The KeyPoint Report on retail real estate in Eastern Massachusetts/Greater Boston will be available soon at KeyPointPartners.com. Here are just a few highlights from the findings in this year’s report:
Market Overview & Vacancy:
The Eastern Massachusetts region increased in total retail footprint by 2.6 million square feet, or 1.4%. As of March 1, 2011, retail real estate inventory in Eastern Massachusetts totaled 189.3 million square feet. After two years in which we saw retail vacancy rise by an astounding 43.3%, topping out at 18.0 million square feet, vacancy finally began to subside, dropping to approximately 17.0 million square feet, reducing unoccupied space by just over 1.0 million square feet This equates to a 9.0% vacancy rate within the region, a significant drop from last year’s 9.7% vacancy level and the first decline in vacancy since 2005.
With the modest increase in retail inventory coupled with a significant reduction in vacancy, Eastern Massachusetts experienced net space absorption of 3.7 million square feet, the first time the region experienced positive absorption of more than 1.2 million square feet since 2005.
Cities and Towns:
City and town rankings by total inventory include the same top 10 from last year. Boston, Cambridge, and Brockton again hold the top three spots. Lawrence remains the city/town with the highest vacancy rate, coming in at 18.3%, but significantly below the 23.0% level recorded last year. Wilmington jumped into the top 10 from 52nd place by way of the closing of the 37,400 square foot Dinette World & Lighting Center. The lowest vacancy rate in the region (for towns with 500,000 s/f or more of retail space) was recorded by Abington at 1.4%, remaining the “healthiest” retail community in Eastern Massachusetts from a year ago. Wrentham finished the study period in second place with a 1.6% vacancy rate, buoyed by Wrentham Village Outlets.
Expansion/Contraction by Store Size:
All store size categories experienced significant declines in vacancy with the exception of the 5,000-9,999 square foot stores. The 2,500 square feet and under component is the only category to lose square footage - a large portion of this segment consists of mom-and-pops, and significant fallout of these independent operators has resulted in a net loss in the 2,500 square feet and under category, reflecting a market share decline over several years from 24.0% to 20.5%.
It was another quiet year for developers, with only a handful of new projects coming on line in 2010. The bulk of new space came by way of large format, freestanding units such as Target, Lowe’s, BJ’s Wholesale, and Market Basket supermarkets, as well as the South Shore Plaza expansion which added Nordstrom and Target.
A number of big box retailers expanded last year, with BJ’s Wholesale Club adding approximately 327,000 square feet to the region with three new locations, and Target increasing its presence in the region by 229,700 square feet. Heading the list of retailers that increased their store counts during the study period was 7-Eleven with 41 stores. Both Walgreens and Get in Shape for Women were next, each improving their positions with 13 new units. The TJX shuttering of its AJ Wright division resulted in a space reduction of 361,300 square feet, the most of any retailer in the region. Blockbuster Video contracted by 180,300 square feet, and was down to only nine stores in the Eastern Massachusetts region at the end of the study period as it attempts to survive in the world of e-commerce. In terms of store count, White Hen Pantry, Blockbuster, AJ Wright, and Curves for Women experienced the largest declines.
Bob Sheehan, Vice President of Research
The KeyPoint Report examining the retail real estate marketplace for Eastern Massachusetts/Greater Boston focuses on the 12-month period beginning March 1, 2010 and ending May 1, 2011. The report examines supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories. The studied market includes 189 cities and towns representing more than 3,500 square miles (44% of Massachusetts' land area) and nearly 5 million people (76% of the state population).