Retail Review- Watching The Pendulum Swing by Mark Malone
The old saying that "one person's loss is another person's gain" is an apt summary of the retail real estate market for 2009.
Retail property owners in Greater Portland have suffered their worst year since the terrorist attacks of September 11, 2001. Back then, the vacancy rate jumped from 3.7% in 2001 to 10.2% in 2002. In 2009, we have seen the retail vacancy rate go from 6.04% to a decade-high vacancy rate of 10.8%.
Retail tenants, on the other hand, have experienced a year with flat sales but rising profits. Profits received a helping hand from declining lease rates. The average asking rate for retail space is currently at $13.50 per sf. - a 30% drop from the peak rate average of $19.30 per sf. in 2006-07. Also, the combination of increased vacancies and lower rates has offered many savvy retailers the opportunity to improve their locations while lowering their rent.
A few examples of the upgrading are:
Clearly, 2009 has been an opportune time for Retailers looking to position themselves for the future. and, a disappointing time for retail property owners, who experienced rising vacancies and lower lease rates. As we get a sneak peak at 2010, however, with the larger vacancies beginning to fill, it appears this trend is nearing an end and the pendulum should begin to swing the other way by the second half of 2010.
Retail property owners in Greater Portland have suffered their worst year since the terrorist attacks of September 11, 2001. Back then, the vacancy rate jumped from 3.7% in 2001 to 10.2% in 2002. In 2009, we have seen the retail vacancy rate go from 6.04% to a decade-high vacancy rate of 10.8%.
Retail tenants, on the other hand, have experienced a year with flat sales but rising profits. Profits received a helping hand from declining lease rates. The average asking rate for retail space is currently at $13.50 per sf. - a 30% drop from the peak rate average of $19.30 per sf. in 2006-07. Also, the combination of increased vacancies and lower rates has offered many savvy retailers the opportunity to improve their locations while lowering their rent.
A few examples of the upgrading are:
- Lamey Wellehan went into a coveted end-cap space at Payne Road Plaza
- Marden's is preparing to take over the old Scarborough Wal-Mart
- Goodwill will be occupying the former Circuit City near the Maine Mall in the first quarter of 2010
Clearly, 2009 has been an opportune time for Retailers looking to position themselves for the future. and, a disappointing time for retail property owners, who experienced rising vacancies and lower lease rates. As we get a sneak peak at 2010, however, with the larger vacancies beginning to fill, it appears this trend is nearing an end and the pendulum should begin to swing the other way by the second half of 2010.
Click here to read the 2010 Retail Report in full.
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Posted by MCB Admin at 9/27/2010 3:20 PM 
Categories: Broker Message
Tags: Retail Mark Malone- Broker Greater Portland Market
Categories: Broker Message
Tags: Retail Mark Malone- Broker Greater Portland Market
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