ALBUQUERQUE, NM-Despite the strengthening national economy, the retail property sector here continues to struggle, according to Ken Schaefer, director of brokerage services for Grubb & Ellis|New Mexico.

“At the beginning of the year, our retail market was doing really well – we were backfilling space and the vacancy rate was dropping,” Schaefer recalls. “But, we’ve seen several big box tenants choose not to renew, as well as increased vacancies from national retailers going bankrupt. As a result, the vacancy rate is going to increase 60 to 70 basis points for the second quarter.”

At the end of the first quarter, the retail vacancy rate was 9.4%, according to Grubb & Ellis. Absorption during the quarter was just 3,104 square feet.

During the second quarter, Ultimate Electronics vacated 33,000 square feet, Smith’s grocery store chose not to renew and two furniture stores, Bassett and Thomasville, both decided not to renew their 16,000-square-foot leases. “Right there, we have 100,000 square feet of negative absorption,” Schaefer tells GlobeSt.com.

Although the market is difficult, Schaefer is quick to point out that these vacancies provide opportunities for established retailers to expand and new retailers to enter the local market. For example, Kohl’s took over an 110,000-square-foot space in Coronado Mall that Mervyn’s previously vacated. Under a master lease scenario, the chain has inked an agreement with Panera for a 5,000-square-foot deli-caf