Zacks Industry Outlook Highlights: CBRE Group, Simon Property Group, General Growth Properties and Taubman Centers - Press Releases

For Immediate Release

Chicago, IL – February 18, 2015 – Today, Zacks Equity Research discusses the REITs (Part 2), including CBRE Group Inc. (CBG-Free Report), Simon Property Group Inc. (SPG-Free Report), General Growth Properties, Inc. (GGP-Free Report) and Taubman Centers, Inc. (TCO-Free Report).
 
Industry: REITs (Part 2)

Link: https://www.zacks.com/commentary/37864/economic-momentum-important-tailwind-for-reits
 
Vulnerability to rising interest rates and treasury yields may shift investors’ focus from the REIT stocks for the short term. But the underlying strength of this industry, which is tied to the health of the economy, is much more important for long-term gains. Hence, a recovery of the economy promises a higher demand for the different asset types that REITs own and manage.

While the economic revival also gives a boost to construction activity, supply has yet to reach normal levels. This offers scope to the present landlords to capitalize on this demand-supply imbalance and command higher rents and raise occupancy at several property types.

A recent study by the CBRE Group Inc. (CBG-Free Report) also revealed continuity of solid performance by the U.S. commercial real estate market in Q4 2014. The study says that office vacancy rates witnessed a 20 basis points (bps) sequential decline to 13.9%. National industrial availability posted a 30 bps decline from the prior quarter to 10.3% while retail availability also moved 10 bps south for the quarter to 11.4%.

Opportunities in the Industry

The latest job market report gives reassurance of U.S. economic improvement and its internal stability. As per the Bureau of Labor Statistics, in January, 257,000 new jobs were created against estimates of 234,000. This denoted the 11th consecutive month in which the economy generated more than 200,000 jobs, its longest such stretch in over two decades.

In this backdrop, we expect healthy growth in demand for office spaces. This is because, as the economy revives, business grows and therefore, corporate sectors look for expansion, renting more space to accommodate the increased workforce. That sounds good for the

Office REITs.

The labor market report also revealed that average hourly earnings improved by a better-than-expected +0.5% to $24.75 per hour in January. With wage growth being a concern in the past, clearly these improved labor market conditions bring relief. Indeed, improved earnings coupled with low energy costs imply an increase in the buying power of the population.

Consumer confidence is also building and in fact, the Conference Board Consumer Confidence Index jumped in January to 102.9 following an increase to 93.1 in December. Consumer spending, which accounts for over two-thirds of U.S. economic growth, also registered 4.3% growth in the fourth quarter, up from 3.2% in the third quarter and denoted its fastest growth since the first quarter of 2006. Moreover, consumer credit spiked in December, increasing $14.8 billion compared with the $13.5 billion climb in November.

This signals that shoppers are confident of borrowing amid job gains and improved earnings. Further, the increase in employment in the retail sector also indicates the rising demand for its products. This sector generated 46,000 new jobs in January, the highest among other major sectors. That also translates into greater demand for space at the Retail REITs.

And coupled with the boom in e-commerce and online retail sales, retail REITs, with the ultimate aim of increasing traffic at their malls and seeking higher demand for space, are channelizing all their efforts toward satisfying customers’ demand for one-stop shopping, dining and entertaining as well as same-day delivery of purchases. Companies like Simon Property Group Inc. (SPG-Free Report), General Growth Properties, Inc. (GGP-Free Report) and Taubman Centers, Inc. (TCO-Free Report) have embraced the omni-channel concept that essentially means selling products simultaneously through all available shopping channels.

Such a backdrop encourages us to target stocks that have better Zacks Rank as these offer scope for riding on the growth trajectory.
 
About Zacks                                  
 
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!  Click here for your free subscription to Profit from the Pros.
 
 
Get the full Report on CBG - FREE
Get the full Report on SPG - FREE
Get the full Report on GGP - FREE
Get the full Report on TCO - FREE
 
Follow us on Twitter:  https://twitter.com/zacksresearch
 
Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
 
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
 
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
 
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CBRE GROUP INC (CBG): Free Stock Analysis Report
 
SIMON PROPERTY (SPG): Free Stock Analysis Report
 
GENL GRWTH PPTY (GGP): Free Stock Analysis Report
 
TAUBMAN CENTERS (TCO): Free Stock Analysis Report
 
To read this article on Zacks.com click here.