With ICSC’s RECon in full gear this week in Las Vegas, we thought it would be a good time to give an update on the retail real estate industry’s first quarter.
Total sales for the quarter reportedly came in at $24 billion, about the same as last year, but, keep in mind that last year’s first quarter also featured the $8.2-billion merger between American Realty Capital Partners and Cole Real Estate Investments. As there wasn’t a portfolio purchase that huge during the quarter, there were obviously more single-asset transactions to make up for that shortfall. Single-asset retail transactions were up 16 percent year over year.
Cap rates are hitting some significant lows. They were at 6.4 percent, lower than the pre-recession level of 6.5 percent and 40 basis points down from the prior-year period. Meanwhile, prices were up 12.8 percent from the same year-ago quarter.
In conjunction with RECon, Marcus & Millichap put out its National Retail Report. Two GRS Group professionals recently attended one of their events in Dallas.
These are the top 10 markets in the country, according to the commercial real estate services firm:
1) San Francisco
2) New York City
3) San Jose, Calif.
4) Austin, Texas
5) San Diego
8) Orange County, CA
10) Los Angeles
The report points out that retailers absorbed 75 million square feet last year, a boost from 40 million square feet the prior year. Additionally, asking rents increased 2.2 percent during that period.
Low levels of new supply has increased the demand for redevelopment of urban locations, and the repurposing of vacant space…all of this is good news for retail real estate landlords.
In line with what we noticed at Marcus’ Dallas event, 1031 buyers are some of the more active in the retail real estate sector right now. These investors are shying away from multifamily properties, where the returns aren’t meeting their criteria.
We have several GRS Group representatives at RECon and will give you our take on the show as it unfolds. Check back for updates!