The Richmond retail market steadily improved in the third quarter, with the vacancy rate dropping to 5.4% from 5.8% in Q2. Fueled by the Publix expansion into former Martin's spaces, net absorption was positive at 609,185 square feet, and we can expect absorption to stay positive over the next few quarters. Average quoted rental rates across all property types are reaching a peak at $15.11 PSF. Retail investment sales have slowed compared to Q3 2016, which can be attributed to higher cap rates.
The Hanover outlet mall project has been scrapped, however we can expect that another retail use will take its place. No other new construction is expected in the pipeline during the fourth quarter.
The Richmond market has started to see shopping centers with large vacant big box space (former Martin's grocery stores, for example) that will need to be converted to junior boxes and/or midsize retail space or repurposed for non-retail uses, such as entertainment.
According to research group The Conference Board, consumer confidence rose in August to the second highest level since 2000, so we can expect to see good holiday sales in the fourth quarter.