Report: Retail investment will pick back up in second half

Investment in retail assets plummeted by 46% in the first half of 2018, but JLL predicts a second-half comeback that should end up surpassing last year’s investment increases.

“We’re pragmatically optimistic of today’s market, and are seeing investors begin to rebuild their confidence in the sector as fundamentals strengthen,” said Naveen Jaggi, president of JLL Retail Advisory Services. “Vacancy is stabilized at under 5% nationwide and rents have reached pre-recession levels.”

In a report released at ICSC’s RECon show in Las Vegas, JLL said it based its forecast on the following factors:

  • Major markets are still showing stronger fundamentals when compared to the United States as a whole, but even those top tier properties are seeing impacts of retailer fallout. Rents continue to rise but remain inconsistent across major markets.

  • Retail construction remains limited with only 14.2 million sq. ft. delivered so far this year. Less with less than one-third of new construction came in the shopping center and mall space, with most concentrated in general retail.

  • Leasing remains steady and absorption rates remain in line with 13.4 million sq. ft. absorbed through April.

JLL pointed out that investors were slow to close deals at the beginning of the year, even though such fundamental measures were already showing improvement.

“Sellers are under more pressure to sell than buyers are to buy,” Jaggi said. “There is tremendous opportunity unfolding to buy quality retail at a discount to historical values.”

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