laredo retail real estate

Opportunities in Laredo’s ppRetail Real Estate

September 19, 2012

Why Laredo Is a Great Real Estate MarketReal Estate Market

• Great local Hispanic population– Hispanics are a marketer’s dream

• Customer base is supplemented by millions crossing the border to shop

• Local economy is getting stronger– Retail sales are increasing– Lower unemployment than other markets

The Majority of Laredo’s Population Is Hispanic p p

5%

Hispanic

95%

HispanicNon-Hispanic

Source: Synovate 2010

Laredo is the Most “Hispanic” City in U.S.

Top 10 Markets by Hispanic Population - 2010

Rank Market Hispanic %

1 Laredo 95%

2 Harlingen/Weslaco/Brownsville/McAllen 88%2 Harlingen/Weslaco/Brownsville/McAllen 88%

3 El Paso 78%

4 Yuma/El Centro 65%

5 Corpus Christi 58%

6 San Antonio 54%

7 Fresno/Visalia 51%7 Fresno/Visalia 51%

8 Palm Springs 46%

9 Bakersfield 46%

10 Miami/Ft. Lauderdale 45%


Latinos are a Marketer’s Dream

• The “3 L’s”:– Large population

Lucrative– Lucrative– Loyal

U.S. Latino Population is Exploding…

Latino Population in Millions

50.556

63.9

35.3

43.5

2000 2004 2010 2015 20202000 2004 2010 2015 2020

Source: Synovate 2010 /U.S. Census Bureau

A Country Within a Country50.5 million Latinos in U.S.

• Mexico 115.0 MM• U.S. 50.5 MM• Spain 47.0 MM• Colombia 45.2 MM• Argentina 42.2 MM• Peru 29.5 MM• Venezuela 28.0 MM• Chile 17.1 MM

Source: Census 2010 & CIA World Factbook, July 2012

More Latinos than Canadians in Canada!

50.5 Million HispanicsOne in six U.S. residents is Latino

Source: 2000 U.S. Census

Among ChildrenAmong Children, 1 in 4 is1 in 4 is HispanicHispanic

Every 30 seconds, a Latino turns 18 in America

Source: NPR, Latino Mayor May Be A Glimpse Of Things To Come, December 12, 2010

Hispanics Driving Growth

• More than half of the growth in the total U Sgrowth in the total U.S. population between 2000 and 2010 was because of the increase in the Hispanic population– A 43% Increase from 2000

M th f bi th• More growth from births than immigration

Hispanic Population Explodes

Th 2010 Hi i l ti t d d• The 2010 Hispanic population count exceeded the Census projections by 1 million

• Growing 4X faster than the total population

A Population Trend that Can’t Be Ignored…

2010 2020

16% 20%

14%

Hispanic

A-A

20%

14%

4%66%Asian

White

14%

5%61%


Latino Growth from 2000 - 2010

In Texas, the Hispanic Population Will Eclipse the Anglo Population by 2015the Anglo Population by 2015

45% 45%45%

39%41% 42%

38%

45%

35%

40%

45%Anglo

Hispanic

Black

25%

30%Other

12%

6%

11%

6%

11%

6%10%

15%

20%

6% 6%

0%

5%

2010 2015 2020

Source: 2008 Texas State Data Center’s Biennial Population Projections.

Fountain of Youth?

