Retail real estate is racking up positive signs in the wake of the pandemic, sporting record low availability in the third quarter.
Retail availability dropped nearly a full percentage point year-over-year across the country to 5 percent last quarter, Bisnow reported. It’s the lowest level of availability recorded by CBRE since it started tracking the metric 17 years ago.
The lack of empty spaces space is linked to one of the biggest talking points in real estate: interest rates. New development in the sector has slowed amid rate hikes and high construction costs, keeping supply in the market constrained.
That dynamic benefits retail landlords and mall operators, who are able to leverage the lack of space to demand higher rents from options-thirsty tenants.
There’s a growing body of evidence supporting the survival of the retail sector after lockdown measures and an e-commerce boom spelled dark days during the pandemic.
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New York
US retail real estate rises from the ashes
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New York
Retail is back: Empty space now below pre-Covid levels
As of November, store openings so far this year kept pace with 2021 levels, but closures fell 55 percent, according to Coresight data reported by Bisnow.
Cushman & Wakefield, which publishes its own retail market report, recorded its lowest vacancy rate in 15 years during the second quarter. Asking rents at shopping centers were 16 percent higher in the second quarter than five years earlier.
An analysis of CoStar data in August also found retail availability inched below the rate at the onset of the pandemic and even the Great Recession.
The fortune of retail real estate could change on a dime, though. Inflation and recession concerns could have a negative impact on shopping activity going forward, which will affect shopping trends and performance across retail outlets.
— Holden Walter-Warner