As Q3 gets into full swing, retail occupancies look good and the chance of overbuilding looks low. We looked through CBRE and The Weitzman Group's Q2 data to get the key takeaways.
1. Retail occupancy remains over 90% for the 23rd consecutive month. Absorption and modest deliveries caused a 90 bps increase in occupancy last quarter, CBRE reports. The Weitzman Group shows occupancy at 92%. Only 1984 had better occupancy rates.
2. Big-box market supply increased with the announcement of nine Sports Authority closures in DFW last quarter and the pullout of Fresh Market. There are 24 Class-A big-box spaces available for lease or sale. CBRE expects the new boxes to be absorbed quickly as they are in preferred Class-A and B locations.
3. Weitzman reports a drop in construction. Anchors still dominate with little or no shop space. New deliveries continue to make up most of the quarterly absorption at around 50% of activity for the past two years, according to CBRE.
4. Major retail components of some of the big mixed-use projects pushed back completion. This eases fears that we're overbuilding like in past cycles. “The lack of overbuilding makes me believe we could see this six-year up cycle continue for another six years," chairman Herb Weitzman (above, middle, at our retail forum last month) tells us.
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