Commercial Investment Real Estate May/June 2017 - Page 27

GLIMMERS
OF HOPE
In the throes of an evolution,
retail is forging new paths.
W
Soaring online sales are con-
tinuing to shake things up in the
retail real estate sector. The impact
is significant — but by no means
equal. There are some winners
and losers emerging as retailers and
landlords alike scramble to adapt to a
changing marketplace.
Sales data is starting to paint a grim
picture for brick-and-mortar retail.
Overall, retail sales achieved a healthy
growth rate of 4.1 percent during 2016.
However, e-commerce is taking a bigger
bite out of that total volume, with online
sales that surged 14.3 percent last year,
according to CBRE.
That shift is starting to have a more visible
impact on retailer strategies and the demand
for space. “When the whole internet scare
started coming out about 10 years ago, everybody
was relieved that the impact wasn’t felt immediately,” says
Steven K. Graul, CCIM, president and principal broker
at Innovative Concept Associates, a restaurant real estate
advisory firm based in Reston, Va. “But I think we are cer-
tainly feeling it over time.”
Part of that impact appears to be a tepid demand for
space. The U.S. vacancy rate for neighborhood and com-
munity shopping centers was relatively flat last year, with a
10-basis point improvement to 9.9 percent, while asking rents
increased 1.8 percent. The statistics for malls tell a similar
story: a flat vacancy rate and very little change in asking or
effective rents. The regional mall vacancy rate ended 2016 at
7.8 percent — no change from last quarter or from the fourth
quarter of 2015 — while asking rents increased 2 percent for
the year, according to Reis.
Retail has been hammered by a barrage of negative news
related to retailer bankruptcies and store closures that run
the gamut from giants such as Macy’s and J.C. Penney to
a slew of smaller shop tenants that include Payless Shoes,
Wet Seal, and The Limited, to name a few. In fact, 2016
was the biggest year of closures for major chains since com-
ing out of the recession, with 4,000 stores that were shut-
tered, according to Cushman & Wakefield. The company is
THE REGIONAL MALL VACANCY RATE AT FOURTH QUARTER 2016 SHOWED NO CHANGE
FROM LAST QUARTER OR FROM THE FOURTH QUARTER OF 2015.
CCIM.COM
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