WALNUT CREEK, CA—The Walnut Creek retail market is one of the premier shopping destinations in the East Bay and home to a wide variety of premium branded retailers. Tiffany & Co., Neiman Marcus, Nordstrom, Coach, Crate & Barrel, Banana Republic, Talbots, Apple and Anthropologie are some of the stores found there. This open-air retail landscape successfully mixes restaurant, retail and entertainment venues, including space at the iconic Broadway Plaza.

Overall vacancy in downtown Walnut Creek rose from 4.8% to 5.1% during fourth quarter 2016, continuing to reach its highest level in five years, according to John Cumbelich & Associates' recent research report. For the first time since fourth quarter 2014, downtown had negative net absorption of 4,048 square feet.

Although this is a substantial difference from third quarter's positive net absorption of 105,576 square feet, the third quarter's positive net absorption was largely the result of the 132,623 square feet in new inventory at Broadway Plaza. Excluding the new Broadway Plaza inventory, the rest of downtown Walnut Creek actually experienced negative net absorption of 27,047 square feet in third quarter. Downtown has continued to experience negative net absorption outside of Broadway Plaza for the second straight quarter, however, the occupancy rate remains healthy at 94.9%, says John Cumbelich & Associates.

Vacancy in historic downtown continued increased from 5.1% to 8.2%, while vacancy in new downtown, that is, south of Mt. Diablo Boulevard, slightly increased from 4.22% to 5.56%. Historic downtown's share of overall vacancy increased in fourth quarter, rising from 28% to 35%.

The fourth quarter increase in vacancy and negative net absorption in downtown can be attributed to the increasing rental rates and the relocation of existing downtown retailers to Broadway Plaza, says Cumbelich. For example, in fourth quarter 2016, H&M relocated to Broadway Plaza from its previous downtown location on Mt. Diablo, leaving behind a 26,074-square-foot vacant space.

The market rent set by premium retailers located at the Broadway Plaza and the surrounding buildings located on Mt. Diablo and North Main Street have made downtown a high barrier-to-entry submarket. The downtown retail market recorded an increase in total vacancy rising from 127,018 square feet to 133,113 square feet in fourth quarter 2016, according to the report.

The vacancy rate has risen largely due to the lack of leasing activity in fourth quarter, as well as the relocation of H&M. In addition to H&M, major retailers that have opened new locations at Broadway Plaza this past quarter include Zara, True Food Kitchen and Kendra Scott. Phase III of Broadway Plaza's expansion project will begin during this quarter, with Apple's new store slated to open in the summer of 2018.

Another store that relocated from elsewhere in Walnut Creek was Anthropologie. It recently took the corner location at South Main and Olympic previously occupied by Barnes & Noble. This Anthropologie & Co. concept store in Walnut Creek is an elevated version of the company's other stores. While it has the same type of merchandise as other Anthropologie stores, it also includes wedding dresses, expanded housewares and furniture, greenery, cosmetics, limited-edition clothing, a café and an impressive staging/display of its merchandise in many vignettes around the store, GlobeSt.com learns. Another Bay Area Anthropologie & Co. location just opened in Palo Alto.

As previously reported, Broadway Plaza unveiled its redesign to the public late last year.

Instant Insights /

Retail Vacancies Reach Highest Level in Five Years

Related Stories

Recommended For You