by Dan Rafter
Payless ShoreSource is the latest brand-name retailer announcing bankruptcy, filing for Chapter 11 protection last week and announcing plans to close about 400 stores in the United States. And Payless is just the latest big retailer closing stores.
It would seem, then, that this is a terrible time for traditional, brick-and-mortar retail
Oddly enough, though, it isn’t … at least not for every retailer.
The first-quarter shopping center report from Chicago-based Quntum Real Estate Advisors says that despite the growing presence of e-commerce and a wave of big-box closings, the U.S. retail market continued to grow, albeit slowly, in the first quarter of 2017.
Not all retailers are growing equally, though. Quantum says that a large chunk of the retail growth was led by the $32 billion food-and-beverage industry. For the 10th consecutive year, this segment had the largest deal volume in the retail sector, 23 percent.
In other good news for brick-and-mortar retailers, Quantum reports that average retail rents should rise throughout 2017. One reason? Construction crews should complete just 49 million square feet of new retail space this year. This lack of new space should continue to drive retal rents higher.
Quantum reported that the average retail rent for the first quarter of 2017 increased to $17.55 a square foot, an increase of 1.1 percent from the average rent of $17.36 a square foot in the fourth quarter of last year.
In more troubling news, Quantum did report that the first-quarter retail vacancy rate rose, up to 5.2 percent in the first quarter from the 4.9 percent vacancy rate the sector saw in the fourth quarter of last year.
Fortunately, the retail vacancy rate during the first quarter was still lower than the rate of 5.6 percent in the first quarter of 2016.