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Spring report reveals stronger retail performance; Sales transactions markedly improve while leasing market trudges on
CHICAGO, May 21, 2012 — The U.S. retail real estate sector witnessed a moderate recovery in the first quarter of 2012 led by retail investment sales, as trades of significant retail properties increased nearly 90 percent over Q1 2011, according to Jones Lang LaSalle’s Spring Retail Forecast.
“Improving economic fundamentals continue to drive a modest recovery. However, significant risks remain, with the most critical being the European crisis and uncertainty about fiscal policy,” said Greg Maloney, President and CEO of Retail at Jones Lang LaSalle. “While retailers are faring better than we’ve seen in the past two years, we witnessed a greater number of underperforming store closings this year. In addition, there continues to be a gradual absorption of available space, but rental rates have still not bottomed out nor are they expected to do so for several quarters.”
Retail Capital Markets Highlights“Retail real estate sales recorded a fantastic quarter with significant retail property sales totaling $12.5 billion, which represented an 87 percent increase over Q1 2011,” said Margaret Caldwell, Managing Director of Capital Markets at Jones Lang LaSalle. “Interestingly, portfolio transactions accounted for more than half of the first quarter’s volume, totaling $6.6 billion.”
Additional retail real estate investment highlights include:
Retail Leasing HighlightsVacancy fell 20 basis points year over year, closing Q1 2012 at 6.9 percent. Net absorption was moderate compared to the previous quarter, totaling just over 12.3 million square feet, but consistent with the trend over the past year. Deliveries were relatively lower as well, coming in at 7.2 million square feet. Vacancy rates are approximately 50 basis points below their peak but still 60 basis points higher than their 10-year average, so it is still a tenant’s market and should continue to be through 2013.
Additional retail leasing highlights include the following:
Retail Trends Affecting Real Estate “Performance is critical as both retailers and landlords need to maximize ROI for the remainder of the year,” said Lew Kornberg, Managing Director of Retail Tenant Solutions at Jones Lang LaSalle. “However, employment levels will remain the leading indicator of what we can expect to see next year in terms of growth in the retail sector.”
Trends affecting retail leasing, marketing and performance include the following highlights:
Jones Lang LaSalle Retail successfully manages the largest third-party retail portfolio in the country. Our portfolio is comprised of unique clients and a broad range of retail properties including regional shopping centers, lifestyle centers, strip malls, power centers, transportation facilities and universities along with redevelopment and mixed-use projects. Jones Lang LaSalle offers a full array of retail services to our clients including property management, financial reporting, leasing, tenant coordination, specialty leasing, marketing, research, development and receivership. For more information on Jones Lang LaSalle Retail, visit www.jllretail.com. About Jones Lang LaSalle Jones Lang LaSalle (NYSE: JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.2 billion of assets under management. For further information, please visit www.us.joneslanglasalle.com.
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