JLL: Merry News for the Retail Sector

JLL released its Q3 2016 “Retail Outlook” report, just in time for the holiday season. The main takeaways included continued low vacancies and construction, and steady absorption. Furthermore, the report forecasts a merry holiday for the retail sector, thanks to increasing holiday sales and pop-up stores.

The third-quarter vacancy rate of 5.1% hit its pre-recession low, with net absorption holding steady at 33.4 million square feet. The 13.5% increase in absorption year over year was due to what JLL referred to as “cautions construction activity,” which delivered close to 15 million to the market.

Rents were 5.0% lower than pre-recession levels, though they jumped 3.8% from the same period a year ago. JLL analysts surmised that, with income and household growth outpacing retail development, rents should approach the pre-recession level within the next year.

The forecast: Most major markets will approach cyclical peaks within the next year, before fundamentals start to soften.

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