Sperry Van Ness International Corporation’s (SVNIC) 2014 Top Markets to Watch Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2014. Today we are delving into the 2014 Top Retail Markets to Watch. Not the largest or the most actively contested markets, the 2014 Retail Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that are driving the economy and commercial real estate performance in markets across the country.
TOP RETAIL MARKET TO WATCH : New York City, New York
The retail recovery is old news in the Big Daddy of U.S. core markets. In New York City, the retail talk in 2014 is about new stores, strong sales, and intensive investment. Massive increases in tourism are a big part of the retail story, with more than 50 million visitors annually in each of the past three years. In 2013, tourists spent $8 billion at local retailers, excluding what they spent on dining and accommodations in the city. Fifth Avenue department stores and other high-end retailers aren’t the only shopping destinations with strong retail sales—the metro area’s dense population and high income demographic has supported more uniform demand across retail classes than in most other U.S. markets. More than 900,000 square feet of absorption, chiefly in the metro area’s neighborhood shopping centers, drove the vacancy rate below 5 percent in 2013. Developers added roughly 400,000 square feet to the local inventory, almost entirely in that same category of neighborhood centers. Outside the core areas and in the broader metro, strip centers have generally fallen behind other product types and experienced a 70,000-square foot demand contraction last year. Competition to acquire well-located properties is intense, and cap rates compressed through competitive bidding are squeezing out even heavily leveraged investors.
To read more on New York City, and other top retail markets, download the full version of the Top Retail Markets to Watch report below.
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