Retail Real Estate Inches Toward Recovery

July 9, 2012

The rows of vacant shopping centers plaguing many U.S. cities may slowly be vanishing. For the second quarter in a row, vacancy rates improved while rents continued to inch up in the retail market, signaling a recovery for the hardest-hit commercial sector, according to Reis, a commercial real estate research firm. 

"Although we still remain hesitant to claim that the market has reached stabilization, two consecutive quarters of vacancy and rent improvement is the strongest evidence to date that the sector is on the road to recovery," says Ryan Severino, Reis senior economist.

Vacancies in strip malls for the second quarter declined to 10.8 percent. Meanwhile, asking rents increased 0.2 percent. According to Reis, the decreases in vacancies and slight increases in rents were first recorded in the first quarter of this year, after nearly seven years of falling numbers for the sector. Reis predicts that vacancies will continue to gradually fall for the remainder of the year as new construction remains largely stalled. 

Source: “Retail Real Estate Recovery Taking Hold: Research Firm,” Reuters (July 6, 2012)