Retail Rents Begin to Rise in 2012
Randyl Drummer from CoStar news writes, and I agree, that retail rents will begin to rise this year.
It’s not so much a huge increase in demand as much as there is virtually no increase in supply. The supply / demand balance is tipping in favor of the landlord. Construction financing is still a pain to obtain so until that loosens up there will still be supply problems. This is also one reason why we’re seeing more fee simple ground leases in that the tenants are footing the bill for new construction of absolute NNN net, single tenant retail.
It’s been trend for several quarters that power centers occupied by national retailers with better access to capital and credit are seeing the strongest demand. However, we’re now seeing the balance tip in secondary and tertiary markets as tenants under 5,000 square feet are starting to fill up strip centers and smaller community shopping centers.
Barring an explosion in gas prices or war with Iran (no pun intended there) we should be heading toward an increasingly good year for the retail sector. I personally hope so.
For more detail:
CoStar News – Article – Retail Outlook Cautious Optimism as Tipping Point In Shopping Center Rents Expected In 2012