{"id":1004430310,"date":"2020-05-04T05:37:01","date_gmt":"2020-05-04T13:37:01","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004430310"},"modified":"2020-05-04T06:59:35","modified_gmt":"2020-05-04T14:59:35","slug":"moodys-forecasts-sharp-drop-in-retail-rents","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/moodys-forecasts-sharp-drop-in-retail-rents\/","title":{"rendered":"Moody\u2019s Forecasts Sharp Drop in Retail Rents"},"content":{"rendered":"
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Image via Rawpixel.com<\/em><\/p><\/div>\n

Effective rents in the retail sector are forecast to fall by 11 percent by the end of 2020, based on first-quarter data collected by Moody\u2019s Analytics through its Real Estate Information Services group<\/a>.<\/p>\n

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READ ALSO<\/strong>: The Science of Retail: Can Data Save the Store?<\/a><\/p>\n

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The underlying data covers commercial real estate rents and vacancies for eight property types in more than 3,000 submarkets across the U.S. The forecast notes that the retail sector was under pressure from expanding e-commerce even before the pandemic and has also been hit by widespread store closures<\/a>.<\/p>\n

\u201cNational vacancies will rise past historic highs\u2026. This drop will constitute almost twice the total decline in rents the retail property sector experienced after the Great Recession in the four years spanning 2008 to 2011<\/em>,\u201d according to Moody\u2019s.<\/p>\n

\u201cStore closures have made it difficult for retail tenants to pay rent, which has negatively impacted landlords. It is not yet clear how effective government support will be in this sector<\/em>,\u201d Victor Calanog, head of CRE economics at Moody\u2019s Analytics, said in a prepared statement.<\/p>\n

A giant stumble<\/h2>\n

In a separate Moody\u2019s Analytics report about two weeks earlier, Calanog zeroed in on the current spate of store closings by Macy\u2019s and the coronavirus pandemic. An initial wave of nearly 30 closures<\/a> in January was quickly followed by Macy\u2019s announcement in February that it would close a total of 125 stores<\/a>. Because of the pandemic, the retail giant on March 17 preemptively closed all their locations. The Moody\u2019s case study looked at, among other things, Macy\u2019s strategic focus on its 150 top-performing stores nationwide; these Growth150 locations generate about half of all sales within the chain.<\/p>\n

This strength, however, cuts both ways. If retail purchasing patterns change as a result of the pandemic, Moody\u2019s reports, \u201cany decline in revenues from the top 150 stores will also have an outsized effect on Macy\u2019s performance<\/em>.\u201d<\/p>\n

In addition, these Growth150 stores tend to be anchor tenants, so if any of them falter and close, an anchor space will go dark\u2014and remaining tenants might \u201cinvoke co-tenancy clauses and renegotiate for more favorable lease terms, leading to revenue declines for landlords<\/em>,\u201d Moody\u2019s warns.<\/p>\n","protected":false},"excerpt":{"rendered":"

Reflecting first-quarter data, retail will be the hardest-hit commercial real estate sector, with a projected decline of 11 percent in effective rent by year\u2019s end.<\/p>\n","protected":false},"author":882,"featured_media":1004430463,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21784,21808,23891,21742,21749],"tags":[32914,33034,38763],"class_list":["post-1004430310","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-brokerage","category-featured","category-national","category-latest","category-retail","tag-e-commerce","tag-moodys","tag-victor-calanog"],"acf":[],"yoast_head":"\nMoody\u2019s Forecasts Sharp Drop in Retail Rents - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/moodys-forecasts-sharp-drop-in-retail-rents\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Moody\u2019s Forecasts Sharp Drop in Retail Rents\" \/>\n<meta property=\"og:description\" content=\"Reflecting first-quarter data, retail will be the hardest-hit commercial real estate sector, with a projected decline of 11 percent in effective rent by year\u2019s end.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/moodys-forecasts-sharp-drop-in-retail-rents\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2020-05-04T13:37:01+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-05-04T14:59:35+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2020\/05\/retail.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/moodys-forecasts-sharp-drop-in-retail-rents\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/moodys-forecasts-sharp-drop-in-retail-rents\/\",\"name\":\"Moody\u2019s Forecasts Sharp Drop in Retail Rents - 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