The second quarter Seattle-area retail report from Kidder Mathews offers an encouraging sign that while supply chain and inflation headwinds continue, the retail sector is slowly bouncing back from the pandemic. Available vacancy space declined in all but one of the five counties and now stands at 2.75%, a 6 basis point drop from Q1.

Rent growth grew 1.7% year-over-year in Q2, but dropped a bit from the first quarter. Retail developments in the works include a Top Golf opening in Renton on July 29th plus a neighborhood center in Black Diamond at Ten Trails and a larger project in Covington possibly debuting next year.

Investment activity included 113 retail property sales in the second quarter, with cap rates ranging from 4.0 to 7.8% and an average of 5.07%. With rising interest rates, expect varying cap rate impacts in the 2nd half of 2022. Kidder’s Seattle outlook for the third quarter is stable to reduced sales volume with single tenant net lease demand remaining high.