November 19, 2025 • 18 mins
Watch Scarlet and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu
-Drew Reading, Bloomberg Intelligence U.S Homebuilding Analyst, recaps Lowe's earnings. Lowe’s Cos. reported profit that topped expectations on a pickup in online sales and growth in demand from professional contractors. Adjusted earnings per share were $3.06 in the third quarter, the company said in a statement Wednesday, compared with the $3.00 estimate of analysts surveyed by Bloomberg.
-Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail,discusses TJX earnings. TJX Cos. posted sales last quarter above estimates and raised its outlook, signaling that US shoppers are turning to cheaper options as the economy shows signs of stress.
The discounter, which runs chains including TJ Maxx and Marshalls, said revenue hit $15.1 billion. Analysts on average expected about $14.9 billion. Its comparable sales topped estimates, too.
-Liz Hart, President of Leasing for North America at Newmark, discusses the state of commercial real estate. Despite economic uncertainty amid low consumer sentiment, retail remains strong. U.S. retail availability is 5.3%, above the all-time low of 5.0%, and 120-bps under the long-term average availability rate of 6.5%. This is largely due to a very limited development pipeline, dating back to the GFC. Since 2010, retail has delivered less than 1.0% new supply each year, enabling retail to manage obstacles such as a rising rate of e-commerce sales, the Pandemic, and the current low state of consumer sentiment.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
Let's bring and Drew Redding, Bloomberg Intelligence US home building
analysts to give us a recap of what we need
to know about Lowe's results. Drew, Good to speak with
you is what does lows look like and when it
comes to its results compared with its big arrival, Home Depot.
Speaker 3 (00:39):
Yes, I think Low's results could be best characterized as
better than feared, particularly in light of what we heard
from Home Depot yesterday. They did fall short of consensus
estimates on same store sales, but I think the buy
side was probably looking for something flat to lower, so
a little bit better than they were looking for. Now
(01:00):
that being said, they did trim their four year outlook.
Now they're looking for four year comp sales to be
flat from flat to up one percent, So that would
imply that four Q is relatively flat. But you know,
similar to what we heard from Home Depot, they had
about one hundred basis point impact from hurricane activity that
was not replicated this year. So again, if you were
to back that out, it looks like the underlying trends
(01:22):
in the business are pretty stable.
Speaker 4 (01:25):
You know.
Speaker 3 (01:25):
That being said, they're still grappling with the same consumer
uncertainty and you know, the same weak housing market that
their competitors, so you know, still challenges out there in
the market.
Speaker 5 (01:35):
Drew, I think I understand it correctly that Lows has
a lower percentage of sales to professional contractors than does
Home Depot. If so, are they trying to narrow that gap?
Are they targeting that segment a little more?
Speaker 3 (01:48):
Yeah, great question. So Loew's is about thirty percent professional
contractors seventy percent DIY. Home Depot is about fifty to fifty,
maybe even a little bit higher. On the pro front.
What's interesting to your point on investment is the pro space,
especially in building products distribution, has really become a battleground
among home improvement retailers. You had Home Depot recently do
(02:12):
acquisitions for srs and gms, and then you have Lows
who recently acquired foundation building materials. So it's certainly an
area where they're making a concerted effort to grow now.
LOWS has historically focused on the small and medium sized
pro and what this acquisition does is it gives them
(02:32):
exposure to larger pros who do more complex projects, so
they're able to you know, be the supplier of choice,
you know, across more building product categories and at a
larger scale.
Speaker 2 (02:45):
So basically directly competing with Home DEEPO in many ways.
Is this going to become duopoly or are There's still
a lot of other places that professional contractors can go to.
Speaker 3 (02:57):
Yeah, so the building products distributions space is still very
highly fragmented. You know, I wouldn't be surprised to see
further consolidation within the industry, you know, across different categories.
Home Depot and LOWS are certainly, you know, two of
the behemoths in the industry who have you know, the
scale and financial flexibility to further consolidate the industry. But
(03:19):
there's some other players as well, like QXO. So it
is a frag mented industry, but I would expect, you know,
in the coming years, it's something that continues to get consolidated.
Speaker 5 (03:29):
Drew, I'm probably like a lot of investors out there,
I can't keep track of where all the tariffs are
these days, all the different products. But I'm just guessing
if I'm a Low's or home depot, my plywood from
Canada that's probably being tariff. A power tool from somewhere
in Asia that's probably subject to tariffs. How are these
companies dealing with it? What have they been telling you guys?
