Despite Lower Demand, Retail Availability Remains Tight

Executive Summary

• The overall retail availability rate remained unchanged in Q3 at 4.7% despite retail store closures and a decrease in net absorption. Low levels of new construction kept the availability rate stable.
• Net absorption fell by 52% quarter-over-quarter to 3.9 million sq. ft., the lowest amount since Q2 2020. Many retailers remained cautious about leasing more space due to economic uncertainty.
• Rising construction and borrowing costs have significantly curtailed new development, with completions dropping by 49% quarter-over-quarter to just 4.3 million sq. ft.
• Due to the continued scarcity of available space, average asking rent increased by 0.6% quarter-over-quarter and 2.5% year-over-year to $24.36 per sq. ft.
• Several secondary and tertiary markets had strong demand growth in Q3, particularly in the Midwest, as prime urban areas have become more expensive.