It might not seem huge but it is! The U.S. retail vacancy rate declined to 7.3 percent in the third quarter from 7.4 percent at midyear, according to CoStar Group, as almost no new space is being built. Retailers leased some 12.9 million square feet in the 62 largest U.S. markets, marking the fifth consecutive quarter of positive absorption since the 26.7 million-square-foot rise in vacancies recorded in the first half of 2009, CoStar says. Though 12 of the top 20 markets posted vacancy increases in 2009, only three saw more space vacated than was absorbed in the third quarter: Phoenix (which saw 749,000 square feet go vacant), Atlanta (408,000 square feet) and Chicago (313,000 square feet).
Houston, whose residential market stayed buoyant despite national housing woes, absorbed the most retail space during the third quarter: 3.02 million square feet. Supply-constrained markets in the Northeast and mid-Atlantic rounded out the top five markets with positive absorption: New York’s Long Island (2 million square feet), Washington (1.83 million square feet), Boston (1.78 million square feet) and northern New Jersey (1.76 million square feet).
Leasing agents are having an easier time keeping properties full, says CoStar. The number of properties that fell below 80 percent occupancy (a benchmark of severe distress) during the quarter dropped from the fourth quarter of 2009, when the market hit and all-time low.