Vacancy Rate: An additional 553,700 square feet of retail space became vacant this year, resulting in a vacancy rate of 9.1%, a moderate increase from last year’s 8.8% rate. Retail space inventory also gained modestly, with an increase of 0.5%. New shopping centers that opened the prior year continued to phase in additional space, but no major new shopping center opened in the region this year. Big box closings, notably Sam’s Club, JCPenney, and Kmart, were the primary cause of the increase in vacancy this year. Citibank and City Sports departures from the region also added to the vacancy level.
Size Classifications: It was another negative year for small stores in the Under 2,500 SF category. This classification remains the largest segment of the retail market; however, its market share in the region slipped to 20.0%. Independents continue to represent the overwhelming majority of small store closings, although chains like Radio Shack, Curves for Women, Citibank, and 7-Eleven contributed as well. The only size classifications that showed improvement in the vacancy rate this year were the 25,000-49,999 SF bracket, which declined from 7.0% to 6.3%, and the 50,000-99,999 square foot segment, which declined from 6.6% to 5.9%, largely the result of new store openings by LA Fitness, Big Lots, TJMaxx, Ocean State Job Lot, Primark, and Round 1.
Town Rankings: The City of Boston again leads the region in total retail inventory. Cambridge ranked second again, while Natick jumped back ahead of Brockton for third place. Abington, Bedford, and Hingham were healthiest by occupancy, with vacancy rates below 3.0%. None of the top ten had rates above 4.0%. The highest vacancy rate was Taunton at 20.4%. Five towns are new to the top ten this year, including Bedford, Lynnfield, North Andover, Raynham, and Burlington.
Retailer Activity: The retailer adding the most retail space to the region was Target, with a new 160,000 square foot at Landmark Center in Boston. Life Time Athletics and Wegmans, both new additions to University Station in Westwood, ranked second and third. The new Walmart Supercenter in Wareham was partially offset by the vacancy of its traditional store in that town, keeping it out of the top three positions. Dollar Tree also added about 100,000 square feet to the region, the only small store format to place high on this list.
Also notable is the new 77,000 square foot Primark store in Boston, representing its first US store. Dollar Tree led the way in store count growth, netting 11 new locations.
The retailer closing the most space was Sam’s Club, phasing out its last two stores in Seekonk and Fall River. JCPenney closed its Natick Mall store, clearly its largest unit in the region at 192,700 square feet. Wegmans will replace this anchor space with a 125,000 square foot store in 2017, and lease the remaining space to complementary tenants. Citibank closed 15 branch locations, the most in the region.
Retail Categories: Non-retail uses are absorbing significant shopping center vacancy. In fact, Medical & Dental led all categories this year, netting 25 more units and ranked second in terms of incremental square footage. Fitness clubs continue to add space including some newcomers to the region: Fit Factory opened two units this year and Life Time Athletics added the largest fitness center in the region to date. Planet Fitness, Crunch Fitness, and LA Fitness added stores as well.
The complete report contains much more detailed information on these areas and more, and will be available soon at KeyPointPartners.com.
Bob Sheehan, Vice President of Research
The KeyPoint Report examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during the year ending May 2016. This study includes 189 cities and towns, representing more than 3,500 square miles (44% of Massachusetts’ land area) and approximately 5.2 million people (76% 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 nearly 262 million square feet of retail space and nearly 60,000 retail establishments. The KeyPoint Reports contain a summary and analysis of market trends and activity for each studied area.
The KeyPoint Reports: Visit KeyPointPartners.com and click on Retail Reports at the top.