ATLANTA, GA (April 23, 2012) – The U.S. retail market is showing some signs of improvement, but the sector has a long way to go before it’s in full recovery mode.
That was the overriding conclusion of guests and show host Michael Bull on the most recent episode of the “Commercial Real Estate Show,” which provided an in-depth look at the retail market’s performance in first-quarter 2012.
The sector showed some improvement in the first three months of the year, absorbing 9 million square feet nationally to slightly push down the vacancy rate, said Suzanne Mulvee (top right photo), senior real estate strategist for Property and Portfolio Research, a CoStar company.
“But to put that into perspective, in the decade prior to the recession, we were averaging 35 million square feet [of absorption] a quarter,” she added. “So it’s a still a very tough market out there.”
Consumer spending has increased noticeably – car sales jumped about 10 percent in 2011 – but retailers remain leery of leasing more space, in part because of their concerns about the growing threat online sales pose to brick-and-mortar operations, Mulvee added.
Mike Puline (top left photo), who handles leasing in the Southeast for DLC Management Corp., said he is “cautiously optimistic” about the year ahead, noting gas prices and unemployment loom as potential drags on the sector. “I still think we’re seeing a very slow recovery,” he noted.
Also, government regulations and new federal healthcare laws could harm small retailers’ ability to expand in the near future, observed Jim O’Donnell (middle left photo), acquisitions officer for RCG Ventures. “A lot of people are thinking twice about opening a small business,” he said.
Guests also predicted more distressed properties will become available as banks become more aggressive about removing the assets from their balance sheets. “I think some of these lenders will quit kicking the can down the road,” said Michael Bull (middle right photo), founder and president of Bull Realty, said.
While some prominent retailers have filed for bankruptcy or are scaling back their portfolios, discount chains such as Dollar General and thrift stores are taking advantage and moving into the resulting space, guests said.
“Tenants that had been priced out of core suburban and high-quality CBD markets … they’re coming into [those areas] and backfilling that space,” said Robert Fransen, CIO of Coro Realty Advisors.
“It’s been interesting to watch stores that landlords may not have welcomed so readily five years agofill space and offer a real service to the community,” added John Harrison of Bull Realty’s National Retail Group.
. The next “Commercial Real Estate Show” will be available April 26 and will provide an update on the U.S. industrial market.
Contact:
Stephen Ursery
Wilbert News Strategies
E-mail: sursery@wnspr.com
Office: (404) 965-5026
Cell: (404) 405-2354
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