U.S. retail rents grew in second quarter, while vacancies shrunk: Reports
Publish Date: July 10, 2014
The U.S. retail real estate market improved in the second quarter (Q2) of 2014 as a lack of new construction helped landlords boost rents and lower vacancies, according to the latest data.
Vacancies at U.S. strip centers were 10.3 percent in the second quarter, down 0.10 percentage point from the first quarter, according to research firm Reis Inc. Strip-center vacancies are now nearly a percentage point lower than the post-recession high set in the third quarter of 2011, Reis reports. At U.S. malls, vacancy remained at 7.9 percent for the third consecutive quarter, down from a high of 9.4 percent in the third quarter of 2011.
Meanwhile, malls rents rose 0.4 percent in the second quarter to $40.32 a square foot a year, the thirteenth consecutive quarter of rent growth for the sector. At U.S. strip centers, rents rose 0.5 percent to $19.51, marking the eleventh consecutive quarter-on-quarter growth for that sector.
Meanwhile, the retail availability rate, representing space that is actively being marketed and available for tenant build-out within 12 months, declined 11.7 percent, down 20 basis points compared to the first quarter of 2014 and 150 basis points below the post-recession peak of 13.2 percent, according to CBRE Group.
“Commercial real estate leasing activity in Q2 2014 picked up from the weather-affected levels of the prior quarter,” said Jon Southard, managing director of CBRE’s Econometric Advisors group, in a press release. “The pace of demand can finally be described as good — without the caveat of ‘for this recovery.’” In the U.S., 41 markets recorded declining availability rates in the second quarter compared to the first quarter; 22 markets recorded flat or increasing rates.
Tampa, Philadelphia, and North Carolina’s Raleigh and Charlotte recorded declines in availability rates of at or over 60 basis points in the second quarter. On the opposite end of the spectrum, Cleveland, St. Louis and Salt Lake City all recorded rising availability rates; each of these markets was 40 or more basis points higher than in the first quarter. CBRE’s preliminary estimate is for the availability rate for neighborhood and community shopping centers to decline to 11 percent in 2014.