Of course, we've all heard on the nightly news, ad nauseum, that the real estate market has been declining during this Great Recession. But what do the numbers say? For that analysis, I've turned to one of the leading listing and research companies in Georgia, The CoStar Group. CoStar is a publicly traded company that also advertises properties under their "showcase.com" moniker. Their professional staff studies the numbers, analyzes, and creates quarterly reports for all types of commercial properties.
Retail is one of the asset groups that's an interesting barometer of the economy. And, with the holiday season approaching, it's probably one of the groups we need to better understand.
The latest report, from the end of the third quarter of this year, shows that Retail Malls, where most of us do our Christmas shopping, have declined slightly. The investigators studied 41 lifestyle centers, along with regional malls and super regional malls. Their findings indicated a slight increase in vacancies and a slight decrease in rents being paid by tenants.
A study of retail, in the Atlanta market in general, indicates that retail has maintained a fairly consistent vacancy rate since the start of the recession in 2008. Of course, construction has slowed to a grinding halt during this time. The year 2008 saw 9.3 million square feet of retail being built and ready for occupancy. So far, approaching the end of 2011, only 800,000 square feet of new retail has been completed.
Retail leasing in the Georgia 400 corridor has taken a larger share of a hit by the economy. Vacancy rates are hovering around 12% with almost zero construction delivered in 2011. However, rental rates are holding at $15 per square foot on average, which is a good sign of stabilization of the market.
While retail real estate numbers don't look good, it's encouraging that they don't seem to be declining. Perhaps with a strong Christmas shopping season, we'll see more encouraging numbers for retailers in 2012 and more exuberance in the real estate market overall.
Brian Patton, CCIM is a commercial real estate broker, author and instructor. For a free copy of the entire retail report from the third quarter of 2011, email Brian from his website: www.CommercialPropertyGuy.com