• Latino population is the youngest of all ethnic groupsgroups

• Mean age by ethnicity:L ti 27 9– Latino 27.9

– African American 32.0Asian 32 6– Asian 32.6

– White 38.6

• Starting their lives as adults• Household needs changing rapidlyg g p y

Source: U.S. Census

Foreign-Born Hispanic Adults are Majority

40%Foreign-Born

60% U.S. Born


Country of Origin for U.S. Hispanics

4%3%11% Mexico11%

9% Central America

Puerto Rico4%

Puerto Rico

South American

67%9% Cuba

Dominican Republic

Others


Country of Ancestry for L d Hi iLaredo Hispanics

20%

Mexico

Other20%

Note: All other nationalities

80%

nationalities accounted for less than 0.5%

Source: Census 2000

Hispanic Shopping Habits

Hispanic Buying Power is Growing Across the Nation

Projected Growth of Hispanic Buying Power

+50%

$1$1.5Trillion$

TrillionTrillion

2010 2015

Source: Center for Economic Growth, The Multicultural Economy,2010

Latino Households Spend Nearly

$17 BillionLatinos Spend

$12 Billion$17 Billion Annually on Household

Furnishings and Equipment

$12 Billion Each Year on Clothing

Hispanic Households Spend

$53 BillionLatinos Spend

$6 Billion

$53 Billionfor Food at Home

Hispanic Consumers Spend

$7.5 Billion Annually on Clothes for Their Kids

$Annually on Personal-Care

Products

Source: “Latino Consumers: Demographic Patterns and Spending Trends among Hispanic Americans”, 8th Edition, Jan ‘11

Latinos Make Fewer Shopping Trips, ButBut…

Shopping Trips per Household

149

143142

Hispanic - Spanish Preferred Hispanic - English Preferred White Non-Hispanic

Source: Nielsen Homescan®, Total U.S., 52 weeks ending 12/25/2011

…Spend More Per Trip

Dollars Per Trip

$52 $51

$47$47

Hispanic - Spanish Preferred Hispanic - English Preferred White Non-Hispanic

Source: Nielsen Homescan®, Total U.S.; 52 weeks ending 12/25/2011

Hispanic Grocery Store Shopping Trips are More Likely To Be Socially Influencedy y

• 40% of Hispanics shop• 40% of Hispanics shop with their immediate family – vs. 18% of non-Hispanics

• Hispanics more likely to consider recommendations from friends or family members when making food purchases (36%)(36%) – Compared to non-Hispanics (22%)

Source: “Hispanic Path to Purchase”, SmartRevenue & Univision, 07/31/12

Satisfying Others Important

• Knowing that others will be satisfied is the third most important factor in deciding to make a food purchase for Hispanics behind taste andHispanics, behind taste and flavor– 59% of Hispanics cite “knowing

th ill lik it” f t hothers will like it” as a factor when purchasing a food (vs. 36% of non-Hispanics)

Source: “Hispanic Path to Purchase”, SmartRevenue & Univision, 07/31/12

Hispanics Over-Index in Key Categories

Top 10 Hispanic Product CategoriesPurchase Index: Share of Hispanic Dollars Divided by U.S. Household Dollar Share x 100

Rank Category Hispanic DollarRank Category Hispanic Dollar Index

1 Dried Vegetables and Grains 221

2 Hair Care 1542 Hair Care 154

3 Shortening Oil 152

4 Baby Food 150

5 Women’s Fragrances 149

6 Grooming Aids 144

7 Disposable Diapers 144

8 Family Planning 142

9 Photographic Supplies 142

10 Baby Needs 137

Source: Nielsen Homescan®, 01/02/2011 - 12/31/2011

10 Baby Needs 137

Latinos Make More Frequent Trips to the

Mall

Hispanic Men Care More about Fashion

Latinos Like to

Watches More Popular Among

Latino Consumers

Buy ClothesConsumers

Source: “Latino Consumers: Demographic Patterns and Spending Trends among Hispanic Americans”, 8th Edition, Jan ‘11

Marketing to Hispanics Increases Revenue Growth

• Study shows that for consumer packaged goods and their retailers, Hispanic allocation accounts to about 34% of CPG change in top line revenue growthchange in top line revenue growth

• The study analyzed the top 500 overall U.S. advertisers between 2006 and 2010,between 2006 and 2010, – Including approximately 39 Consumer Packaged Goods

companies and retailers• including Coca‐Cola, General Mills, Ralcorp, Groupe Danone, Nestlé,

Walmart and Walgreens Other companies analyzed include CloroxWalmart, and Walgreens. Other companies analyzed include Clorox, Unilever, Kimberly‐Clark, Target, Church & Dwight, CVS, Hormel, PepsiCo, Kellogg’s, Diageo, Pernod Ricard, Sara Lee, Fortune Brands, Rubbermaid, NutriSystem, ConAgra, Campbell’s, Hershey’s, Loréal and Estée Lauder, among others

Source: Association of Hispanic Advertising Agencies, May 2012

Sales Tax Allocation Growing Steadily…

1% City Sales Tax Allocations

26,935,220 15%

IIncrease

23,471,293

FY Oct ‘10 – Sep ‘11FY Oct ‘09 Sep ‘10 FY Oct 10 Sep 11FY Oct 09 – Sep 10

Laredo’s (Mostly) Hispanic Residents Are Shopping More this Year Than LastAre Shopping More this Year Than Last Year!

