Q2 U.S. Retail Vacancy Rate Hit Lowest Level in 15 Years
New York, NY, October 5, 2022-"Bricks-and-mortar store owners are emerging from the pandemic with surprising strength, posting some of their best numbers in years and plotting expansions as more Americans venture out to buy things again,” reports the Wall Street Journal.
“U.S. retail vacancy fell to 6.1% in the second quarter, the lowest level in at least 15 years, while asking rents for U.S. shopping centers in the quarter were 16% higher than five years ago, according to real-estate services firm Cushman & Wakefield.
“More stores opened than closed in the U.S. last year for the first time since 1995, according to an analysis by Morgan Stanley, and some analysts say they expect that trend to continue this year even with recession fears rising.
“The retail real-estate industry’s turnaround reflects a wrenching, decades-long adjustment that included hundreds of retailer bankruptcies, widespread vacant storefronts and plummeting demand for enclosed malls. Over the past dozen years, construction of new retail has slowed significantly after many years of overbuilding.
“Instead, most developers are opting to renovate outdated properties rather than building new ones. Those that do embark on new projects are more cautious, usually securing leases from tenants before breaking ground. More and more companies that started as online only retailers, like Warby Parker Inc., are also turning to real estate to attract customers and boost growth. The eyeglass retailer opened nine new locations in the second quarter, bringing its total at the time to 178 stores, according to financial filings.
“And after being forced to buy more things online at the start of the pandemic, many people have decided they like shopping in stores for items ranging from clothing to groceries, in a reassuring sign for the staying power of bricks-and-mortar retail.
“Other real-estate sectors still suffer from oversupply. Most notably, the office market is struggling with a glut of workspace that has been aggravated by the pandemic and the rise of remote work. It will likely take years for supply to shrink to fit the post-Covid-19 level of office demand, some property analysts said.
“After its own painful reinvention, retail real estate is now benefiting from years of minimal construction as companies that survived the challenges of online shopping and the pandemic look to expand.”