Note: I covered apartments and offices in the newsletter: Moody’s: “Apartment Market Softens, Office Evolution Continues, and Retail On Shaky Ground”
From Moody’s Analytics economists Thomas Lasalvia, Lu Chen and Nick Luettke: Apartment Market Softens, Office Evolution Continues, and Retail On Shaky GroundOver the past decade, traditional retail forms have been challenged by e-commerce’s boom, whose share as a percentage of total retail sales has been constantly hovering above 15% since early 2023. During the sector’s ongoing revolution, retail clusters have been shifting towards service-centric and experience-oriented uses. As non-performing assets get replaced by modernized retail forms or even mixed-use communities, the retail sector ignited a long-awaited hope at the rise of pent-up consumer demand.
[N]eighborhood and community shopping centers held steady for another quarter. But over 85,000 sqft of net move-ins fell well under the verified new retail completions, totaling 390,000 sqft over the last three months. August and September leasing activities showed some cracks but it may still be too early to call it systematic. National vacancy stayed flat at 10.3% since early 2023. Asking/effective rents were up slightly by 0.2%/0.3% as compared to last quarter but remained in the $21/$18-per-sqft range, a level relatively unchanged since 2018.
In the mid-’00s, mall investment picked up as mall builders followed the “roof tops” of the residential boom (more loose lending). This led to the vacancy rate moving higher even before the recession started. Then there was a sharp increase in the vacancy rate during the recession and financial crisis.