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Costar’s State of Retail Webinar Review – Part 2 February 5, 2010

Posted by Erik Swanson in Articles, Research/Data, Retail News, Uncategorized.
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In the first slide below, Costar predicts that the national retail vacancy rate will peak near 8% in mid 2010. We believe in our region landlords will fare slightly better with vacancy expecting to peak at just over 7%. However, expect to see older or “B” and “C” class properties in tertiary markets suffer greater overall vacancy as the few elusive replacement tenants have their pick of “A” locations. Costar expects absorption to continue to increase as the economy stabilizes and retail construction remains in check. After years of robust retail development, the overall economic softness, weakening tenant demand, and lack of financing all contributed to a dramatic decline in deliveries in 2009. For the Pacific Northwest, the story is much the same. Close to 7 million square feet of retail space was delivered in total in ’07 and ’08. In 2009 we estimate under 3 million square feet was delivered and only a few hundred thousand square feet was completed in the last half of the year.

CoStar-Webinar-StateOfRetailMkt-2009 36

When will we recover?

The Seattle MSA is predicted to recover with its first quarter of positive rent growth in mid 2012.  Costar expects Seattle to achieve higher than average annual rent increases at nearly 5.5%. 2012 may seem far away for many struggling landlords, but it could be far, far worse. Consider Detroit or New Orleans who are expected to experience minimal rent growth starting sometime in the late part of 2013!

CoStar-Webinar-StateOfRetailMkt-2009 38

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