Local retail vacancy rate remains stable
The vacancy rate for leased retail space in the county at the end of March was 21.8 percent, which is down from 22 percent six months earlier but the same rate as a year ago. The good news in that number is things haven’t gotten worse over the past nine months.
At the same time, retail bankruptcies are reportedly down. More retailers are looking for new or improved locations, while others are looking to renew leases.
“Nonetheless, lease rates slipped slightly in the overall market as landlords, especially those with large blocks of space, became more aggressive in landing deals,” wrote Jill Langosch, vice president of research for C.B. Richard Ellis of Grand Rapids, in the firm’s MarketView report.
“Look for rates to hold as landlords improve occupancy and solidify their lending arrangements,” she added. “Realistically, availability rates are so high that strong rent growth is several years away.”
Rental rates at the end of the first quarter ranged from $4 a square foot to $18 a square foot, triple net, across the county’s four retail submarkets. The lowest submarket vacancy rate was on the northwest side at 13.9 percent. The southeast submarket, which is also the county’s largest retail sector with 4.4 million square feet, had the highest percentage of vacant space at 26.8 percent.
The entire retail market totals 11.1 million square feet. The market positively absorbed 15,776 net square feet from the third quarter of last year to the first quarter of this year, or nearly 1,300 more square feet than it filled over the previous six months.
“There was no new construction of strip center space over the past six months, and the construction pipeline for new supply is expected to be minimal for some time,” reported Langosch.
“In summary, retail fundamentals indicate we have seen the bottom and are getting closer to a recovery phase,” she said. “We are not forecasting a robust or swift recovery. Rather, we expect the recovery will continue with positive growth, though not necessarily consistent from period to period.