Why Retail Inventories Spiked in 4Q17

Eric Carlton

Investment activity for single-tenant retail product picked up in the second half of 2017, and particularly in the fourth quarter. However, it wasn’t an increase in demand that drove the activity—as was the case in the local office and multifamily asset classes of several Southern California markets. Instead, it was an increase in supply that gave way to existing demand, according to Erik Carlton of Colliers International, who works on retail single-tenant deals across the country. The reason for the increase in demand? Some sellers were responding to the length of the cycle and, following the announcement of new tax reform, thought 2017 was a good time to exit.

“Last year, people were seeing the writing on the wall,” Carlton, an EVP of retail services at Colliers International, tells GlobeSt.com. “There was so much product on the market at the end of last year because our sellers wanted to get it out as soon as possible because they didn’t know what was coming. The market was a little more finicky in the third and fourth quarter of last year, and buyers could really pick and choose, and they could play off of each other. The fourth quarter of last year had a huge volume of deals.”