Year Ends on a Sour Note
Vacancy Rate Spikes in the 4th Quarter
The 3rd quarter of 2010 showed no real signs of a further weakening market, nor shifts to indicate a strengthening of the market; but that all changed in the 4th quarter. Despite no large retailers closing their doors, San Ramon seemed to be plagued by small tenants closing up shop through year-end. despite the spike, overall vacancy does remain fairly low.
The largest spread quarter to quarter was the loss of 30,000 square feet in the grocery anchored centers. Crow Canyon Commons has seemingly been struggling for quite a while with a constant circulation of smaller tenants. Diablo Plaza on Crow Canyon and San Ramon Valley boulevard also experienced departures including Quizno’s and the announcement Jo-Ann’s closure as of June 2011. Magnolia Square lost PG Wine Shop back in October but did successfully backfill the Tahoe Joe’s with Fat Maddie’s Grill. Market Place is also suffering from the lack of activity and has yet to lease the former El Balazo space. In light of this, The Shops at Bishop Ranch continues to dominate the entire valley with the highest lease rate in 2010, that signed by Little Madfish earlier in the year.
What does all of this mean? I would expect the same pattern to continue, at least through the beginning of the year. A decline in rental rates could spur more activity but I am not convinced that is going to happen. With the exception of The Shops at Bishop Ranch, retail centers are still suffering from excess inventory. As office vacancy rates improve at Bishop Ranch I would expect surrounding retail to do the same.
Read and download the complete San Ramon Retail Market Report