Speaker 3 (03:49):
Yeah, good question. So Lows gets about sixty sixty percent
of its products from the US, so their exposure internationally
is maybe not as high as you would expect. China's
probably around fifteen to twenty percent. You know, there hasn't
been a whole lot of talk. I think we have
seen their average ticket increase this quarter was up about
three percent, and part of that is in response to
(04:11):
tariff related price increases. Loose told us that they were
only modest increases, and you know, they'll take a portfolio
approach to how they increase prices. They'll look at their
product lineup and see where they have more elasticity. But
I think the impact of costs will start to come
in a little greater as we look into Q four
in early twenty twenty six. And you know, some of
(04:31):
the areas that we're looking at you mentioned Plywood so
lumber tariffs from Canada. We also had the implementation of
tariffs on cabinetry both the kitchen and bath, which to
go up to fifty percent in January. So I do
think that the impact gets a little greater as we
look at the next year, so I would expect further
price increases from both retailers.
Speaker 5 (04:52):
Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1 (05:00):
And to the Bloomberg Intelligence podcast. Catch us live weekdays
at ten am Eastern on Apple, Cocklay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on.
Speaker 5 (05:12):
YouTube TJ Max. Before to some earnings here, Mary Ross
Gilbert covers the stock for Bloomberg Intelligence as a retail analyst.
She's based out there in La Mary, I know you
guys like the TJ Max. I mean, Alex is a fan. Alex,
Alex Steel's a fan. Scarla who's a fan? Lisa Mateo's
a fan. I have the card, You've got the car.
Speaker 2 (05:32):
I have the credit card?
Speaker 3 (05:32):
All right?
Speaker 5 (05:33):
Very good?
Speaker 4 (05:33):
Mary? Are you a fan?
Speaker 5 (05:34):
Our investors a fan?
Speaker 4 (05:37):
Paul?
Speaker 6 (05:38):
You are absolutely right. I'm a fan too, and they
it's because they carry such a variety of brands and
it appeals to all income groups. So if you have
a luxury consumer, you can get Balanciaga, you can get
Chloe Low, So they carry all of the brands. And
then if you're more oppressed and you're really a valued consumer,
(05:59):
they have Steve Madden, they have Theory, so they really
they have Puma, they have Nike, Adidas, so they have
all the brands that consumers want, and that's why they're Marmas,
which is tj Max and Marshall's division, reported a comp
sales increase of six percent, and that's why. You know,
(06:20):
if you look at the overall results, they were up
five percent, so a lot of strength there within the
Marmas home goods and of course Canada. Canada was up
eight percent, So we're seeing consumers flock to get the
brands that they want and they've had some amazing buying opportunities,
so their margins were higher.
Speaker 2 (06:41):
So the way that TJX stocks at stores is that
they get inventory that hasn't sold at full price stores.
But if all these merchants, all these retailers are managing
their inventories better and don't have a lot of excess inventory.
Where does tj X get its inventory? I mean it
has to have a another option, right.
Speaker 6 (07:02):
Yeah, Scarlett, you raise a good question. But the fact
is is that some of the retailers, but also the
brands themselves. So if you think of for example, PVH,
which has the Tommy Hill Figure and Calvin Klein brands,
we see those brands pretty prevalent throughout off price, So
that's been a good channel for them to sort of
(07:23):
release some of that excess inventory. And when they work
with some of their wholesale partners, including the department stores,
So where you have product that's not selling off price,
is just a natural fit to be able to release
that inventory. So you want to keep your inventory fresh
in the stores, especially when you're a full price operator,
(07:43):
and there hasn't been any slow down in terms of
that excess inventory. And that's why even on the luxury side,
where typically you wouldn't think you'd find markdowns, it's been
pretty prevalent, especially with overall weakness in luxury.
Speaker 5 (08:00):
So what does the folks at cheek kJ max what
are they saying about the consumer these days?
