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Retail Space Declines in US

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Retail Investment Property  retail real estate  retail development  United States retail property  CBRE report  retail property availability  retail property finance  real estate environment  Abigail Rosenbaum  Econometric Advisors 

Retail Space Declines in US

By - Wednesday 21 November 2012

Those looking for retail investment property in the US will need to act quickly to avoid high prices, as availability rates continue to slip. According to the CBRE, retail real estate will continue on a steady recovery in 2013, but neighbourhood and community shopping centre availability will decline to 11.7 per cent. This is expected to fall yet further by 2014, dipping by an additional 10.9 per cent.

In the penultimate quarter of 2012, retail availability stood at 12.9 per cent, down from 13.1 per cent at the end of the previous year. However, this figure is still above the peak of 11.3 per cent in the first quarter of 1992. New construction isn't likely to increase availability either, with projects expected to be at an historical low in 2013. Total deliveries will stand at around 6.3 million square feet nationally. This will allow landlords to demand modest rents, averaging 0.7 per cent throughout next year.

Abigail Rosenbaum, economist, CBRE Econometric Advisors, stated: "The consumer rebound has emboldened retailers to resume expansion plans, but they remain cautious. With limited retail development underway, we have had five consecutive quarters of healthy, positive absorption. Absorption should stay on a positive trend over the next few years, bolstered by continued economic recovery."

However, tenants will continue to have the upper hand in negotiations over the next couple of years, despite the scarcity. Rents aren't expected to reach pre-2008 levels for another five years and remain in the recession slump, at around 14 per cent. Nevertheless, rent growth will occur in Denver, Austin, Nashville, Pittsburgh, New York and San Francisco, bolstered by strong demand.

The projections by the CBRE coincide with the general consensus that the US property market is recovering and across the board prices are rising. Lending has also increased, making it easier for prospective buyers to secure finance and take advantage of the current real estate environment before prices return to pre-recession levels.

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