Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/827208
10 S C T / J U N E 2 0 1 7 T H E C O M M O N A R E A R ising sales and low levels of new construction have helped U.S. retail centers register positive year- over-year rent growth for 13 quarters straight, according to CBRE. Net asking retail rent averaged $16.97 per square foot nationally in the first quarter, the firm reports. That is up by 6 percent from the first quarter of 2016. It is also 10.7 percent higher than the recent low of $15.33 per square foot recorded in the fourth quarter of 2013. "Retail rents have not been this high in nearly eight years," wrote Spencer G. Levy, CBRE's head of research for the Americas, in the firm's quarterly report. "All retail segments had positive rent growth this quarter." The lifestyle center and mall segment Retail properties are generating steady income growth By Brannon Boswell Strong fundamentals R E I T S led the way, with a seven-year high of $23.76 per square foot, up by 28 percent from the first quarter of 2016. This healthy rent growth might be at the expense of weaker properties, though, notes Levy, by dragging down the overall net absorption rate. Net demand for retail space remained flat in the first quarter, with 14.5 million square feet of available shopping center space finding tenants. CBRE says the market usually averages about 20 million square feet of such absorption per quarter. "For the remainder of 2017, rent levels will likely continue to increase, though the acceleration of growth will slow," Levy wrote. "As market demand increases, this pullback in rent growth will allow the market to restore itself to equilibrium." A spate of high-profile retailer bankruptcies during the first quarter notwithstanding, retail REITs are managing to boost income and rents — thanks in part to years of selling off underperforming properties to create vacancy-proof portfolios. Weingarten Realty, for one, reported a same-center net operating income jump of 3.7 percent in the first quarter, attributable to a 9.5 percent increase in rental rates. Though exposed to store closures by Family Christian Stores, Payless, RadioShack and Rue21, the company is making progress refilling all the space because of its well-located properties, says Drew Alexander, Weingarten's Wegmans will anchor Regency Centers' The Field at Commonwealth