Ten X: Property Owners Should Consider Selling Retail Assets In These 5 Markets
As physical retailers across the U.S. struggle to keep pace with shifting consumer shopping preferences, owners of flailing retail assets are itching to sell properties.
Though the sector remained stable in Q3 thanks to strong consumer confidence and positive economic fundamentals that drove consumer spending, thousands of stores have already closed this year, putting upward pressure on landlords to fill vacant space, reinvent their properties to appeal to more shoppers or sell.
Online real estate marketplace Ten-X reports that Austin, Denver, Dallas, Salt Lake City and San Jose would be the best markets to purchase retail assets, based on data compiled from the first half of the year. Below are the top five markets in which to sell assets:
No. 1: Kansas City, Missouri
In four of the last five quarters, retail net absorption in this market was negative with vacancies rising 110 basis points during that time period. Employment advanced only 0.2% in the six months ending in June, and retail trade jobs were down more than 1% from Q2 2016, causing a curb in demand for retail space.
No. 2: Memphis, Tennessee
Population growth has been slow for the past four years in Memphis, and the annual growth rate has not exceeded 0.1% since 2012. Retail vacancies rose 140 basis points year-over-year and demand has been negative since 2015.
No. 3: Cleveland, Ohio
Issues with inconsistent job growth and a retail trade sector that has been declining for 18 months have negatively impacted the Cleveland market. Cleveland's retail sector also had a vacancy rate of 15.7% as of Q2. This is expected to worsen by 2021, reaching nearly 17%.
No. 4: Northern New Jersey
Metro population growth has experienced a slowdown since 2011 and grew only 0.3% in 2016. Retail vacancies were up 60 basis points to 8.6% as of Q2 from the same time period last year.
No. 5: Pittsburgh, Pennsylvania
Unemployment levels in Pittsburgh remain higher than the U.S. average, hovering around the low 5% range. Meanwhile, Pittsburgh saw a decline in its population growth for the fourth year in a row. Though new supply in this market will remain limited in coming years, waning demand is expected to cause vacancies to rise to 10% by 2021.
CORRECTION, NOV. 16, 2:25 P.M. ET: A previous version of this story incorrectly listed Austin, Denver, Dallas, Salt Lake City and San Jose as the best markets to sell retail assets in. These are the best markets in which to purchase retail assets. The story has been updated.
