Regional Retail Market | Overview
- The regional vacancy rate decreased during the last two quarters from 8.2 to 7.6 percent.
- While the majority of new, ground-up construction has been in mixed-use developments, redevelopment of existing centers and on infill locations has increased sharply.
- Asking rents remained stable with stagnation in rent for older centers.
- Investment activity increased for fully-leased centers and redevelopment opportunities. Owners continue to rethink their center mix and spin off non-core assets.
The regional retail market has been adjusting to the pressure from e-commerce and big box retailer instability. In spite of a “terminal” diagnosis, deals are still being done. Although still up from the end of 2016, vacancy decreased during the third and fourth quarters.
E-commerce-resistant tenants such as off-price retailers, medical users, entertainment, and fitness operators continue to be more active, backfilling the larger vacancies left by large format retailers such as Macy’s, Sears and Kmart. Many large owners are now targeting for one-third of center tenancy to be entertainment use.