The outbreak of the pandemic has hit retail real estate hard. After initial lockdown closures, the rise of e-commerce has brought doom prophecies.
However, the market reached new heights earlier this year. Second Quarter Report From Cushman & Wakefield, reported by The Wall Street Journal.
The retail vacancy rate fell to 6.1% in the second quarter. This percentage is the lowest not only since the pandemic but also in the last 15 years.
CoStar told a similar story in August, and analysis of the data revealed retail availability. below rate It was at the beginning of the pandemic and even during the Great Recession. The apparent high interest in retail space sets this sector apart from the rest. Markets with high inventories such as officesits value is being eroded as it faces a slower and uncertain recovery.
Meanwhile, retail asking rents are moving in the opposite direction of the plunge in vacancy rates. Asking rents for shopping centers in the second quarter were 16% higher than they were five years ago. Last year it closed more stores than it has since 1995, according to Morgan Stanley.
The main driver of the improvement indicator in the retail market is the downward adjustment in new construction. Buildings began to decline a decade before him as demand for the mall slumped and prominent retailers went bankrupt. As a result, the market oversupply has eased.
Businesses are looking for opportunities to expand their brick-and-mortar presence as shoppers return. ralph lauren When Cartier is one of the companies looking to open more locations in the next few years.
That said, retail real estate isn’t out of the woods. Inflation and recession fears can adversely affect the volume of consumer purchases and, in turn, the success of retailers. Some companies are expanding, while others are shrinking significantly.
Bed Bath & Beyond was announced in late August. close hundreds of stores And lay off a significant portion of the workforce. High-profile home brands are struggling with slowing sales, stock market declines and turbulent management changes.
— Holden Walter Warner