Wednesday, May 23, 2018

Eastern Massachusetts Retail Report Preview

The 2018 KeyPoint Report for Eastern Massachusetts/Greater Boston, based on our proprietary GRIID™ retail database, is in production and should be available by the end of June. While you’re waiting, here’s a preview - but consider these results preliminary and subject to change:

Vacancy Rate: Eastern Massachusetts experienced a substantial rise in the vacancy rate to 9.5% this year from a level of 8.6% in 2017, reflecting a 11.3% increase in unoccupied space. At the same time total inventory ended the year at 196.4 million square feet, a gain of 1.0%, nearly the same square footage as the increase in vacant space. This resulted in a nominal negative absorption rate of only 21,900 square feet. A considerable number of large format store closings and chain liquidations were responsible for the disappointing outcome, which could have been even worse without a significant number of retail conversions to non-retail space cushioning the impact.

Size Classifications: Where most size classifications yielded lower vacancy rates last year, Eastern Massachusetts saw a reversal of fortune in 2018. Vacancy rates in all categories except 200,000+ SF (which represents only 1.6% of the retail inventory in the region) increased this year. Worst hit was the 25,000-49,999 SF classification, which includes many of the Toys R Us and Benny’s vacant boxes resulting from chainwide liquidations. If there’s a silver lining, it’s that the under 2,500 SF classification, largely mom-and-pops, was least impacted, which hasn’t been the case in recent history.

Town Rankings: The five communities encompassing the most retail space remain the same for the third year in a row, with Boston and Cambridge maintaining their dominance in first and second position. Natick, Burlington, and Brockton follow. Westwood made the leap from 32nd place in 2017 to the top spot in the region for lowest vacancy rate, coming in at a scant 1.6%, thanks largely to HomeSense occupying a vacant Sports Authority box at Westwood Station.  Filling out the top four communities are North Andover, Stoneham and Somerset, which were not even in the top ten a year ago. Taunton had the highest vacancy rate in Eastern Massachusetts for the second straight year, ballooning more than 1,000 basis points to 29.9% as a result of the Sears closing at Taunton Galleria.


Retailer Activity: The retailer gaining the most retail space in the region was Wegmans, adding a two-level store at Natick Mall and a second unit at the redeveloped Meadow Glen in Medford. In second place was 7-Eleven, completing its brand conversion from Tedeschi Food Shops which it acquired in 2015. Market Basket rounded out the top three by adding new stores in Lynn and Fall River. By number of new units, 7-Eleven added 68, the most of any retailer. Metro PCS was a distant second, adding 16 stores while another wireless provider, T-Mobile, increased its store count by 14 locations.

With the Toys R Us liquidation imminent, all locations are considered closed for the purpose of the Eastern Massachusetts report. As a result, this once formidable toy store operator tops all retailers for largest space reduction. Sears closings in Burlington, Dedham, and Taunton placed this department store firmly in second place. Tedeschi Food Shops follows in third. Tedeschi Food Shops also led all retailers with the loss of all its 107 remaining stores, most of which are now 7-Eleven. Payless ShoeSource trailed with 18 store closings followed closely by Subway, dropping 17 units.

NOTE: Readers can expect to see much more detail on retail changes in Eastern Massachusetts when we publish our 2018 KeyPoint Report for Eastern Massachusetts/Greater Boston. Planned for this year’s release is a special section on regional enclosed malls, widely regarded as the most troubled segment of retail today. Stay tuned!

Bob Sheehan, Vice President of Research
BSheehan@KeyPointPartners.com

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 2018. 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, South-ern New Hampshire and Greater Hartford, Connecticut. These markets encompass approximately 44% of all retail space in New England. GRIID™ has information on nearly 264 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 for 2018: coming soon!

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