What Are the Latest Trends in Retail Real Estate?

December 14, 2016 Designer

For the last few years retailers have been looking in rural areas for retail locations. The big retailers with many locations in suburban and metropolitan areas, where most of the stores are located have been more aggressive in territory and rural markets. Higher demographic markets are starting to experience market saturation and retailers are looking to add stores in smaller “tertiary” markets. Albuquerque, which is a tertiary/secondary market, is drawing attention of many regional and national retailers both “in the market” and retailers that have not entered the Albuquerque market.

How will these trends affect the Albuquerque Retail Market?

The Albuquerque market is seeing this retail demand. Not only are existing centers seeing activity from local and national retailers, which are filling up vacant space, construction of new centers has increased the supply of new retail space in the market.

Where are lease rates trending?

With this increased activity, spaces are filling up, which in turn will likely increase lease rates. If this trend continues, lease rates will continue to increase

How about Capitalization (Cap) rates for retail properties?

With stronger “credit’ tenants filling spaces with longer leases, Cap rates should decrease and values increase on newly constructed centers. As for the neighborhood and strip centers, Cap rates should remain relatively consistent with current levels. It takes change to get change. If a landlord wants to improve property values, they will still need to roll up their sleeves and put some work and money into the center and hire the Wright Retail Brokers and professional property management to increase income and preserve value. There’s still no way to get “top dollar” for a middle of the road center without the Net Operating Income (NOI) increasing.