The Washington area still is attracting and retaining shops and businesses despite slower job growth and reduced federal spending, according to a report released Tuesday.
Research firm Delta Associates said growth in leased retail space is expected to continue with a shift toward new development in buildings that combine residential and retail space.
“Retail development is still strong,” said Elizabeth Norton, mid-Atlantic research director at Delta Associates. “But there’s a shift towards mixed-use developments.”
Delta found unemployment in the Washington region among the lowest in the nation, but predicted job growth would slow in coming years. The group said decreases in federal spending led to this slowdown and economic growth would be less robust in the coming years.
“The growth is still healthy, despite [job growth] being below the average,” Norton said.
She said low vacancy rates and increases in retail rent indicate strength in the retail sector.
“There’s still a demand for retail,” Norton said. “I think it’s under-served in the Washington area.”
According to the Delta report, the Washington region has more than 112 million square feet of retail space, the fourth largest among metropolitan areas in the country. Of this space, more than half is situated around a grocery store, where only 2.3 percent of retail space is vacant. Delta said as the number of open-air, mixed-use developments increased, there are concerns that other types of shopping centers will be vacated. The report predicted this closed-air market should remain stable, but vacancy rates could increase slightly.