Speaker 6 (08:06):
Well, the consumer, I mean they're really seeing strength. So
It's interesting because when you sort of read the take
on Target with their results today and they sort of cited,
you know, the consumer is very cautious. But that caution,
I think what's really going on is that they've got
the brands that consumers want. So those that are executing
are the ones that are getting the sales, because even
(08:28):
some retailers that are more full price oriented are generating sales,
or they may be promotional, like we're going to get
Gap when they go to report tomorrow, and we think
we're going to see strong results there out of Old
Navy and out of Gap, and those are their two
largest brands. So we think that they're just executing really
well and providing great fresh merchandise. But they're also promotional
(08:50):
and they provide value to the consumer. So the consumer
is flocking to value, there's no doubt about it. But
we do see some you know, operators, You've got Ralph
Lauren on the luxury side, they continue to outperform and
their sales are always topping expectations too, and consumers there
are willing to pay full price, so there are a
lot less promotional every year, they seem to be less
(09:13):
promotional for that reason. They're able to sell at full price.
Speaker 2 (09:17):
So clearly TJX has a strategy that works well given
the current environment, and even when the economy is doing well,
I would argue it has a strategy that works well.
At at what point do investors want more from the
company than just executing on the strategy. Will they want
I don't know, am an agent? Do they want consolidation?
Do they want innovation from TJX?
Speaker 6 (09:39):
Yeah, Well, so that's the reason why TGX is focused,
you know, internationally. So they're going to be entering Spain
in twenty twenty six, so coming next year, and of
course they've had some they have two joint venture investments,
one in Mexico and then one in the Middle East,
and they're both off price retailers that they've invested in.
(10:00):
So they're basically taking their talent and providing them a
platform to leverage their talent in these joint ventures and
to grow that way. So they're always looking for ways.
Because Scarlett, you bring up a good point. TJX trades
at a pretty high premium in the off price space,
and generally it's a pretty big premium that is due
(10:20):
to their very consistent execution. But You're right, consumers keep wondering, well,
how can they keep growing on top of all this growth?
And yet they keep doing it. But as they talk about, look,
they have drops several times a week. There's not a
lot of retailers that offer fresh merchandise several times a week,
and they curate the merchandise by location, so they're very
(10:43):
cognizant of the demographics for each location.
Speaker 5 (10:47):
Stay with us. More from Bloomberg Intelligence coming.
Speaker 3 (10:49):
Up after this.
Speaker 1 (10:54):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am. He's den on Apple, Cocklay and
Android Auto with the Bloomberg Business App. Listen on demand
wherever you get your podcasts, or watch us live on YouTube.
Speaker 5 (11:07):
Let's talk a little bit of commercial real estate here.
We can talk about big market small markets. We do
that with Liz Hard, president of Leasing for North America.
The name of the firm is new Mark, joining us
live here in our Bloomberg Interactive Broker Studio. We appreciate that. Liz,
you step back. Let's start with retail. Talk us about
the retail marketplace. Where are we in terms of filling
(11:29):
that up?
Speaker 4 (11:30):
Absolutely so, overall, retail's performing really well. This year. Lowest
availability we've seen is five percent, and we're at five
point three right now. So across the market is doing
pretty well, but like most of the market, it's a
quite bifurcated story. So in normal's performing very well, power
centers performing very well. But if you look at what
the availability is, the availability that we're tracking half of
(11:51):
it's been on the market for over twenty four months,
So it's that bifurcated story that steth's not moving, it's
really not moving.
Speaker 2 (11:58):
What does it look like in city center versus the suburbs.
I think about a couple of places I've been to,
like Seattle, which there are parts of downtown Seattle which
look vacant, but then you go to the suburbs like Bellevue,
and I mean, traffic is out of control and it
looks like everyone has gravitated over there for certain cities
that have really been hit hard by the work from
(12:18):
home phenomenon, what does that look like?
Speaker 4 (12:20):
So we're seeing that trend start to stabilize. It definitely
was a COVID trend that was very, very pronounced, and
in the last twelve months it started to smooth out.
So it is starting to show that it's starting to blend.
But in the market that you just showed, Seattle is
a very occupier friendly market. So that's one in which
the retailers are really calling the shots. And that's true
in a lot of those West Coast markets right now.
(12:41):
You're not seeing that as much in other markets, particularly
in the Sun Belt, where it's really the landlords who
are calling the shots. So it is a suburban urban trend,
but it's also a geographic trend across the United States.
Speaker 5 (12:52):
Here in New York City, we just had one of
the maybe the coolest office building open up, the JP
Morgan oh My Park Avenue one.
Speaker 2 (13:00):
Watch right, we can't go in there yet though we can't, Well,
we can.
