By IRR January 2014
The retail property sector continued its recovery in 2013
Investor interest in retail properties surging, with many markets reporting that development activity has resumed. This comes as vacancy rates continued to decline throughout the year, while capitalization rates continued to compress and approach 2007’s historic lows. Retail transaction volumes weren’t as impressive as some other property sectors in 2013, but still exceeded 10-year average norms.
Out of IRR’s 63 reporting markets, only Atlanta and Greensboro observed that the local retail markets remained mired in recession. Meanwhile, 18 markets representing a wide geographic and population density spectrum reported that development activity has increased materially and the retail sector has again entered the expansion phase of the market cycle.
Retail transaction volumes, especially for “one off” or small portfolios of assets, weren’t as robust in the retail sector as experienced in the industrial or –most particularly-apartments sectors in 2013. Several large-scale ownership level transactions did occur in 2013, however, pushing up volume metrics in 2013.