by Brianna Crandall — February 13, 2017 — The steadily shrinking percentage of available space in U.S. neighborhood, community and strip centers took a pause in the fourth quarter (Q4) of 2016, although employment and wage trends should bode well for the industry this year, according to the latest retail availability analysis by global property advisor CBRE Group.
Retail availability in such centers across major U.S. markets registered 10.2% in Q4, unchanged from Q3 but 50 basis points (bps) below the year-ago figure. A full 37 of the 62 markets tracked by CBRE posted less availability of retail space in Q4 than Q3.
National retail availability rates have steadily declined from their post-recession peak of 13.1% in 2011 as new construction has remained relatively muted and demand has held up. Economic indicators in Q4, including the 1.6% year-over-year increase in employment and the 3.5% gain in personal income, are likely to provide momentum for the retail and shopping center industries this year.
Jeff Havsy, CBRE’s chief economist in the Americas, commented:
We anticipate that 2017 will be a solid year in retail real estate because wages are growing at their fastest pace in nearly a decade, and that will drive spending. Retail availability rates should continue to decline, which should fuel rent growth. New construction remains tepid, which counters any drain on demand from the growth of e-commerce.
CBRE forecasts that developers will have delivered roughly 16.4 million sq. ft. of new neighborhood, community and strip retail centers in the USA in 2016 once final figures are tallied. That is roughly on par with completions in each of the previous two years. In context, the peak for retail deliveries was 73 million sq. ft. in 2005.
Markets registering declines in retail availability of 50 bps or more in Q4 from Q3 include Bakersfield, CA; Birmingham, AL; San Jose, CA; and Tampa and West Palm Beach, FL. Those that posted sequential increases in availability include Richmond, VA; Oklahoma City, OK; and Albuquerque, NM.
CBRE defines availability as any space marketed for lease, including space currently occupied but offered for sublease.
The full report is available from CBRE’s U.S. Research Reports section.