Speaker 4 (13:03):
Ask Jamie Diamond. You think he'll let us in if
we ask him on the radio.
Speaker 5 (13:06):
He allows us to remote broadcast there. But again across
and then across the street from penn Station on. I
guess it's Sixth Avenue, you know the empty lot there
where that old Pennsylvania Hotel used to be. So it
seems like the city's definitely getting better.
Speaker 4 (13:19):
It's back.
Speaker 5 (13:21):
How does New York City look just from an office perspective?
Speaker 4 (13:23):
Absolutely so. In the Trophy category, you're below five percent availability,
so low single digits, very very high performing. Again, you
do have that kind of tail of two cities going
on where the lower end of the market isn't performing
as strongly, but we're seeing very high absorption in the
top category, very strong demand being led again, you know,
financial services sector, tech sector which is coming back, and
(13:45):
you're having a little bit of an AI boom here
in New York City. A lot of companies coming out
for the West Coast that want to get into New
York City's tech talent, which is bigger than it's ever been.
It's great to see that happening here in New York City.
Speaker 2 (13:57):
That is super interesting. Talk a little bit more about that.
What kind of space are they looking for? How quickly
are they growing? And you know, where do they want
to be situated. Do they want to be in midtown
your banks? Do they want to be downtown where it's
always been more of yes? That And what's the New
York name for our tech spirits Silicon Alley? No, yeah,
(14:17):
maybe Silicon Alley.
Speaker 4 (14:19):
I'd say Midtown South and then south of that. They
do like to be more downtown for the most part,
not Midtown. Then really although AI is a little bit
of everywhere because it's also you know, very much where
we are right now, right because it's even in this building.
You guys have an AI division, and the talent here
is going to be in your building as well, So
it really is everywhere. But in terms of how quickly
it's growing, I'll talk about San Francisco first, then we'll
(14:40):
mimic how it's here as well. It's pretty incredible. It's
growing as quickly as I've ever seen it in my
twenty year career. There's several companies in San Francisco that
started less than five years ago that are already looking
for over one hundred thousand square feet. I think there's
seven as of the last count, but the numbers changing
so quickly it's hard to keep track of. And what
you're really seeing is a commitment to the office space.
(15:01):
So how interesting is this? Right, they're able to build
new companies. They certainly have access to technology, you know that,
and they're a tech first company. But why are they
choosing to be in the office. Well, they're solving big
problems and when they're doing it, they want to be
doing it face to face, and they're choosing to do
it mostly in higher end buildings, creative buildings. They love
high ceilings, they love to have natural light. And one
(15:23):
thing that's really interesting is a lot of them are
thinking about productivity hacks. So how do they get snacks
that are elevating their productivity? How do they make sure
that they even have the level of oxygen? Isn't that
interesting to make sure that they're maximizing their productivity. So
a lot of an analytical approach to real estate. That's
probably much more than we've seen in that past generation.
Speaker 5 (15:44):
How about industrial space, It seems like for a while
there we're building these Amazon distribution centers everywhere you could,
I mean half of the state New Jerseys at Amazon
distribution center. I think talk to just about industrial.
Speaker 4 (15:57):
Yeah, absolutely so. Well, Amazon doesn't seem to be slowing down.
Trend does continue, But what I would say in general
is that we are still seeing, you know, some absorption
that's happening. We built quite a bit of industrial so
it does feel like from the data there's a little
bit of a pullback in the data of an increase
in availability, but it's just because the market's catching up
to what was built, and we'll see that for the
(16:18):
next couple of quarters. But we are very long on
industrial being a very solid market in the US, especially
with the reindustrialization that's happening and kind of the reformation
of supply chains based on what's happening with tariffs. But
what's also interesting is Small Bay Industrial. Wow, what a
hot part of the market. I mean, very very low vacancy.
A lot going on there too, so the market's feeling
(16:40):
pretty hot. And then from a user perspective, you know,
three pls are really shit. They're the three pls. Oh gosh,
make you explain these I'm like, it's it's what you do,
and you're redoing the supply chain logistic. So it's kind
of like a I don't want to call it the
we work of supply chain, that might be too simple,
simple simplifying it, that kind of thing. They basically have
them take it on and then they reposition it for you.
(17:01):
But three pls that's really the dominant player in the market.
Speaker 2 (17:04):
Which city is kind of hitting on all cylinders here
when it comes to industrial, when it comes to office,
when it comes to retail.
