The national vacancy rate for office properties remained unchanged during the fourth quarter at 16.9 percent. Fortunately, given how slowly the office sector’s recovery has progressed, this is not necessarily reason for worry.
Vacancies for neighborhood and community centers were unchanged during the third quarter and now stand at 10.5 percent, just 60 basis points below the peak vacancy of 11.1 percent, recorded during the third quarter of 2011.
More than a decade since the rise of the internet in the 1990s, e-commerce has officially become the bogeyman for the traditional retail industry. Executives are hard at work incorporating internet retailing platforms within their firms' existing structures under pressure from shareholders, though some are finding the task far from simple. Property owners are consumed with managing the fallout from the bankruptcies of major retailers and the trend toward smaller physical stores.
While overall economic growth remains slow, consumers appear to be weathering the storm. This is particularly impressive given the one-two punch of higher taxes and spending cuts facing the country’s consumer base. Retail sales growth, though inconsistent, has generally remained positive. However, these favorable indicators have not translated into significant or consistent absorption of neighborhood and community shopping center space. The limited demand that exists is primarily for smaller units of less than 5,000 sq. ft. while landlords continue to have a more difficult time leasing larger boxes.
There are indications that anywhere from 150,000 to 200,000 units under construction in the top 79 markets that Reis tracks, with approximate completion dates from late 2012 to 2013. That is more than triple the rate of inventory growth in 2011.