Good read on how the continued lack of new development in the retail space is leading to lower vacancies and higher rents for owners of shopping centers.
This sort of market dynamic has been one of the reasons we are bullish on retail space in general - particularly well positioned neighborhood centers that are priced attractively and that have a nice mix of service based tenants.
From the article:
With shopping center vacancies continuing to tighten as retailers slowly fill the remaining excess space and developers adding little in the way of new shopping space, retailers are facing a dwindling number of high-quality locations with available space to accommodate expansion or new store openings.
Today, only 60 million square feet of new retail space is under construction, compared with 150 million square feet that was under construction in 2007 when developers were building or expanding power centers, malls and shopping centers in pursuit of population growth in the suburban fringes.
"You really have far fewer options if you’re a retail tenant in today’s market, and that’s really starting to wear on the demand numbers," said McCullough, who joined Suzanne Mulvee, director of U.S. Retail Research for CoStar Portfolio Strategy, in presenting CoStar's Midyear 2015 Retail Market Review and Forecast. "What’s holding back a lot of tenants today is the scarcity of available supply in good locations with strong demographics."
Full Article here: http://www.costar.com/News/Article/Low-Level-of-Retail-Construction-Starting-to-Crimp-Net-Absorption/174128