Net demand for retail space has been trending up since July 2010, yet the U.S. retail sector will not reach historical average vacancy before mid-2013, according to the ‘May 2011 Insights: Retail Outlook’ issued by Cassidy Turley, a commercial real estate services provider based in Washington D.C.
According to Cassidy Turley's report, Class A centers will rebound with slight rent growth this year in most metropolitan areas, while most Class B and C centers in secondary and tertiary markets will continue to lag. For the next two years, it will continue to be a story of haves and have-nots.
‘Net demand for retail space has been trending up since July of last year, and vacancy has stabilized at 10.9 percent,’ the report says. ‘The upside is that consumers are spending again, and labor markets are clearly strengthening. The downside is that the slow housing recovery is delaying the retail-sector recovery. Retail vacancy in top tier regional markets hit bottom in 2010, and many Class A centers are reporting rent growth in 2011, while secondary and tertiary markets are still facing anemic demand.’
‘The good news is that unlike the previous three years, the positive momentum we are observing in the retail sector easily exceeds the downside risks, giving us greater confidence that the recovery will continue to strengthen,’ says Kevin Thorpe, chief economist at Cassidy Turley.
