The rates of decline among asking rents for small retail and shopping center properties slowed in August, according to new data from Stamford, Conn.-based research firm Boxwood Means Inc.
Rents for shopping centers under 50,000 square feet eased 0.44% to $18.12 per square foot (psf) – the slowest rate of decline since last October.
Retail rents, including street retail, free-standing building and other retail property uses, shed 0.57%, which is the first narrowing in negative rent growth since January 2008, Boxwood Means says.
"Let's not forget that rents are still contracting month to month," reminds Randy Fuchs, principal of Boxwood Means. "But stepping back, the rent trends are improving, and the formation of a bottom seems to be forming on the national level for retail and shopping center sectors, earlier than and unlike the other property types."
Fuchs says the improving rents make sense, given the stabilization that's occurring in some residential housing markets.
"When this trend, which is vital to the health of the small commercial retail sector, is coupled with slowly increasing consumer expenditures, the result will likely be that neighborhood retail and shopping centers will strengthen and further stave off the persistent rent declines witnessed since 2006," he says.
Boxwood Means' data show large regional disparities. For instance, rents at small strip centers in the Mid-Atlantic narrowed the losses in August to -0.14% and in the Northeast by -0.19%. Overall, shopping center rents in the Mid-Atlantic are still on positive turf over the last 12 months, at 0.40%.
On other hand, retail rents plummeted 0.82% last month in the West, and shopping center rents closed down 0.86% in the Southeast – areas that are still afflicted by some very weak residential markets such as South Florida and Southern California.
SOURCE: Boxwood Means