U.S. retail real estate will continue a slow, steady recovery in 2014, with the availability1 rate for neighborhood and community shopping centers declining to 10.6%, according to a new forecast from CBRE Group, Inc. The market improvement will continue into the following year, as the retail availability rate slips to 9.7% in 2015.
In Q3 2013 the retail availability rate stood at 12.3% down from 12.7% at the end of 2012.
“Consumers remain cautious, as the economic recovery has not provided enough confidence for them to spend at an above-average pace,” said Abigail Rosenbaum, Economist, CBRE Econometric Advisors. “This caution has kept retailers from rapidly expanding, and the demand recovery at retail centers remains muted.”
CBRE projects that new construction will remain low next year, with total deliveries of 8.1 million sq. ft. nationally. The improving supply/demand picture will enable landlords to achieve rent growth in 2014, averaging 2.5%.
“Availability rates will trend down in the coming quarters, but it will take some time before significant rent increases can be justified,” added Ms. Rosenbaum.
CBRE projects the growth in rents over the next two years will be led by San Francisco, Denver, Nashville, Austin, Dallas and Charlotte driven by healthy demand growth.
To speak with Ms. Rosenbaum or another CBRE expert, please contact Robert McGrath (212.984.8267 or Robert.McGrath@cbre.com).
1 Availability is space that is actively being marketed and available for tenant build-out within 12 months.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.