Retail Outlook: Tighter Markets, Robust Pipeline
- Apr 16, 2013
California will lead the way for lowest retail vacancy this year, according to projections by Marcus & Millichap Real Estate Investment Services Inc.
As shown in the chart at left, the Golden State will boast six of the 10 tightest retail markets, evenly divided between north (San Francisco, Oakland, San Jose) and south (Los Angeles, Orange County, San Diego). Rounding out the top 10 will be three East Coast markets and one more representative of the Pacific: Boston, Washington, D.C., Miami and Seattle.
Among the top 10, estimated vacancy will range from 2.4 percent in San Francisco to 5.8 percent in Orange County, compared to the U.S. average of 8.6 percent.
Even as vacancy declines in these major metropolitan areas, a significant pipeline of new product is on the way. Nationally, 55 million square feet of retail is slated for completion this year, up from 32 million in 2012.
The top 10 markets exhibit considerable geographic range; the East is represented by New York City and Boston, Chicago and St. Louis are Midwestern standouts, and Texas’ three biggest metros will add 6.3 million square feet among them.
In the West, Las Vegas and Salt Lake City will add 1.6 million and 1.5 million square feet, respectively. Seattle is the sole Pacific Coast market among the top 10, and will come close to tripling the volume of new product that came online last year.
For an update on trends in retail property management, read “Growth Mode” in the May issue of CPE.