KeyPoint data showed that 6,179 restaurants operated within Eastern Massachusetts. By 2010, even after withstanding the Great Recession, that number climbed to 6,391 units.

Outback Olive Garden Subway Pizza Hut IHOP Chipotle Au Bon Pain Regina Pizzeria Panera Uno Wendy’s Five Guys Burger King TGI Friday’s Boloco Not Your Average Joe’s Boston Market Qdoba Applebee’s Ninety Nine b. good KFC Crown Fried Chicken Taco Bell McDonald’s Chili’s Cosi D’Angelo’s Acapulco Comella’s Friendly’s Papa Gino’s Legal Sea Foods Bertucci’s Longhorn

In the past five years the restaurant count in the region has rocketed to 6,946 locations, more than doubling the pace of new openings from the first half of the decade. Much of the growth in the number of restaurants resulted from the development of fast casual chains, in addition to the phenomenal growth of Subway, which passed McDonald’s by the end of 2010 to become the largest restaurant chain in the world. Its current global store count exceeds 42,000 locations, an average of two store openings per day since 1965. In Eastern Massachusetts, Subway has added 71 locations in the ten years since 2005.

40

20

While Subway is in a class all by itself, in the next tier are fast casual chains Chipotle, Panera Bread, and Five Guys, which combined for more than 100 new locations since 2005. Neither Chipotle nor Five Guys operated stores in the region until 2007 and 2008, respectively. Other chains showing notable growth since 2005 include Boloco, Qdoba, and b. good.

0

Friendly’s

D’Angelo’s

McDonald’s

KFC

Applebee’s

Boston Market

Burger King

Uno

Au Bon Pain

Pizza Hut

Outback

Bertucci’s

Papa Gino’s

Acapulco

Chili’s

Taco Bell

Ninety Nine

Not Your Average Joe’s

TGI Friday’s

Wendy’s

Regina Pizzeria

IHOP

Olive Garden

Longhorn

Legal Sea Foods

Comella’s

Cosi

Crown Fried Chicken

b. good

Qdoba

Boloco

Five Guys

Panera

Subway

-40

Chipotle

-20

Friendly’s, D’Angelo, McDonald’s and KFC lead all chains in the region for the most store closings between 2005 and 2010 in Eastern Massachusetts. Although operational problems caused some of the fallout at these chains, the more salient issue may lie in the fact that they were not quick to adapt to consumer trends toward better eating habits and healthier lifestyles. Other chains losing significant market share include Applebee’s, Boston Market, Burger King and Uno. Figure 1, at left, illustrates the change in store counts during the past ten years among restaurant chains with 10 or more locations in the region. Source: KeyPoint Partners’ GRIID™

10

No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change in price, rental or other conditions, or withdrawal without notice.

Copyright 2015 KeyPoint Partners, LLC

11

The KeyPoint Report

Retail Real Estate Trends & Analysis 2015

Eastern MA/Greater Boston

©2015 KEYPOINT PARTNERS, LLC, BURLINGTON, MA

Special Section: 10-Year Restaurant Report

On the covers: Wegmans, one of several major grocers who expanded in the region Methodology: The data for this study includes all public retail space in the study area except for a few exclusions discussed below. The information in our database has been compiled from a variety of sources. A member of KeyPoint Partners’ research staff has visited each store/shopping center in order to verify and/ or acquire the necessary information. The area for each space is obtained from sources deemed reliable, such as the owner or leasing agent, is paced off by our researchers or otherwise measured. Retail categories and SIC Codes are obtained from a leading business database, InfoUSA, when available. Each entry is field verified or determined by our research staff. In general, public retail space is characterized as all space currently, or most recently, utilized in selling or renting retail goods and/or services to the public. There are no size restrictions for stores or shopping centers. Certain retail classifications are excluded, including automobile dealerships, gasoline service stations, automobile repair shops and quasi-retail services, such as stock brokers, real estate agents, insurance agents, etc., unless such establishments are located in shopping centers containing typical retail tenants. In some cases wholesale or quasi-retail establishments have been included in the database if information from InfoUSA or our field research indicates that goods and/or services are being offered to the public from the location. Some establishments available to the public but typically serving primarily the needs of other users of a facility, such as a cafeteria in an office building or a beauty salon located inside a hotel, may also be excluded. Demographic information used in this study was provided by Scan/US.

Custom Retail Market Research KeyPoint Partners provides retail research consulting services ranging from preliminary desktop assessments to comprehensive evaluations which integrate field investigation and quantitative analysis for a variety of retail location and store types. The heart of our research superiority is our powerful, proprietary GRIID™. Is there a custom retail market research project we can do for you? Call Bob Sheehan, Vice President of Research at 781.418.6248, or email him at [email protected].

The KeyPoint Report

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©2015 KEYPOINT PARTNERS, LLC, BURLINGTON, MA

KeyPoint Partners, LLC One Burlington Woods Drive, Burlington, MA 01803 Tel 781.273.5555 Fax 781.272.8408

KeyPoint Partners, LLC One Burlington Woods Drive, Burlington, MA 01803 Tel 781.273.5555 Fax 781.272.8408

KeyPointPartners.com

KeyPointPartners.com

[email protected]

[email protected]