Speaker 4 (17:10):
Ooh, all three would I think probably if you're going
to say all three, it would have to be somewhere
in the south southeast quadrants, so I'm sun Belt sun
Belt sun Belt in southeast quadrant is where I would
say it is probably heading on all three at the
same time.
Speaker 5 (17:27):
Thirty seconds left. I finally want to go out and
build something up, build a building, office tower or something.
Can I get the capital to do it? Can I
get the banks to lend me money to do it?
Speaker 4 (17:34):
Well, it certainly depends on what you're building, but if
you're building for trophy in a place with good demand,
you can now.
Speaker 1 (17:40):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
Let's bring and Drew Redding, Bloomberg Intelligence US home building
analysts to give us a recap of what we need
to know about Lowe's results. Drew, Good to speak with
you is what does lows look like and when it
comes to its results compared with its big arrival, Home Depot.
Speaker 3 (00:39):
Yes, I think Low's results could be best characterized as
better than feared, particularly in light of what we heard
from Home Depot yesterday. They did fall short of consensus
estimates on same store sales, but I think the buy
side was probably looking for something flat to lower, so
a little bit better than they were looking for. Now
(01:00):
that being said, they did trim their four year outlook.
Now they're looking for four year comp sales to be
flat from flat to up one percent, So that would
imply that four Q is relatively flat. But you know,
similar to what we heard from Home Depot, they had
about one hundred basis point impact from hurricane activity that
was not replicated this year. So again, if you were
to back that out, it looks like the underlying trends
(01:22):
in the business are pretty stable.
Speaker 4 (01:25):
You know.
Speaker 3 (01:25):
That being said, they're still grappling with the same consumer
uncertainty and you know, the same weak housing market that
their competitors, so you know, still challenges out there in
the market.
Speaker 5 (01:35):
Drew, I think I understand it correctly that Lows has
a lower percentage of sales to professional contractors than does
Home Depot. If so, are they trying to narrow that gap?
Are they targeting that segment a little more?
Speaker 3 (01:48):
Yeah, great question. So Loew's is about thirty percent professional
contractors seventy percent DIY. Home Depot is about fifty to fifty,
maybe even a little bit higher. On the pro front.
What's interesting to your point on investment is the pro space,
especially in building products distribution, has really become a battleground
among home improvement retailers. You had Home Depot recently do
(02:12):
acquisitions for srs and gms, and then you have Lows
who recently acquired foundation building materials. So it's certainly an
area where they're making a concerted effort to grow now.
LOWS has historically focused on the small and medium sized
pro and what this acquisition does is it gives them
(02:32):
exposure to larger pros who do more complex projects, so
they're able to you know, be the supplier of choice,
you know, across more building product categories and at a
larger scale.
Speaker 2 (02:45):
So basically directly competing with Home DEEPO in many ways.
Is this going to become duopoly or are There's still
a lot of other places that professional contractors can go to.
Speaker 3 (02:57):
Yeah, so the building products distributions space is still very
highly fragmented. You know, I wouldn't be surprised to see
further consolidation within the industry, you know, across different categories.
Home Depot and LOWS are certainly, you know, two of
the behemoths in the industry who have you know, the
scale and financial flexibility to further consolidate the industry. But
(03:19):
there's some other players as well, like QXO. So it
is a frag mented industry, but I would expect, you know,
in the coming years, it's something that continues to get consolidated.
Speaker 5 (03:29):
Drew, I'm probably like a lot of investors out there,
I can't keep track of where all the tariffs are
these days, all the different products. But I'm just guessing
if I'm a Low's or home depot, my plywood from
Canada that's probably being tariff. A power tool from somewhere
in Asia that's probably subject to tariffs. How are these
companies dealing with it? What have they been telling you guys?
Speaker 3 (03:49):
Yeah, good question. So Lows gets about sixty sixty percent
of its products from the US, so their exposure internationally
is maybe not as high as you would expect. China's
probably around fifteen to twenty percent. You know, there hasn't
been a whole lot of talk. I think we have
seen their average ticket increase this quarter was up about
three percent, and part of that is in response to
(04:11):
tariff related price increases. Loose told us that they were
only modest increases, and you know, they'll take a portfolio
approach to how they increase prices. They'll look at their
product lineup and see where they have more elasticity. But
I think the impact of costs will start to come
in a little greater as we look into Q four
in early twenty twenty six. And you know, some of
(04:31):
the areas that we're looking at you mentioned Plywood so
lumber tariffs from Canada. We also had the implementation of
tariffs on cabinetry both the kitchen and bath, which to
go up to fifty percent in January. So I do
think that the impact gets a little greater as we
look at the next year, so I would expect further
price increases from both retailers.
