Cassidy Turley: Retail Sales on The RisePosted: Updated:
Cassidy Turley in Indianapolis says rising consumer confidence led to an increase in retail sales in the second quarter of 2014. Regional Vice President Jason Tolliver says the national numbers lead him to believe "the spending consumer has returned."
August 1, 2014
Indianapolis, Ind. -- Cassidy Turley, a leading commercial real estate services provider in the U.S., announced today that retail commercial real estate fundamentals improved in the second quarter based on consumer confidence rising to its highest level in six years in June, leading to a pick-up in sales for restaurants, clothing outlets and department stores. Increased consumer confidence also positively impacted rent growth in the multi-family market, which saw high demand in the first half of 2014.
"It seems that the spending consumer has returned," said Jason Tolliver, Regional Vice President in Cassidy Turley's Indianapolis office. "Much healthier consumer spending was evident in retail sales, which increased at an average annual growth rate more than double the pace witnessed earlier in the year. Stronger job numbers, like those witnessed in June as every major industry grew, bode well for continued growth as consumers become emboldened to spend more freely."
Q2 2014 Highlights:
• Quick Summary: The market absorbed 161,689 square feet in the quarter, with net occupancy gains for the year rising to 255,025 square feet.
• Growth Areas: Occupancy has increased in 11 of the 15 prime trade areas, and all trade areas have witnessed improved fundamentals so far this year. Some of the most notable leasing of the year has been within the grocery segment where grocers such as Kroger, Fresh Thyme Farmers Market, Earth Fare and ALDI have signed deals.
• Vacancy Rates: Deal velocity was noticeably stronger on a square-foot basis from the start of the year, which helped vacancy to decline to its lowest level since before the recession at 6.9% for all retail types.
• Outlook: Increased demand and limited new supply will translate into year-over-year vacancy declines of 80–90 bps in 2014. Average asking rents should see an annual advance of 1.5% to 1.8%, with the highest rental rate appreciation occurring in the prime trade areas.
• Quick Summary: The market absorbed 1,064 units during the second quarter, elevating net absorption for the year to 2,140 units and continuing a streak of five years of uninterrupted occupancy growth. As a result, the vacancy rate for all classes of product registered 5.4%, a decline of 60 bps from a year prior.
• Growth Areas: All classes of space posted occupancy gains for the quarter and the year. Growth has been most pronounced in the Midtown, North/Carmel and Northeast submarkets.
• Investment Sales: Transaction volume has remained solid with more than 2,450 units sold over the past six months. Notable investment sales for the year have included Waterside at Castleton, Harrison Place, Madison Park, Southgreen Apartments, Inverness Apartments, Villa Paree and Eagle Creek.
• Outlook: Absorption is forecast to continue at a historically impressive clip, and occupancy will remain stable over the balance of 2014. Despite the delivery of new product, vacancy will remain lower than at any time since the mid-1990s and will track in the mid-5% range. Expect to see piqued interest by out-of-state buyers who seek to take advantage of higher returns than those found in gateway metros.
About Cassidy Turley
Cassidy Turley is a leading commercial real estate services provider with more than 4,000 professionals in more than 60 offices nationwide. With headquarters in Washington, DC, the company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $25.8 billion in 2013, manages approximately 400 million square feet on behalf of institutional, corporate and private clients and supports more than 24,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets.
The Indianapolis Business Journal 2014 Book of Lists ranks Cassidy Turley as #1 Indianapolis-area commercial real estate brokerage and the #1 Indianapolis-area commercial property management firm. Cassidy Turley has been named one of the Best Places to Work in Indiana by the Indiana Chamber of Commerce for each of the past eight years. Please visit www.cassidyturley.com for more information.
Source: Cassidy Turley