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Demand for U.S. retail space improves in Q1 2016

Demand for U.S. retail space improves in Q1 2016

June 2016

U.S. neighbourhood, community and strip retail centres continued their steady recovery in the first quarter, with nearly half of 62 markets surveyed reporting tighter availability, according to figures released by CBRE.

Those retail-centre formats registered an average availability rate of 11.2% in the first quarter, down 10 basis points from the fourth quarter.

CBRE expects the retail industry to remain bifurcated, with each market’s best-positioned shopping centres achieving the highest performance – and highest rents – as the rest strive to adapt to the evolving retail market and have a tougher time boosting rents.

That’s the case even as U.S. retail sales have been steady but lacklustre of late, with sales up an estimated 3.1% in February from a year ago but taking a slightly downward sequential trajectory in this year’s first two months, according to the U.S. Commerce Department. The National Retail Federation predicts that retail sales for 2016 as a whole will amount to a moderate 3.1% gain from last year.

“It’s a marathon pace, not a sprint,” said Jeff Havsy, CBRE’s Chief Economist of Americas Research and Managing Director of Econometric Advisors. “That is evident in the absorption trends. We’re taking up some space, vacancy keeps coming down and we don’t have a lot of new supply built. It’s just taking a while to get back to equilibrium.”

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