Speaker 5 (04:52):
Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1 (05:00):
And to the Bloomberg Intelligence podcast. Catch us live weekdays
at ten am Eastern on Apple, Cocklay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on.
Speaker 5 (05:12):
YouTube TJ Max. Before to some earnings here, Mary Ross
Gilbert covers the stock for Bloomberg Intelligence as a retail analyst.
She's based out there in La Mary, I know you
guys like the TJ Max. I mean, Alex is a fan. Alex,
Alex Steel's a fan. Scarla who's a fan? Lisa Mateo's
a fan. I have the card, You've got the car.
Speaker 2 (05:32):
I have the credit card?
Speaker 3 (05:32):
All right?
Speaker 5 (05:33):
Very good?
Speaker 4 (05:33):
Mary? Are you a fan?
Speaker 5 (05:34):
Our investors a fan?
Speaker 4 (05:37):
Paul?
Speaker 6 (05:38):
You are absolutely right. I'm a fan too, and they
it's because they carry such a variety of brands and
it appeals to all income groups. So if you have
a luxury consumer, you can get Balanciaga, you can get
Chloe Low, So they carry all of the brands. And
then if you're more oppressed and you're really a valued consumer,
(05:59):
they have Steve Madden, they have Theory, so they really
they have Puma, they have Nike, Adidas, so they have
all the brands that consumers want, and that's why they're Marmas,
which is tj Max and Marshall's division, reported a comp
sales increase of six percent, and that's why. You know,
(06:20):
if you look at the overall results, they were up
five percent, so a lot of strength there within the
Marmas home goods and of course Canada. Canada was up
eight percent, So we're seeing consumers flock to get the
brands that they want and they've had some amazing buying opportunities,
so their margins were higher.
Speaker 2 (06:41):
So the way that TJX stocks at stores is that
they get inventory that hasn't sold at full price stores.
But if all these merchants, all these retailers are managing
their inventories better and don't have a lot of excess inventory.
Where does tj X get its inventory? I mean it
has to have a another option, right.
Speaker 6 (07:02):
Yeah, Scarlett, you raise a good question. But the fact
is is that some of the retailers, but also the
brands themselves. So if you think of for example, PVH,
which has the Tommy Hill Figure and Calvin Klein brands,
we see those brands pretty prevalent throughout off price, So
that's been a good channel for them to sort of
(07:23):
release some of that excess inventory. And when they work
with some of their wholesale partners, including the department stores,
So where you have product that's not selling off price,
is just a natural fit to be able to release
that inventory. So you want to keep your inventory fresh
in the stores, especially when you're a full price operator,
(07:43):
and there hasn't been any slow down in terms of
that excess inventory. And that's why even on the luxury side,
where typically you wouldn't think you'd find markdowns, it's been
pretty prevalent, especially with overall weakness in luxury.
Speaker 5 (08:00):
So what does the folks at cheek kJ max what
are they saying about the consumer these days?
Speaker 6 (08:06):
Well, the consumer, I mean they're really seeing strength. So
It's interesting because when you sort of read the take
on Target with their results today and they sort of cited,
you know, the consumer is very cautious. But that caution,
I think what's really going on is that they've got
the brands that consumers want. So those that are executing
are the ones that are getting the sales, because even
(08:28):
some retailers that are more full price oriented are generating sales,
or they may be promotional, like we're going to get
Gap when they go to report tomorrow, and we think
we're going to see strong results there out of Old
Navy and out of Gap, and those are their two
largest brands. So we think that they're just executing really
well and providing great fresh merchandise. But they're also promotional
(08:50):
and they provide value to the consumer. So the consumer
is flocking to value, there's no doubt about it. But
we do see some you know, operators, You've got Ralph
Lauren on the luxury side, they continue to outperform and
their sales are always topping expectations too, and consumers there
are willing to pay full price, so there are a
lot less promotional every year, they seem to be less
(09:13):
promotional for that reason. They're able to sell at full price.
