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Retail real estate in a stronger position as we approach mid-year

The overall vacancy rate for the US retail real estate market increased from 10.7 per cent to 11.0 per cent during just the first quarter of 2010, but the worst of the haemorrhaging seems to be behind us, according to a report by Colliers International.

Colliers expects the overall retail vacancy rate to tick further upward during Q2, but by the end of 2010 vacancies should begin to level off and clear signs of recovery will become evident in 2011.

The year kicked-off with an abundance of positive news for retailers. GDP and same-store sales charted an upward trajectory, jobs were added to the economy, and the DJIA hit 11,000.

However, during early second quarter, retailers who had been experiencing months of growth suddenly saw their numbers back in the red.

While the US economy continues to face significant challenges, Colliers believes that consumer sales will continue on a path of modest improvement throughout 2010, and as such, the retail real estate market will experience tepid, measured growth.

"It appears that contraction in the US retail real estate market is finally winding down, but not completely over," says Garrick Brown, Colliers International's US retail research director and complier of its Spring 2010 Retail Highlights. "We expect store closures to continue through year-end; but the return of credit and capital, coupled with an uptick in M&A activity, could be a much-welcomed shot in the arm for US retail real estate."

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