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May | June | 2015 CCIM.com
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Retailers that are back in expansion mode are bumping up against a
big obstacle — a lack of inventory when it comes to good real estate
locations. T e limited supply of new retail construction has been a
huge help to improving absorption and vacancies. Yet the market
has reached a tipping point where good space is hard to f nd, and
many retailers are still reluctant to commit to the higher rents now
needed to support new development.
"Tenants have taken their foot of the brake and are very aggres-
sively pursuing deals again," says Brian Sorrentino, CCIM, director of
ROI Commercial Real Estate in Las Vegas. T ere were 4,490 proposed
retail and restaurant store openings in 2014, according to the Interna-
tional Council of Shopping Centers, with dollar stores the most active
sector. In addition, the nation's largest restaurant chains grew their
unit count by 2.2 percent, to more than 220,000 locations, according
to Technomic's 2014 report on U.S. restaurant chains.
Deceptive Calm
T e broad industry view shows a retail recovery that continues to
move forward at a fairly sedate pace. During 2014, the improvement
in occupancies at neighborhood and community shopping centers
was relatively f at. Vacancies declined just 20 basis points for the
year to reach 10.2 percent, according to Reis. Last year, mall vacan-
cies actually rose 10 basis points to reach 8 percent, due in part to a
number of Sears store closings during fourth quarter.
However, a deeper dive into individual markets reveals a com-
pletely dif erent story. Retailers and restaurants are back in full force
looking to open new locations, and they are having an increasingly
dif cult time landing prime locations amid stif competition. "T ere
has been very little new space delivered to the market since 2009, and
everyone is f ghting for the same space," Sorrentino says. "Good space
is very tight, and nobody wants the overbuilt secondary space." In Las
Vegas, for example, there is strong demand from quick service res-
taurants looking for 2,500-square-foot end-caps with patios, which
are locations that are few and far between, he adds.
In Memphis, Tenn., retailers such as Ikea, H&M;, and Bass Pro
Shops have recently opened new stores or committed to leases. Wire-