Retail vacancy in the Treasure Valley decreased slightly in June, yet further improvement may be years away, according to Thorton Oliver Keller’s recent Market Review newsletter. Vacancies decreased slightly from 13.7 percent to 13.5 percent in June, marking the third month that number has gone down.
“The big story now in retail is that it is picking up a bit. Some tenants are now willing to come back, and sign three- to five-year lease terms,” Mark Schlag said. Schlag is a retail brokerage specialist at TOK.
He emphasized that full recovery in the retail market will continue to be a slow process.
“National retail sales just fell again in June. That is maybe a warning signal that recovery is going to be slow and painstaking. Consumers are still spending less. Lease rates are going to have to be aggressive, because tenants are going to be driving for very hard deals for some time.”
Schlag said that until the job market improves in Idaho and the rest of the country, and Americans start spending again, it will adversely affect the retail sector. However, there may be a bright spot for some tenants.
“For well capitalized tenants that have existing businesses, they are upgrading locations. There are a lot of good deals out there.”
What might also contribute to a decrease in retail vacancy, may be a return to the “fundamentals that matter most” as Schlag referred to it as.
“Good location, traffic counts, being well located, with residential locations around it. Those are things that should have always been there, but this economy has forced us to come back to those fundamentals,” he added.