Sales Tax Revenue:• FYTD Oct-Jul ’12: $25 MM

— $2MM over budget

Increase in Sales Tax Allocation Better Than Larger Citiesg

Sales Tax Allocation For City, Transit And Sports Venue For December ’11 vs. YAG

13.1% 12.8%

10.3%

6.3%

Laredo Houston San Antonio Dallas

D ’t B B d M thD ’t B B d M thDon’t Buy Border MythsDon’t Buy Border Myths

Dispelling Key Border Myths

Borders Are:

• High Crime• Low Income• High UnemploymentHigh Unemployment

Myth: Borders are High Crime Areas

“New data released by the FBI this week confirm that border cities remain among the safest places to live in the United States”1

- U.S. Rep. Silvestre Reyes

“El Paso and other cities and towns along the border are consistently rated among the safest in

the nation.”- President Obama

1. Note: In reference to the FBI Uniform Crime Report released in May 2011

El Paso, Texas• Violent crime rate: 458.3 per 100,000

— Comparable to Gresham, Ore. --458.4 per 100,000

Laredo, Texas• Violent crime rate: 495.5 per 100,000

— Comparable to Abilene, Texas -- 494 3 per 100 000

• Murder rate: .8 per 100,000 — Comparable to Sterling Heights,

Mich. -- .8 per 100,000

494.3 per 100,000• Murder rate: 3.9 per 100,000

— Comparable to Portland, OR. -- 3.9 per 100,000)

McAllen, Texas• Violent crime rate: 222.1 per

100 000100,000 — Comparable to Garland,

Texas -- 223.5 per 100,000• Murder rate: 3.7 per 100,000

— Comparable to Elgin, Ill. --

Brownsville, Texas

3.7 per 100,000

,• Violent crime rate: 312.7 per 100,000

— Comparable to Fullerton, Calif. --319.2 per 100,000)

• Murder rate: 3 9 per 100 000• Murder rate: 3.9 per 100,000 — Comparable to Portland, OR --

3.9 per 100,000)

Source: FBI Uniform Crime Report released in May 2011 as quoted by Governing.com on “Terror on the Border? Not Exactly.”, May 27, 2011

Laredo’s Mean Income is Lower, But in Line with Lower Cost of Living g

100Index

U.S.

• U.S. Mean HH Income: $68,259 75

84

708090

100National Average

$ ,

• Laredo Mean HH 506070

Income: $51,380

203040

010

Mean Income

Cost of Living

Sources: U.S. Census. 2010 American Community Survey 1-Year Estimates (Including Income and Benefits). Laredo, TX Cost of Living Index, Areavibes.com.

Income Living

Laredo Unemployment is Below National Averageg

Considerable gains July 2012• Considerable gains since rate peaked in October 2009 at 9 3%

8.3%

y

October 2009 at 9.3%– Despite small

increases in recent months

7.8%

Source: Bureau of Labor Statistics, July 2012

National Laredo

Being Near the Border is Good for Business!

Consumer Base Increases with Shoppers from Mexico

3.7 Million Non3.7 Million Non-- Commercial Commercial VehiclesVehiclesVehiclesVehicles1.5 Million Commercial 1.5 Million Commercial VehiclesVehicles2 5 Million Pedestrians2 5 Million Pedestrians2.5 Million Pedestrians2.5 Million Pedestrians(Laredo’s Crossings FYTD Oct(Laredo’s Crossings FYTD Oct--Jul ‘12) Jul ‘12)

$37 Million in$37 Million in$37 Million in $37 Million in Bridge RevenueBridge Revenue(Laredo’s Southbound Crossings FYTD (Laredo’s Southbound Crossings FYTD OctOct--Jul ‘12) Jul ‘12)

½ Million ½ Million Higher Than Higher Than ggBudgetedBudgeted(Laredo’s Southbound Crossings FYTD (Laredo’s Southbound Crossings FYTD OctOct--Jul ‘12)Jul ‘12)OctOct Jul 12) Jul 12)

