Scrooges beware. A retail recovery is on the way.
There’s been much ho, ho, ho’ing of late about rising retail rents, but an absence of holiday cheer given the number of empty storefronts in the city. Now comes the news that not only are asking rents up, but vacancies have finally stabilized. That suggests one of the biggest slumps in retail history could finally be coming to an end.
America is leading the charge out of a nearly two-year doldrums, with retail asking rents up 6 percent in the U.S. and Canada in the third quarter, compared to the same period last year. New York is still king, according to CB Richard Ellis’ third-quarter Global Retail MarketView. New York’s storefront landlords are asking on average $1,800 per square foot. Trailing way behind are Sydney, at $1,218 a square foot, Hong Kong at $1,113 a square foot, and rival London at $891 a square foot.
But rising asking rents reflect landlord expectations, which have until now seemed out of line with the number of lonely spaces. If one ventures off glittering Fifth Avenue and booming Times Square, the storefronts begin to look rather bleak. So the best news in the report might be that retail vacancies in the U.S. have finally stabilized, especially for those bastions of Consumer America, the mall. That’s the beginning of a slow, but hopefully steady recovery, says the report:
Growth in consumer spending has stabilized over the past few months and consumers continue to increase their spending on necessities [...] A steady recovery is not expected until the beginning of 2011, but the fact that retail center availability rates have not increased in the third quarter is a good sign.
With consumers just starting to line up their credit cards in preparation for the biggest shopping weekend of the year, the report segguest the recovery will begin in earnest next year. But of course, we’d do well to heed the report’s warning that improvement we have a long way to go, “given that we are currently comparing to some of the lowest points in retail sales history.”