Retail Is on the Mend, But…
As I walked out of Starbucks. I saw a businessman looking through his papers titled “Loss History.” I took note as he just flipped, didn’t stop and study them, just kept flipping like same old thing as last quarter. I got back to my desk and started reading the NAI Global blog. This is what Dr. Peter Linneman, Chief Economist of NAI Global has to say about the Retail sector of commercial real estate.
Retail sales bottomed early in 2009 and will continue to recover more as we add more jobs. It’s self-reinforcing, as a virtuous cycle. However, we have a long way to go to get back to the peak of where we were. We are still some 10% below where we were at our peak. If retail sales grew by 5% a year over the next two years, most people will say that’s a pretty good retail sales recovery. But two years out, you’d only be back to where you were in mid-2008, even though you would have 10 million to 15 million more people added to the population. It’s a flat recovery.
Retail vacancy rates seem to have hit a peak. As people are shopping again, and as you get increased activity, you don’t have a lot of activity on the leasing side but at least you have strong tenants realizing that they have a future. They’re saying, “Consumers are going to shop again, we are going to need some additional stores again, we are going to have to upgrade our stores and locations,” and are starting to look more positively to the future.
-Dr. Peter Linneman, PhD
Dr. Peter Linneman is Chief Economist of NAI Global and Principal of Linneman Associates.
You can read about the Cleveland Retail Market in this link to the NAI Daus Quarterly Market Report.
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