RETAIL MARKET RESEARCH – YEAR END 2012. NATIONAL RETAIL OUTLOOK.
Rent growth remains stingy. At $17.34 psf and $14.83 psf, third quarter mean asking and effective rates for community and neighborhood shopping center space were up 0.3%. With fourth quarter’s portion of new supply, vacancy in the community and neighborhood shopping center market could rise additionally by year-end before a definitive downward trend takes hold in 2013. Positive growth at about 1.0% is expected in 2013.
The vacancy rate in neighborhood and community centers, while nearly flat, continues to inch up slightly amid unsteady demand. Thus vacancy in this sector closed the latest quarter at 13.8%, up 10 basis points for the period and a return to the first quarter cyclical high. The near-100,000 square feet of community-neighborhood sector space that arrived on line in two projects year-to-date through the third quarter (both in April) were accompanied by only 26,000 square feet of net absorption market-wide. The total for the third quarter alone was negative 40,000 square feet. Fourth quarter, additionally, is expected to see 192,000 square feet deliver in three additional neighborhood centers, two of which, with 125,400 square feet between them, delivered in November.
Meanwhile, an 114,000-square-foot community center expansion commenced in October in southeast Orlando. The development of large-format projects has been largely absent. Only one power center, a 400,000-square-foot project planned for Clermont, is found in the current development pipeline. Osceola County commissioners have approved Compass Center for International Commerce), a $1.2 billion retail-hotel-commercial development proposed for a site across the street from Osceola Heritage Park in Kissimmee. The plans call for 1.5 million square feet of “wholesale/retail space.”
The total year-to-date sals volume for 47 transactions in 2012 was $290 million. Mean selling prices for the latest quarter and year-to date were $142 psf. Respective mean cap rates were 8.8% and 8.3% . In third quarter’s largest sale, second-largest in a year, PX Regency Village LP paid American Commercial Realty Corporation $16.0 million ($177 psf) for the 90,311-square-foot Regency Village neighborhood center in Orlando. The sale closed at the end of August at an 8.0% cap rate. The property, built in 2002, was 3.0% vacant at date of sale.
The 12-month rolling cap rate per the end of the latest quarter in Orlando and Tampa was notably lower, at 7.7% and 7.1% respectively, down 60 basis points from a year earlier.
Third quarter power center vacancy rates in Orlando and Tampa were at 8.9% and 5.5% respectively, down 150 basis points for this quarter alone. The third quarter national rate was notably lower at 6.1%. The forth quarter mean asking rent for local non-anchor power center space in Orlando and Tampa was $23.87 psf and $22.75 psf respectively.
In the third quarter's largest sale, Sterling Corporation paid E&A Acquisition Ltd. Partnership $10.8 million ($110 psf) for the 98,323- square-foot Barclay Square neighborhood center in Largo. The deal closed in August at a 7.9% cap rate. The property was 18.0% vacant at time of sale. Since the quarter ended, an affiliate of New York-based Mason Asset Management paid Simon Property Group $24.6 million for the 678,377- square-foot DeSoto Square Mall enclosed regional shopping mall in Bradenton, GlobeSt.com reported in November.
The information in this report is deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee, expressed or implied, may be made as to the accuracy or reliability of the information contained herein. Sources: Sean Glickman’s local market knowledge, Integra Realty sources, Reis Observer, Real Capital Analytics, CoStar Group, Inc., Data Quick, Core Logic, PriceWaterhouseCoopers, Wells Fargo Securities,Economy.com, Federal Reserve, MBAA, NAR, Real Capital Analytics, Glenn Mueller, Trepp, U.S. Census Bureau, Urban Land Institute, ICSC, Sites USA, Retail Planet, US Retail Centers, University of CFL, CBC NRT, Moody’s, WSJ & more.
Managing Director, Glickman Retail Group
Director, Retail Investment Advisory, Coldwell Banker Commercial NRT