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Retail Traffic Magazine: Retail Leasing Market to Stabilize in 2010, but Rent Growth Won’t Materialize for Two Years March 31, 2010

Posted by Sean Tufts in Articles, Research/Data, Retail News.
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Below is another good article from the national retail perspective.   The Puget Sound market offers slightly better data with the shopping center vacancy rate at 8.8% (according to Costar’s 2009 year end retail report).  The Puget Sound was lucky not to get excessively over-built during the last cycle and there is an insignificant amount of new construction expected in the next couple of years.  This constraint on supply should help our region minimize the downtime and allow for some much needed rent growth in the coming years.

Read the following article at Retail Traffic Magazine:

Market researchers predict that retail real estate fundamentals will start stabilizing in 2010. But don’t expect miracles—it will take several years, up until 2012, before the industry will see any appreciable rent growth, they note.

The availability rate at U.S. neighborhood and community shopping centers will reach its peak in the third quarter of 2010, at 12.8 percent, according to a new report from CBRE Econometric Advisors, a Boston-based research firm. Reis Inc., a New York City-based research firm, predicts it might take even longer, until 2011, for vacancy rates at neighborhood and community shopping centers to peak, somewhere around 12.2 percent.

Both firms cite the precarious job market and too much supply built in the previous decade as reasons for the prolonged recovery. Between 1999 and 2008, the U.S. retail industry added anywhere between 25 million square feet and 30 million square feet of new neighborhood and community shopping center space to the market on an annual basis, says Ryan Severino, an economist with Reis. This year, the volume of new anchored neighborhood and community center completions will likely be much lower, around 2.5 million square feet, according to CBRE Econometric Advisors,—but it will take a while for retailers to absorb all the currently available space in today’s economic climate.

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