Retail real estate market shows slight improvement, issues remain

Retail property recovery has progressed.

Jones Lang LaSalle noted that the retail real estate market experienced some positives at the halfway point of the year, but there are many obstacles that may only be solved with time.

The firm's Mid-Year Outlook explained that the situation for retail commercial real estate has multiple positive aspects, according to World Property Channel, which cited the report. Leasing volumes improved because of a boom in many cities' populations, but also because of a dearth of top-class building supply.

Property management companies in Washington, D.C., saw the city's rental growth rate improve more than 2.5 percent during the quarter, and the report noted the economy will play a large part in the district's continued success.

There were many areas which experienced improvements in retail rents, but the overall level dropped 1.7 percent at the end of the second quarter compared to the second quarter of last year, the report explained. The level of decline slowed during the second quarter, as the rate only dropped five basis points.

Even with the national disappointment, the rent levels in Tampa and Miami improved markedly, according to JLL. Tampa experienced an improvement of nearly 2 percent, while Miami had a year-over-year growth rate of 13.2 percent during the second quarter. The reason behind it was likely large room for market recovery because of the major issues Florida experienced during the recession.

"The retail [real estate markets that experienced] the biggest falls were Florida, Las Vegas and Phoenix," Greg Maloney, president and CEO of Jones Lang LaSalle, told the website. "Now, as we see a recovery, they are outpacing places like [cities in the] Midwest."

Las Vegas rents could have a growth rate of more than 8 percent by 2015, while growth in Phoenix could eclipse 4 percent in 2016, the report said. Furthermore, Raleigh should improve to around 4 percent during that time period.

Even with the positives in some parts of the country, full recovery could be a long way off. The report added that new development has not occurred throughout much of the country, the report added. Maloney noted that it could be at least another year and a half before a positive development trend is noted nationwide.

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