Speaker 2 (09:17):
So clearly TJX has a strategy that works well given
the current environment, and even when the economy is doing well,
I would argue it has a strategy that works well.
At at what point do investors want more from the
company than just executing on the strategy. Will they want
I don't know, am an agent? Do they want consolidation?
Do they want innovation from TJX?
Speaker 6 (09:39):
Yeah, Well, so that's the reason why TGX is focused,
you know, internationally. So they're going to be entering Spain
in twenty twenty six, so coming next year, and of
course they've had some they have two joint venture investments,
one in Mexico and then one in the Middle East,
and they're both off price retailers that they've invested in.
(10:00):
So they're basically taking their talent and providing them a
platform to leverage their talent in these joint ventures and
to grow that way. So they're always looking for ways.
Because Scarlett, you bring up a good point. TJX trades
at a pretty high premium in the off price space,
and generally it's a pretty big premium that is due
(10:20):
to their very consistent execution. But You're right, consumers keep wondering, well,
how can they keep growing on top of all this growth?
And yet they keep doing it. But as they talk about, look,
they have drops several times a week. There's not a
lot of retailers that offer fresh merchandise several times a week,
and they curate the merchandise by location, so they're very
(10:43):
cognizant of the demographics for each location.
Speaker 5 (10:47):
Stay with us. More from Bloomberg Intelligence coming.
Speaker 3 (10:49):
Up after this.
Speaker 1 (10:54):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am. He's den on Apple, Cocklay and
Android Auto with the Bloomberg Business App. Listen on demand
wherever you get your podcasts, or watch us live on YouTube.
Speaker 5 (11:07):
Let's talk a little bit of commercial real estate here.
We can talk about big market small markets. We do
that with Liz Hard, president of Leasing for North America.
The name of the firm is new Mark, joining us
live here in our Bloomberg Interactive Broker Studio. We appreciate that. Liz,
you step back. Let's start with retail. Talk us about
the retail marketplace. Where are we in terms of filling
(11:29):
that up?
Speaker 4 (11:30):
Absolutely so, overall, retail's performing really well. This year. Lowest
availability we've seen is five percent, and we're at five
point three right now. So across the market is doing
pretty well, but like most of the market, it's a
quite bifurcated story. So in normal's performing very well, power
centers performing very well. But if you look at what
the availability is, the availability that we're tracking half of
(11:51):
it's been on the market for over twenty four months,
So it's that bifurcated story that steth's not moving, it's
really not moving.
Speaker 2 (11:58):
What does it look like in city center versus the suburbs.
I think about a couple of places I've been to,
like Seattle, which there are parts of downtown Seattle which
look vacant, but then you go to the suburbs like Bellevue,
and I mean, traffic is out of control and it
looks like everyone has gravitated over there for certain cities
that have really been hit hard by the work from
(12:18):
home phenomenon, what does that look like?
Speaker 4 (12:20):
So we're seeing that trend start to stabilize. It definitely
was a COVID trend that was very, very pronounced, and
in the last twelve months it started to smooth out.
So it is starting to show that it's starting to blend.
But in the market that you just showed, Seattle is
a very occupier friendly market. So that's one in which
the retailers are really calling the shots. And that's true
in a lot of those West Coast markets right now.
(12:41):
You're not seeing that as much in other markets, particularly
in the Sun Belt, where it's really the landlords who
are calling the shots. So it is a suburban urban trend,
but it's also a geographic trend across the United States.
Speaker 5 (12:52):
Here in New York City, we just had one of
the maybe the coolest office building open up, the JP
Morgan oh My Park Avenue one.
Speaker 2 (13:00):
Watch right, we can't go in there yet though we can't, Well,
we can.
Speaker 4 (13:03):
Ask Jamie Diamond. You think he'll let us in if
we ask him on the radio.
Speaker 5 (13:06):
He allows us to remote broadcast there. But again across
and then across the street from penn Station on. I
guess it's Sixth Avenue, you know the empty lot there
where that old Pennsylvania Hotel used to be. So it
seems like the city's definitely getting better.
Speaker 4 (13:19):
It's back.
Speaker 5 (13:21):
How does New York City look just from an office perspective?
