JLL: Retail Sales Have Recovered But Construction Hasn't Caught Up Yet
US retail construction hit an all-time high of 261M SF in 2006, before plummeting to just 59M SF of new deliveries in 2011.
As 2016 approaches, retail sales have recovered, but retail construction has yet to catch up. This is causing more vacancies and rising rents across most major markets, says JLL Director of Retail Research James Cook.
Vacancy rates have fallen 120 basis points in the last two years, and Cook anticipates vacancies will remain low through 2016. 2015 should see 82M SF of retail space delivered, with stand-alone retail buildings, small neighborhood centers, and grocery and power centers accounting for 76% of the space under construction.
40% of the retail construction in the pipeline sits in Northern New Jersey, South Florida, Houston, Dallas-Fort Worth and Boston. And with less new inventory and a major market net absorption of roughly 28M SF, the national vacancy is down to 5.8%.
As for what to expect in 2016? JLL Director of Development Larry Jensen sees more focus on redevelopment, expansion and repurposing.