Washington, D.C. -- The retail real estate sector posted positive net absorption, a stable vacancy, and a near-stabilization of rent for the first quarter of 2012, according to the latest research from CoStar Group.
For the first quarter, vacancy nationally was unchanged at 7%, compared with 7.3% one year earlier. Net absorption of 9.4 million sq. ft. was below the 16.2 million sq. ft. in the fourth quarter. Retail completions were exceptionally low at just 4.3 million sq. ft., with a Salt Lake City urban retail project being one of the largest deliveries this quarter.
“We forecast completions of retail space to remain depressed for the year,” said Walter Page, director of research for CoStar’s property and portfolio research. “In-process construction continues to fall compared to office and warehouse construction, which is rising slightly.”
At the metro level, retail performance was more of a mixed bag than other property types, with few standout markets. For example, market rent over the past year ranged in a narrow band with most markets showing a -5% to +2% change, as the impact of housing market distress and Internet retailing has curtailed demand growth. For the quarter, roughly one-third of the markets recorded negative net absorption, suggesting that the retail recovery is still weak. Market vacancy rates range from 2.8% in San Francisco to 12.1% in Phoenix.