Open-air center rents to climb 2.8 percent this year: Report

The firm anticipates that the vacancy rate at such centers (which exclude urban, freestanding and mall properties) will grow from a low point of 6.6 percent this year to 6.8 percent by 2020. And that increase might have been even greater, if not for the pulling back by about half of the development pipeline, which is now slated to total some 34.4 million square feet through this year and into 2020.

Cushman & Wakefield says the current asking rent per square foot for such retail space is $16.91, up by 2.8 percent from 2017. The firm is projecting that the figure will grow to $17.19 per square foot by 2019.

“Nearly every possible metric suggests the U.S. economy — at least as it relates to the property markets — is in excellent shape, and the leading indicators point to a strong finish to 2018 and continuing momentum into 2019,” said Kevin Thorpe, global chief economist at Cushman & Wakefield. “GDP growth and demand for real estate space generally move in tandem. When GDP was growing by 2 percent, which has been the case throughout most of this cycle, we observed strong improvement in commercial real estate leasing fundamentals nationally, and property values were rebounding strongly. Now we are moving towards an economy that’s growing at a rate of 3 percent — and flirting with 4 percent. Local market nuances aside, this is about as robust as the economy has been at any stage in this nine-year cycle, which is still very much tracking to be the longest on record.”  

The full report may be downloaded here.