I read a great article today that I thought others might be interested to read. Published by Retail Traffic Magazine, a retail focused website for owners, developers, and brokers, the article shows the trend line in leasing activity throughout the country. In our own area retail leasing has been a bit slower to come back, especially when compared to the industrial market. One particular part of the article stuck out to me:
“The retail sector should continue to post gains in both occupancy and rents, but the gains will be modest, according to Ryan Severino, senior economist with Reis.
“Even with so few completions occurring, the economy is not generating enough demand for space,” he wrote in a Jan. 15 report. “Until the economy begins to create more and better jobs, retail sales will remain listless, demand will remain at low levels and the vacancy compression will be slow and tedious.””
This statement mirrors what we are seeing in the market, with one exception. Despite the slow crawl, the Tri-Valley market has seen an increase in pricing, especially in the past six months. Tenants are still expecting to get the free rent and extremely low base rents reminiscent of 2009 but in reality those deals are very few and far between and only seen in struggling older centers. The new developments such as Pleasanton Gateway and Fallon Gateway have done exceptionally well. Theses two centers have created new high-water marks, even when considering pre-recession rates. This activity is driving rental rates on similar properties upward and creating a momentum shift in the favor of landlords.
Read the entire story at the link below: