Vacancy Rate: After suffering through the most dreadful economy in more than half a century, the Eastern Massachusetts retail climate is finally showing some giddy-up in the pace of activity. Earlier this year the retail vacancy rate fell below 8.0%, perhaps its version of the “Mendoza line”, for the first time since 2008.
The vacancy rate in the region currently stands at 7.8%, declining more than a full percentage point since last year. Although this is the third year in a row that the vacancy rate has declined, it is the largest percentage drop in more than a decade. In order to accomplish that, nearly 2.0 million square feet of unoccupied space in the region were absorbed. Net absorption in Eastern Massachusetts ended the year at 2.05 million square feet, indicating that new construction was limited.
Size Classifications: Another bright note in this year’s results is the fact that not only was there improvement in overall vacancy, but also vacancy rates in all size classifications dropped significantly - other than the 200,000 square feet and above category, which remains fully occupied. Last year, when we saw a nominal decline in vacancy, results across all size classifications were mixed, with vacancy in small tenant categories creeping higher.
towns ending the study period with vacancy rates under 5.0% compared to just 15 last year.
At the opposite end of the scale, there are a number of towns that continue to be burdened with excessive vacancy. Six towns remain among the top 10 with the highest vacancy rates from the same group last year, including North Reading, Westborough, Norwood, Swansea, West Bridgewater, and Lawrence. Rates among the top 10 range from 20.7% in North Reading to 14.9% in Lawrence. All the carryovers have trended down significantly, with the exception of North Reading, which inched up from 19.4% last year. North Reading’s poor ranking requires some explanation, however. The vacancy rate in towns with limited inventory can be skewed heavily by one or two large format spaces, as is the case in North Reading. Vacant Stop & Shop and Sears Hardware stores represent 68% of total vacancy in that town.
Retailer Activity: Among the top growing retailers in Eastern Massachusetts, Market Basket added 221,700 square feet to the region, the most of any retailer, by opening three new stores in Brockton, West Bridgewater, and Westford and expanding its Chelmsford store. Adding the most units was fast food restaurant chain Subway with 33 new locations. By closing its nine locations in Eastern Massachusetts, Foodmaster tops the list of contracting retailers, vacating 235,000 square feet of space. Leading the decline in store count with 10 stores are Bank of America and Fashion Bug, which was phased out of business when acquired by Ascena Retail Group as part of its Charming Shoppes acquisition. All 600 Fashion Bug stores were closed.
The full report contains much more detailed information on these categories and more, and features an updated, easy-to-read design. It will be available soon at KeyPointPartners.com.
Bob Sheehan, Vice President of Research
This KeyPoint Report examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during the 11-month period beginning April 1, 2012 and ending Mary 31, 2013. The study area includes 189 cities and towns, representing more than 3,500 square miles (44% of Massachusetts’ land area) and approximately 5.05 million people (76.2% of the state population). KeyPoint Partners’ GRIID™ database maintains detailed information on virtually all retail properties in three key regions: Eastern Massachusetts, Southern New Hampshire and Greater Hartford, Connecticut. These markets encompass approximately 44% of all retail space in New England. GRIID™ has information on more than 256 million square feet of retail space and approximately 59,600 retail establishments. The KeyPoint Reports contain a summary and analysis of market trends and activity for