"There's been a methodical, consistent growth in retail," John Applebee, senior vice president with Grubb & Ellis/BRE Commercial, tells GlobeSt.com. "It's been strong for the past several few years."
The Valley's strong population growth, which added more than 100,000 new residents to the area for the ninth consecutive year, and a job growth rate that pushed the city to second in the nation, were the key factors in the retail trend, a Grubb& Ellis/BRE Commercial report shows. "Retail growth follows new home sales so as new home sales have been increasing every year so has the new retail development," Applebee says, adding the Valley's growing fringe areas saw the largest increase in retail development.
Low interest rates also helped ignite consumer confidence, combining with other factors to keep new retail development high. Those same factors pushed vacancy rates down to 5.9% during 2003, making it the ninth consecutive year for single digits and the seventh year it was below 8% for the 101.2-million-sf inventory.
Total net absorption also showed signs of improvement with the metro Phoenix market surpassing 5.5 million sf of total net absorption for the first time since 1994, when net absorption topped five million sf. Last year also pushed net absorption rates beyond the 10-year annual average of 3.3 million sf.
While the demand for space continued to fuel new construction that added 4.5 million sf of new retail centers to the Valley during 2003, rental rates moved up minimally in established properties while new construction saw only minor rent increases.
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