Dive Brief:
- Finding available retail space and the expense of sensible space to grow e-commerce business are two trends identified by commercial real estate services and investment firm CBRE Group that will impact the industry in 2017, according to Retail Leader.
- CBRE Group's report revealed that the amount of available space in U.S. neighborhood, community and strip shopping centers is the lowest in nearly 10 years, and projections are that it could decrease even more.
- Occupancy costs and investment yields on logistics properties aren’t normally looked at right after a holiday season concludes. However, the CBRE Group said both will have an major impact on retailers’ financial performance this year.
Dive Insight:
With online shopping starting to leave a mark, grocery stores are trying to do more and innovate, and some companies are looking to open up new stores in high-traffic areas—especially where millennials are moving. The problem is, these retail spaces are commanding top dollar right now, as the live/work/play environment is hotter than it’s ever been.
Retail across the board is seeing escalating prices, which is forcing some neighborhood groceries out of their leases, even after decades of service. And finding new space is challenging because grocery is competing with big box stores, restaurants and other businesses for what's available. Supply is limited, demand is high, and most grocery chains can’t compete price wise.
Retail market reports across the U.S. all pretty much say the same thing. Availability rates will continue to decrease and rents will increase, keeping all companies but the very top of the grocery food chain virtually out of the market.
According to commercial real estate management firm JLL’s most recent retail market report, the U.S. vacancy rate fell 20 basis points. Demand has exceeded supply in the past four quarters, dropping vacancy rates 60 basis points over the last 12 months.