Revenue Increases Also Started Since Last Fiscal Year

Laredo Southbound Bridge Revenues

$43,638,202

An $818K Increase

$42,820,134

FY Oct ‘10 – Sep ‘11FY Oct ‘09 Sep ‘10 FY Oct 10 Sep 11FY Oct 09 – Sep 10

Key “Semana Santa” Shopping Holiday Shows Increased Traffic Into Laredo

• Over the two-week period in FY 2012 that includes Holy Week, CBP issued 88,220 permits (March 28, 2012-April 10, 2012) at the Laredo Port , )of Entry – Compared to the same

two-week period in FY 2011 (April 13 April 262011 (April 13-April 26, 2011) when CBP issued 67,927 permits

• This represents a 30%i ncrease in the number of I-94 tourist permits issued

Why Do Mexicans Come to the U.S. To Shop?

Better Prices On Name BrandsBebe Jeans: $187.84 Bebe Jeans: $105.99

Guess Bag: $124.71 Guess Bag: $96.00

Better Prices On Name BrandsGuess Bag: $113.73 Guess Bag: $88.00

Michael Kors Shoe: $234 51 Michael Kors Shoe: $184 95Michael Kors Shoe: $234.51 Michael Kors Shoe: $184.95

More Options

Michael Kors Items: 59 Michael Kors Items: 953

Access to Name Brand Discount Stores

Outlet Malls Off-Price, Close Out and Discount Retailers

They Even Know When To Shop!

Example: Mexican Black Friday ShopperShopper

Jorge Andrés Velasquez Gomez flew into Tijuana at night from Guadalajara, Mexico

f— a three-hour flight. He planned his trip to give him just enough time to cross the border and get in line for the midnight opening of stores at the Las Americas

tl t ll Th ll i j t th f thoutlet mall. The mall is just north of the border in San Ysidro. Velasquez Gomez was still shopping at 8:30 in the morning. ©Katie Euphrat

“It’s tiring, it’s exhausting," said Velasquez Gomez, "but it’s really nice. It’s cool.”

Source: Fronteras, “Mexican Consumers Flock to the U.S. for Holiday Sales” by Jill Replogle, Friday, November 25, 2011

Anecdotal Comment

“Every time my family comes from Mexico y y yCity, they come to shop. They even come with shopping lists from all of my extended pp g y

family. Everybody saves all year just to come and shop in the U.S.” p- A.L. Garcia, Account Executive

A d Sh Th D !A d Sh Th D !And Shop They Do!And Shop They Do!

CYTD ’12 They Have Declared CYTD ’12 They Have Declared

$110 MM in Purchases $110 MM in Purchases Made in LaredoMade in Laredo SalesSalesMade in Laredo Made in Laredo -- Sales Sales

Tax ManifestosTax Manifestos

Note: ONote: Only nly reflects state funds, reflects state funds, does not include does not include local funds that were reimbursed.local funds that were reimbursed.

Source: State of Texas Economic Development and Tourism OfficeSource: State of Texas Economic Development and Tourism Office

And They Spend More In Laredo Than Other Cities

116.8Manifesto Total Sales Amount CYTD ’12 (Millions)

110.2

Note: Only reflects state funds, does not include local

46 3

funds, does not include local funds that were reimbursed

27.8

46.339.4 41.8

31.6

15.96.3

BROWNSVILLE EL PASO HIDALGO HOUSTON LAREDO MCALLEN MERCEDES SAN ANTONIO SAN MARCOS

Source: State of Texas Economic Development and Tourism Office

Laredo is Robust for Retail Real Estate

• Great Local ConsumersGreat Local Consumers

• Visiting Mexicans withVisiting Mexicans with Money to Spend

• Improving Economy

My Book Can Help!

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For more information aboutConsumer trends and marketing, contact

Kelly McDonald at 214-880-1717 or kelly@mcdonaldmarketing com

©2012 McDonald Marketing

214-880-1717 or [email protected]

©2012 McDonald Marketing2700 Thomas Avenue

Dallas, TX 75204214-880-1717, Fax 214-880-7596

www.mcdonaldmarketing.comAll rights reserved.

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