Los Angeles, California (PRWEB) June 18, 2013
Bentley Forbes, a real estate investment and development company, has paid close attention to the recovery of the market since the recession. In the retail sector, according to an article recently published by nj.com [May 12, 2013], companies are showing a higher degree of confidence by extending their lease terms. A representative from Bentley Forbes weighs in regarding what this means for the retail sector of the real estate industry.
According to the article, one of the major signs of unrest in this particular area of the market was the reluctance of retailers to sign 10-year leases. Although standard in many instances, these leases were renewed on one-year terms instead of 10. The article explains just how dreary a picture this painted for the retail industry as a whole: "Ryan McCullough, a vice president at CoStar, said it was as if stores had been placed on 'a waiting list for foreclosure.' Parent companies wanted to take a wait-and-see approach before making long-term commitments. At the same time, landlords, looking to hold on to their tenants, lowered rents."
Although rents did drop during the years of the recession, they are nearly back up to the same rates as they were in 2006. According to the article, 2006 rent was an average of $20.92 per square foot and there was a vacancy rate of 7.6 percent. Today, the article asserts, the rent average is $19.37 and the vacancy rate is 6.6 percent. As such, the strategy followed by landlords seems to have paid off, as vacancy rates are lower and rental rates have almost returned to their previous levels.
"During the recession, many landlords took advantage of the opportunity to work with their tenants to restructure leases," comments a representative from Bentley Forbes. "The benefits of this strategy are now being realized as the retail sector is gaining momentum. From an investor perspective, retail in major markets is in high demand and the overall market fundamentals look promising."
McCullough is quoted as saying: "Think of it as a sign of retailer confidence." Many professionals in the industry agree, as lease terms have begun to last longer than one year. But Marta Villa, who is the vice president of CBRE, offers another reason for why these lease lengths may be expanding: "One reason for the longer lease is the lower rents brought on by the recession. If (a retailer's) lease is coming due in the next 24 months, they want to get in there and tie up that space."
The professionals at Bentley Forbes agree that these trends in the retail sector of the real estate industry are indicative of a growing, healing economy.
Bentley Forbes is a privately held, nationally-recognized real estate investment and development company. The organization focuses on the acquisition and operation of multi-family residential and commercial developments spanning many property types and regional markets. For over two decades, the professionals of the company's management team have spearheaded initiatives as developers, managers, and acquirers. Ultimately, they specialize in multi-family residential, Class A office, hotel, industrial/warehouse, and retail properties. The team at this organization is poised to take advantage of real estate investment and development opportunities in multiple regional markets across the nation.