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Property market

-10

12-month change in total vacancy
(bps)

0.6%

​​12-month net absorption
(as % of inventory)

0.6%

12-month completions
(as % of inventory)

5.4%

12-month rent growth
(p.s.f.)

Investment market

$28.7

Investment sales
(H1 2018, billions of $US)

-3.6%

H1 2018 investment sales growth
(%)

4.3%

Average cap rate

flat

12-month change in cap rate
(bps)

  • Demand: Recently announced store closures come to fruition in the second quarter of 2018, though fundamentals remain strong as empty spaces are backfilled.
  • Transactions: Retail transactions declined by a lesser 3.6 percent year-over-year due in part to large portfolio and entity level transactions; but deals continue to be slow to close as underwriting standards tighten further.
  • Markets: Strong-performing assets in primary markets continue to be in high demand, while investors further struggle to justify and underwrite opportunities in smaller secondary and tertiary markets.
  • Sources of capital: Private capital takes advantage of retail opportunities with high-net-worth transaction volume increasing by 35.0 percent year-over-year.
  • Sources of risk: Retail underwriting parameters continue to tighten as the cycle progresses.

U.S. Retail cap rate map

Prime urban retail cap rates remain compressed with few assets on the market capturing strong buyer pools.


Methodology: Cap rates pertain to JLL’s expected average ranges for Prime Urban assets being priced as of Q2 2018.



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