The Washington area has the lowest retail vacancy rate in the nation, according to a new report.
The vacancy rate was 5.7 percent in the first quarter of 2010, well below the national average of 9.5 percent, according to the report released Thursday by Delta Associates. The rate was up from last year, when it was 4.6 percent.
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Metro area
Retail vacancy rate
D.C.
5.7%
New York*
6.1%
San Francisco*
6.3%
Boston*
7.1%
Los Angeles/Orange County
7.6%
Denver
9.9%
Chicago
10.4%
Houston
11.3%
Dallas-Fort Worth
12.0%
Atlanta*
12.5%
Phoenix*
12.9%
Note: First quarter 2010 figures, except those noted with a *, which are vacancy rates as of December.
Source: CoStar, Delta Associates
Greg Leisch, the chief executive officer of Delta, a commercial real estate research firm in Alexandria, said he saw 2010 as the bottom of the commercial real estate cycle.
“While we are recession-resistant, the region is not recession-proof,” Leisch said. It will still take a few years for supply and demand to reach equilibrium for area retail, he said.
“>
Metro area
Retail vacancy rate
D.C.
5.7%
New York*
6.1%
San Francisco*
6.3%
Boston*
7.1%
Los Angeles/Orange County
7.6%
Denver
9.9%
Chicago
10.4%
Houston
11.3%
Dallas-Fort Worth
12.0%
Atlanta*
12.5%
Phoenix*
12.9%
Note: First quarter 2010 figures, except those noted with a *, which are vacancy rates as of December.
Source: CoStar, Delta Associates
“We have been very fortunate,” said Henry Fonvielle, executive vice president of the Rappaport Cos., a retail brokerage firm based in the Washington area. “If you’re going to be in the commercial real estate industry, Washington, D.C., is where you want to be.”
A 1.8 percent growth in population in 2009, better-than-average employment, and relatively high area incomes contributed to the low vacancy rate, the report said. For example, the unemployment rate for the metro area was the lowest in the nation in February, at 6.9 percent.
Still, retail performance has varied based on proximity to the District, Leisch said. Vacancies at grocery-anchored shopping centers in the region’s “core” — Washington, Arlington County and Alexandria — stayed basically flat from 2008 to 2009, while those in the “inner ring” (Fairfax, Montgomery and Prince George’s counties) and “outer ring” (Loudoun and Prince William counties) ticked up about 2 percentage points.
Still, retail performance has varied based on proximity to the District, Leisch said. Vacancies at grocery-anchored shopping centers in the region’s “core” — Washington, Arlington County and Alexandria — stayed basically flat from 2008 to 2009, while those in the “inner ring” (Fairfax, Montgomery and Prince George’s counties) and “outer ring” (Loudoun and Prince William counties) ticked up about 2 percentage points.
The commercial side of the real estate market is still mixed, said Andy Bauer, regional economist with the Baltimore branch of the Richmond Federal Reserve.
“It’s all about absorbing the existing space,” he said.
The metro area has more than 119 million square feet of retail space, over half of which is in Northern Virginia.
