NEW HAVEN - Despite a dearth of new construction in recent years, the vacancy rate among retail properties is expected to rise again this year in greater New Haven, albeit at a slower rate than in 2009. So predicts the 2010 National Retail Report by real estate investment services firm Marcus & Millichap.
Slight job growth by the end of 2010 suggests a milder decline in retail property fundamentals this year compared to 2009 in southwestern Connecticut, according to the M&M report. The resulting slow rebound in retail sales, however, will force some local retailers to shutter, causing market-wide vacancy to tick higher.
"The second consecutive year of modest supply growth may improve investor confidence in the New Haven metro area," says Edward M. Jordan, regional manager of Marcus & Millichap's New Haven office.
"However, low availability of for-sale properties and tight capital markets will subdue velocity," he adds.
Among the most significant forecasts of the New Haven Retail Research Report:
In 2010, local businesses will increase payrolls by 1,600 positions, or 0.2 percent. Last year, 21,750 workers were let go.
Retail inventory will expand by 0.3 percent this year with the completion of 184,000 square feet, the same amount of space that was delivered in 2009.
After vacancies climbed 100 basis points last year, continuing weak demand will underpin a 500-basis-point rise to 8.1 percent in 2010.
_ This year, asking rents are projected to drop 1.0 percent to $20.50 per square foot, while effective rents will recede 2.9 percent to $17.64 per square foot. In 2009, asking and effective rents fell 4.7 percent and 7.3 percent, respectively.
Also included in the Marcus & Millichap report is the firm's annual National Retail Index (NRI), a snapshot analysis that ranks 44 retail markets based on a series of 12-month forward-looking supply-and-demand indicators. New Haven moves down three places this year to No. 15. Washington, D.C., claimed the top spot in this year's National Retail Index (NRI) for the second year in a row due to a low vacancy rate and healthy job growth. Projected job gains boosted San Diego one place to No. 2 and a lack of significant construction in recent years moved San Francisco up one notch to No. 3. Forecasted job growth elevated New York City four places to No. 4 and continued layoffs dropped New Jersey three places to No. 5, despite low vacancy and the state's relatively steady economy.
For a complete copy of Marcus & Millichap's National Retail Report and the complete NRI rankings, visit MarcusMillichap.com.
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