Speaker 4 (13:23):
Absolutely so. In the Trophy category, you're below five percent availability,
so low single digits, very very high performing. Again, you
do have that kind of tail of two cities going
on where the lower end of the market isn't performing
as strongly, but we're seeing very high absorption in the
top category, very strong demand being led again, you know,
financial services sector, tech sector which is coming back, and
(13:45):
you're having a little bit of an AI boom here
in New York City. A lot of companies coming out
for the West Coast that want to get into New
York City's tech talent, which is bigger than it's ever been.
It's great to see that happening here in New York City.
Speaker 2 (13:57):
That is super interesting. Talk a little bit more about that.
What kind of space are they looking for? How quickly
are they growing? And you know, where do they want
to be situated. Do they want to be in midtown
your banks? Do they want to be downtown where it's
always been more of yes? That And what's the New
York name for our tech spirits Silicon Alley? No, yeah,
(14:17):
maybe Silicon Alley.
Speaker 4 (14:19):
I'd say Midtown South and then south of that. They
do like to be more downtown for the most part,
not Midtown. Then really although AI is a little bit
of everywhere because it's also you know, very much where
we are right now, right because it's even in this building.
You guys have an AI division, and the talent here
is going to be in your building as well, So
it really is everywhere. But in terms of how quickly
it's growing, I'll talk about San Francisco first, then we'll
(14:40):
mimic how it's here as well. It's pretty incredible. It's
growing as quickly as I've ever seen it in my
twenty year career. There's several companies in San Francisco that
started less than five years ago that are already looking
for over one hundred thousand square feet. I think there's
seven as of the last count, but the numbers changing
so quickly it's hard to keep track of. And what
you're really seeing is a commitment to the office space.
(15:01):
So how interesting is this? Right, they're able to build
new companies. They certainly have access to technology, you know that,
and they're a tech first company. But why are they
choosing to be in the office. Well, they're solving big
problems and when they're doing it, they want to be
doing it face to face, and they're choosing to do
it mostly in higher end buildings, creative buildings. They love
high ceilings, they love to have natural light. And one
(15:23):
thing that's really interesting is a lot of them are
thinking about productivity hacks. So how do they get snacks
that are elevating their productivity? How do they make sure
that they even have the level of oxygen? Isn't that
interesting to make sure that they're maximizing their productivity. So
a lot of an analytical approach to real estate. That's
probably much more than we've seen in that past generation.
Speaker 5 (15:44):
How about industrial space, It seems like for a while
there we're building these Amazon distribution centers everywhere you could,
I mean half of the state New Jerseys at Amazon
distribution center. I think talk to just about industrial.
Speaker 4 (15:57):
Yeah, absolutely so. Well, Amazon doesn't seem to be slowing down.
Trend does continue, But what I would say in general
is that we are still seeing, you know, some absorption
that's happening. We built quite a bit of industrial so
it does feel like from the data there's a little
bit of a pullback in the data of an increase
in availability, but it's just because the market's catching up
to what was built, and we'll see that for the
(16:18):
next couple of quarters. But we are very long on
industrial being a very solid market in the US, especially
with the reindustrialization that's happening and kind of the reformation
of supply chains based on what's happening with tariffs. But
what's also interesting is Small Bay Industrial. Wow, what a
hot part of the market. I mean, very very low vacancy.
A lot going on there too, so the market's feeling
(16:40):
pretty hot. And then from a user perspective, you know,
three pls are really shit. They're the three pls. Oh gosh,
make you explain these I'm like, it's it's what you do,
and you're redoing the supply chain logistic. So it's kind
of like a I don't want to call it the
we work of supply chain, that might be too simple,
simple simplifying it, that kind of thing. They basically have
them take it on and then they reposition it for you.
(17:01):
But three pls that's really the dominant player in the market.
Speaker 2 (17:04):
Which city is kind of hitting on all cylinders here
when it comes to industrial, when it comes to office,
when it comes to retail.
Speaker 4 (17:10):
Ooh, all three would I think probably if you're going
to say all three, it would have to be somewhere
in the south southeast quadrants, so I'm sun Belt sun
Belt sun Belt in southeast quadrant is where I would
say it is probably heading on all three at the
same time.
Speaker 5 (17:27):
Thirty seconds left. I finally want to go out and
build something up, build a building, office tower or something.
Can I get the capital to do it? Can I
get the banks to lend me money to do it?
Speaker 4 (17:34):
Well, it certainly depends on what you're building, but if
you're building for trophy in a place with good demand,
you can now.
Speaker 1 (17:40):
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