Top 5 Retail Markets

By Keith Loria, Contributing Editor

Auction.com, L.L.C., has released its latest Retail Market Outlook Report, ranking the retail sector’s top buy and sell markets and named Fort Lauderdale, Fla., Miami, Austin, Texas, Los Angeles and San Jose, Calif., as the top buy markets.

Rick Sharga, Auction.com

The buy cities were based on current and expected fundamentals and the ranking took into account growing rents and low vacancy projections in these areas.

“The retail sector has been surprisingly robust, considering some of the headwinds it’s facing, and continues to recover as rents rise and absorption drives vacancies to a new post-recession low,” Rick Sharga, Auction.com’s executive vice president, said in a prepared statement. “Part of the reason for this is that retail construction has been scaled back significantly compared to pre-recession levels. But we’re also seeing positive trends in major, coastal markets in California and Florida where resurgent housing markets and higher household incomes boost retail sales.”

Additionally, Auction.com named Baltimore, Md., Pittsburgh, Pa., St. Louis, Mo., Detroit, Mich., and Philadelphia, Pa., as the top sell markets, forecasting vacancies and rents are expected to remain stagnant through at least 2019.

Overall, the report showed that retail fundamentals have continued their slow-but-steady recovery as vacancies reach a new post-recession low of 10.1 percent, which is an improvement of 3.0 basis points from one year ago and just 100 bps below the 2011 post recession peak.

“The retail sector still has not seen absorption numbers come close to what they were pre-recession, as e-retail sales climb and affect retail space, creating less need for inventory,” Peter Muoio, Auction.com’s chief economist, said in the statement. “As e-retail expands, store footprints continue to shrink.”

The report notes that while e-retail is helping drive absorption in distribution and fulfillment centers, it continues to be a drag on retail space and is contributing toward the trend of smaller store footprints with less space warranted for inventory. However, absorption continues to outpace supply, as it has in 14 of the past 15 quarters.