Net Lease News

B+E Weekly Newsletter

March 19 – March 25, 2024

MARKET

FEDERAL RESERVE STILL FORESEES 3 RATE CUTS THIS YEAR DESPITE BUMP IN INFLATION

• Chair Jerome Powell said the surprising pickup in inflation in January and February hadn’t fundamentally changed the Fed’s picture of the economy: The central bank still expects inflation to continue to cool, though more gradually than it thought three months ago.
• In new quarterly projections they issued, the policymakers forecast that stronger growth and inflation above their 2% target level would persist into next year. Overall, the forecasts suggest that the Fed still expects an unusual combination: A healthy job market and economy in tandem with inflation that continues to cool, just more gradually than they had predicted three months ago.
• For this year, the Fed projected that the economy will expand by 2.1%, a big increase from its December forecast of just 1.4%. Yet at the same time, it still expects inflation to keep declining, though slowly.
• The Fed’s policymakers did make some small adjustments in their outlook where in 2025 they now foresee only three rate cuts, down from the four they envisioned in their December forecasts.

INDUSTRIAL

OPTIMISM PREVAILS IN INDUSTRIAL CAPITAL MARKETS THIS YEAR

• Dual announcements yesterday gave industrial real estate’s long-term prospects a significant boost, specifically those facilities that cater to EV and semiconductor manufacturing.
• In one development, the Environmental Protection Agency issued new tailpipe pollution limits that ensure the majority of new passenger cars and light trucks sold in the US by 2032 are all-electric or hybrids. The rule phases limit to the amount of pollution allowed from tailpipes over time so that in eight years more than half the new cars sold in the US would have to be zero-emissions vehicles for carmakers to meet the standards.
• On the other, Intel described plans for a $100 billion investment to build and expand factories in four US states after it secured $19.5 billion in federal grants under the CHIPS Act and expects another $25 billion in tax breaks.
• It also says there are 15 markets where over one million square feet of industrial space was leased to EV occupiers in the last five years, with the top five being Chicago, Detroit, Central Valley, Silicon Valley, and Memphis. These deals total 28 million square feet, representing 73% of all EV leasing deals over this time period.

RETAIL

CHIPOTLE ANNOUNCES 50-FOR-ONE STOCK SPLIT AS SHARES REACH RECORD HIGHS

• Chipotle announced Tuesday a 50-for-one stock split, which would be one of the biggest in New York Stock Exchange history.
• In the fourth quarter, same-store sales rose 8.4 percent, backed by a 7.4 percent increase in transactions, which accelerated from mid-single digits in October and more than 4 percent in Q3.
• Restaurant-level operating margin was 25.4 percent in Q4, an increase of 140 basis points. On the year, it was 26.2 percent, an improvement of 230 basis points year-over-year.
• In terms of unit economics, the chain surpassed $3 million AUV in 2023 and is well on its way toward a long-term goal of $4 million and 7,000 restaurants throughout North America.

SLIM CHICKENS LOOKS TO ADD 25 LOCATIONS IN VIRGINIA

• Slim Chickens announced it has inked a deal with an established multi-unit operator, Mid-Atlantic Restaurant Group, who will bring at least 25 locations throughout Virginia. 
• The better-chicken brand has opened more than 260 locations across the United States and the United Kingdom. With more than 1,200 locations in development, the brand’s momentum shows no signs of slowing down.
• Slim Chickens has experienced a 70% restaurant growth over the last three years and has reached an impressive $3,864,513. Over the last five years, Slim Chickens has experienced substantial development growth, with over 1,200 signed agreements in the pipeline.
• Slim Chickens is targeting several markets coast to coast for example Ohio, Illinois, Pennsylvania, Virginia, New York, and Massachusetts as well as overseas in the European Union, Turkey, the GCC, and Asia. 

ZIGGI’S BUILDS FRANCHISEE DREAMS ALONG THE WAY TO 100 LOCATIONS

• The coffee chain is spread across 18 states and prefers to follow good operators into a market. This year is particularly special as the 85-unit brand should reach 100 shops by summertime, permit and construction timelines willing. A majority of that growth will come from franchising, which began in 2016. 
• Ziggi’s 85 shops are spread across nearly 20 states. The company’s strategy is to follow well-equipped operators into a market and build density instead of focusing on a particular region. Having a distribution company that can ship materials to Oregon, Maine, and everything in between certainly helps.
• As the coffee has matured in its franchising program, so has the type of deals it’s signed. Late last year, Ziggi’s announced the development of 50 new shops in the Greater Atlanta area, its largest agreement to date.