2. Retail Market Snapshot
Indianapolis • Third Quarter • 2012
Market Tracker Vacancy (All Types) Net Absorption (Qtr.) Net Absorption (YTD)
*Arrows indicate Qtr. trend 7.4% 187,936 157,610
Overview
The Indianapolis retail market improved slightly during the third quarter of 2012 by registering
187,936 SF of quarterly net absorption for all retail types. This occupancy growth reversed
the losses experienced in the second quarter and helped year-to-date net absorption climb
to 157,610 SF. Within the Indianapolis retail market, product type variations in quarterly net
absorption included malls (+435 SF), power centers (+838 SF), neighborhood centers (+8,785
SF), strip centers (+22,010 SF), and community centers (+70,384 SF). Correspondingly, the
Indianapolis Retail
total retail vacancy rate declined to 7.4% in the quarter, thereby matching the rate in effect at the
3Q12 3Q11
beginning of the year but remaining 30 bps below the rate in effect a year earlier. Among Cassidy
Vacancy
Turley tracked retail product types, vacancy rates varied from neighborhood centers (11.8%),
All Retail Types 7.4% 7.7%
strip centers (11.1%), community centers (10.8%), malls (7.5%), to power centers (6.7%).
Neighborhood Centers 11.8% 12.1%
Community Centers 10.8% 11.5% Average quoted asking rental rates for all retail types declined from the previous quarter,
Power Centers 6.7% 6.7%
ending the third quarter of 2012 at $11.66 PSF. That compares to $11.99 PSF in the
Strip Centers 11.1% 12.9%
second quarter of 2012 and $12.31 PSF at the end of the third quarter of 2011. Currently,
Malls 7.5% 7.5%
the asking rate for all retail types represents a 481 bps decline over the average asking rate
Net Absorption (Qtr.)
in effect during the balance of 2011. Average asking rates among product types for the
All Retail Types 187,936 33,203
third quarter varied from power centers ($17.46), strip centers ($14.11), community
Neighborhood Centers 8,785 -76,183
centers ($11.31), neighborhood centers ($11.09), to malls ($10.86).
Community Centers 70,384 90,770
Power Centers 838 54,899 Promisingly the details of the September retail sales report showed broad strength, with
Strip Centers 22,010 1,021 sales outside autos, gasoline and building materials—a closely followed barometer of
Malls 435 -159,043 consumer spending—climbing well above expectations at 0.9%. Although far from robust,
the most recent sales numbers do indicate resilience on the part of consumers, which
Vacancy Rate Types)
Vacancy Rate (All (All Types)
bodes well for fourth-quarter retail demand and is particularly good news for retailers
10%
heading into the year-end holiday sales season.
8%
6% Forecast
4% • ur retail forecast continues to call for a modest increase in overall retail and restaurant
O
2% sales, particularly the fast casual segment. Expect growth at both ends of the spectrum,
0% with value and discount retailers as well as luxury brand retailers posting marginally
2008 2009 2010 2011 2012
higher sales volume. Improving balance sheets have translated into increased retailer
activity in the market and this is expected to continue.
NetNet Absorption (Qtr.) (All Types)
Absorption (All Types)
350
• etailers will continue to examine their portfolios and shift capital to more profitable
R
300
stores and locations. A- and B-quality properties in established communities with
Square Feet ('000s)
250
200 adequate commuter exposure will see increased occupancy but at net effective rents
150
frequently less than levels seen prior to the recession.
100
50
• n the development front, expect more mixed-use developments constructed in dense
O
0
3Q 08 3Q 09 3Q 10 3Q 11 3Q 12 market areas and limited demand for select multi-tenant or speculative development in
primary locations, with more widespread development at least 24 to 36 months away.
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