ALBANESECORMIER VALUE
FAVORABLE RETAIL SUPPLY DYNAMIC Strip center occupancy sits near historical peaks, landlords have successfully re-leased the space vacated by bankrupt tenants, and retailers are pushing forward with store opening plans, driving rents higher. Typically, strong fundamentals like these would lead to an increase in supply. However, since ’22, strip center development starts have been minimal, averaging just 0.3% of the existing stock per year, with expectations for them to continue at this exceptionally low rate, which is terrific news for owners. The topic of low strip center new supply has been a significant focus of discussion lately but is not entirely new. From ’01 to ’08, prior to the Global Financial Crisis, bulging new supply averaged approximately ~2.5% of the total stock annually, more than any other traditional real estate sector. In contrast, from ’09 to ’23, new supply averaged ~0.6% per year, the lowest compared to other traditional sectors, setting the stage for today’s strong fundamentals. This report reviews the history of strip center development since the turn of the century and highlights where new developments are more likely to sprout.
After the pandemic, the retail real estate industry has seen its fundamentals strengthen, with REIT management teams highlighting a supply-demand backdrop that is the best in their careers
Source: Green Street, Drawing the Line – Where and When New Developments Pencil. July 11, 2024
49 AlbaneseCormier® | 2025 Annual Report
Made with FlippingBook - Share PDF online