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Year end sales data from Retail Traffic January 25, 2011

Posted by Sean Tufts in Articles, Research/Data, Retail News.
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Retail Traffic magazine has an article out today highlighting Q4 retail sales data. In total, $7.8 billion worth of deals over $5m sold.

The big quarter put volume for the year at $20.21 billion, an increase of more than $7 billion compared to the $13.05 billion in deals in 2009 and just below the $20.35 billion in deals that took place in 2008. The volume is just a fraction of the industry’s volume in 2007, when a whopping $71.3 billion in significant retail transactions took place.

The average cap rate on retail properties came in at 7.9 percent—matching the figure in 2009 and up 100 basis points from the average figure in 2008. The average price paid per square foot worked out to $158 in 2010—$12 greater than the average price paid in 2009.”

This data backs up other reports that cap rates are trending down from their high sometime in 2009 when there was a lack of buyers and financing. The main cause for this dip is the class of product that is trading hands. Owner’s of high quality product have been able to capitalize the lack of supply on the market.

Another reason are investors getting back into retail? Cap rate spreads.

The positive leverage between cap rates and retail mortgage interest rates is presently 171 basis points, more than double the 85 basis points average for the decade and almost three times the 63 basis point spread at the market’s investment peak.”

No one knows how long interest rates will remain at this level but most agree that they will begin trending up in the next couple of years. The full article from Retail Traffic is here.

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