An annual report by Marcus and Millichap, a real estate investment and brokerage firm, showed a drop in the nationwide vacancy rate for retail properties, from 10.2% last year to the current 10%, according to an article in the San Diego Union.
The Encino, Calif.-based company forecasted 64 million sq. ft. of retail space will be under construction in 2011, double that of 2010.
“The tide has begun to turn,” the report said, thanks to monthly retail sales at $275 billion at the end of 2010, after excluding autos and gas. The authors called this benchmark breakthrough “a critical bellwether of consumer demand.”
But it noted there is still an excess of store space in many markets, and increasing sales aren’t high enough to raise rents for retail space. No change in rental rates were predicted nationally until 2012.
In terms of retail rankings, Marcus & Millichap kept Washington, D.C., at the top of its National Retail Index, with New York City and San Diego in second and third place. The list is based on retail vacancies, rental rates, population growth, employment and other factors. Several California cities occupy spaces on the Top 10 list because restrictive land-use policies control supply and keep vacancies low.
The bottom 10 were also consistent over the last two years: Jacksonville, Fla; Cleveland; Detroit; Cincinnati; Las Vegas; Sacramento, Tucson, Ariz.; Fort Lauderdale, Fla.; Indianapolis; and Phoenix placed in the bottom 10 of the National Retail Index.