The 9.1-million-square-foot Lexington community-neighborhood shopping center market had a quiet second quarter. Second quarter vacancy remained low at 7.6%, unchanged from the prior quarter and down 80 basis points over 12 months, according to Reis. First Glance data reports the rate at 8.1% in the third quarter. After a solid first quarter performance (60,000 square feet), net absorption trailed off the second quarter, to only 2,000 square feet. Net absorption averaged 53,000 feet per year (for a total of 477,000 square feet) from 2003 to 2011, so the current year is well on its way to meeting prior totals. New construction totaled 351,000 square feet from 2003 to 2011, for a 39,000-square-foot per year average. No community-neighborhood shopping center space finished in 2010 or 2011, and none is forecast for 2012. The only retail project that has completed here is the 300,000-square-foot Bannon Crossing Power center, which completed in May. Reis forecasts no major changes in the vacancy rate through 2015.
Reis reports average asking and effective rents of $13.89 psf and $12.11 psf, both up 0.1% for the quarter and up 0.7% and 0.9%, respectively, over 12 months. Rents gains averaged 0.8% and 0.5%, asking and effective, from 2003 to 2011. This is a low-rent retail market. First Glance data from Reis indicate a second quarter asking rent of $13.93 psf. Reis forecasts gains of only 0.9% asking and 1.2% effective in 2012. Annual gains for both measures exceeding 2.0% are not forecast until 2014.
NAI Isaac reports occupancy for Regional Malls at 99.84%, for Neighborhood centers at 88.87%, for Community/Power Centers at 97.10%, for a total occupancy rating of 93.95%. NAI reports that the bulk of the retail inventory is divided between the Community/Power and Neighborhood Center categories which accounts for approximately 10.4 million SF of the total gross leasable area.