NEW CONSTRUCTION HELPED DRIVE BIGGEST ABSORPTION IN A DECADE

Delta Shores power regional center along Interstate-5 in South Sacramento contributed 512,966 square feet of new retail space during 2017, with an additional 228,744 to be completed in early 2018. As a result, the Sacramento region had its biggest annual net absorption total since 2007. With these new big boxes filled, however, there appears to be little in the pipeline for new construction of similar scale. The large vacancies in certain submarkets have brought down the overall average asking rate, even as fierce competition for trendy spaces in Downtown Commons and other suburban retail destinations drives a tremendous rise in asking rates. As owners focus on creating modern centers anchored by recreation, fitness and dining, we should see a continuing trend of existing centers being extensively renovated.