Home Front

A blog about the economy and the Sacramento-area real estate market.

August 13, 2008
As housing slumps, store vacancy rates continue to rise
One thing just leads to another in real estate. It wasn't so long ago that residential real estatefountain.jpg was declining  and declining while the commercial sector that builds stores where we shop was still going gangbusters. Well, now it's caught up with the shopping centers, too.
  It's kind of uncanny how much it resembles the path taken by the residential sector. Unbridled faith in the future led to an excess of investment capital, overbuilding and then an inability to stop when all the signs said the party was ending.

Bottom line, the big power centers with their Wal-marts, Best Buys, Home Depots and Targets and other so-called "big box" stores are hanging in there pretty strong. The big always survive. But it's not so easy for centers that need the mom and pop-type smaller stores. Mom and pop are pretty tapped out with their home equity declining and inability to get credit.
As the housing slump has worsened vacancies have risen. An estimated 7.6 percent of retail space across the four-county region was vacant at the end of June. That's up from 5.6 percent at the end of last year. The thinking is: it's going higher as long as we can't break this vicious housing downturn.

Enough from me, though. If you want the real news check out this interesting August retail update from commercial real estate broker Colliers International.

Image: Herschman architects

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