We’ll continue to see negative effects on older or second-tier malls in their respective markets, but the majority of retail properties have benefited from economic growth and the strength of the American consumer over the past several years.
NEW YORK (PRWEB) July 31, 2018
Trepp, LLC, the leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has published new research on retail properties and how their financial performance has bucked the recent media narrative. The full report can be accessed here: http://info.trepp.com/retail-growth-analysis-july-2018-pr.
In spite of the negative retail headlines which have dominated the news cycle since 2016, Trepp’s latest research report shows that the average net operating income (NOI) and occupancy rate for retail properties behind CMBS debt has consistently grown since the financial crisis. According to Trepp’s data on roughly 35,000 retail CMBS loans, the average NOI grew by 2.89% in 2016 and 1.72% in 2017. Retail properties generated $21.18 of NOI per square foot in 2017, which is nearly one full dollar more than the average NOI per square foot for all other property types. In addition, Trepp data show that the average occupancy rate for retail CMBS properties grew 1.43% in 2017, while the average for all other property types actually declined in that time frame.
“Headlines from the past few years have been dominated by big-box store closings and the Amazon effect, negatives for brick-and-mortar retail properties” said Joe McBride, Director of Applied Data & Research at Trepp. “We’ll continue to see negative effects on older or second-tier malls in their respective markets, but the majority of retail properties have benefited from economic growth and the strength of the American consumer over the past several years. Owners are adapting quickly and, sometimes, a big-box closure gives the owner the chance to re-tenant a property at higher rents”
Trepp’s research also examines growing retail financials by US Census regions, metropolitan statistical areas (MSA), and property subtypes over time. To measure performance in these areas, Trepp calculated annual NOI as a growth index indicator with a starting year of 2004 and base value of 100. By region, the Pacific US has grown the most thanks to high levels of tourism in Hawaii and California, as well as millennial spenders in tech hubs such as Silicon Valley and Seattle. The Miami-Fort Lauderdale MSA posted the highest growth index in Trepp’s study, with the Houston and Los Angeles metros not far behind.
By retail property subtype, outlet centers and urban/street retail have posted the highest growth indices determined by Trepp’s index criteria. In particular, outlet properties carved out additional market share and growth during periods of economic contraction due to price-conscious consumers on the lookout for discounts. In more recent years, urban/ street retail has flourished with a rising presence in rapidly booming markets. Regional malls, which have lost a slew of big-box tenants, posted the lowest growth index in the time frame measured.
For additional details, including further breakdowns of retail performance by metro area and subtype, download the full research report: http://info.trepp.com/retail-growth-analysis-july-2018-pr. For daily CRE and CMBS commentary, follow @TreppWire on Twitter.
Trepp, LLC, founded in 1979, is a leading provider of data, analytics, and technology solutions to the global securities and investment management industries. Trepp specifically serves three key sectors: structured finance, commercial real estate, and banking to help market participants meet their objectives for surveillance, credit risk management, and investment performance. Trusted by the industry for the accuracy of its proprietary data, Trepp provides clients with sophisticated, comprehensive models and analytics. Trepp is wholly owned by Daily Mail and General Trust (DMGT). For more information, visit http://www.Trepp.com.