Vacancy Rate: We never want to be the bearers of bad news, but somebody has to do it: vacancy in Eastern Massachusetts continues to trend upward. In 2015, the region experienced a rise in the vacancy rate from 8.5% to 8.8%. We continue to see national and regional chains close stores, as we did a year ago when the rate jumped from7.8% to 8.5%. This year major contributors to the higher vacancy rate range from small tenant closings such as Radio Shack and Coldwater Creek to large department stores units including Sears, Kmart, and JCPenney.
Size Classifications: In recent years, a general trend in Eastern Massachusetts was the increase in vacancy rates among smaller stores, which was largely attributable to mom-and-pop stores that could not recover from the Great Recession. This size category also experienced a rise in vacancy rates this year, but this time national chains were a major contributor. Radio Shack in particular impacted these categories - spaces under 2,500 square feet saw an increase from 13.1% to 13.5%, while the 2,500-4,999 square foot categories increased from 10.9% to 11.7%. The electronics chain impacted both. The 10,000-24,999 square foot bracket also experienced a significant vacancy rate increase from 7.3% to 8.0%, resulting mainly from store closings by Staples, Mill Stores, and Work Out World.
Occupancy also slipped in categories under 10,000 square feet. Conversely, however, some larger categories gained. Market Basket openings helped push up the 50,000-99,999 square foot segment, while Target, Wegman’s, and Wal-Mart all had a hand in the occupancy share gain in the category above 100,000 square feet.
Town Rankings: The top 10 town rankings by retail square footage remain intact from a year ago. There was some minor shuffling within the top 10, with Burlington moving up from 7th to 5th by virtue of new development projects, most notably 3rd Ave.
Among communities with at least 500,000 square feet of retail space, Abington remains on top of the rankings for lowest vacancy rate in the region. Two smaller towns added enough new retail space this year to get them into the top 10 for lowest vacancy rate: Westwood, as a result of the University Station opening, and Concord. Lexington, Chelmsford, Mansfield, Braintree, and Acton are also newcomers to this top ten ranking.
Seven of the top ten towns with the highest vacancy rates repeat from last year. Only Hanover, Kingston, and Middleton are new to the list. JCPenney and Sears closings were the cause of the former two towns moving up in the ranking.
On the negative side, JCPenney dropped 207,900 square feet by closing its Taunton and Hanover stores, the largest decline in total space in the region. Work Out World and Mill Stores contracted by 155,400 and 140,900 square feet, respectively. The runaway loser for unit reduction was Radio Shack, which closed 37 locations. Staples was a distant second with 10 store closings, followed by Wet Seal with seven closings.
The full report contains much more detailed information on these categories and more, and 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 from May 2014 to May 2015. The study area includes 189 cities and towns, representing more than 3,500 square miles (44% of Massachusetts’ land area) and approximately 4.96 million people (75.8% of the state population).
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