CBRE’s big box report shows optimism for 2016
Big box retail space throughout Tucson saw healthy leasing activity in 2015, particularly spaces in the 10,963 to 100,000-square-foot range, according to CBRE Research’s Big Box Report of 2015.
“Over the past year, the Tucson area experienced an increase in demand for a shrinking supply of top-tier retail anchor space,” said Nancy McClure, vice president, CBRE. “With just six vacant retail boxes of ±30,000 SF or more, retailers are sure to try and secure the best of the best.”
There is cause for optimism in 2016, according to the report.
McClure points out that the state of the retail market is not without challenges. She said that the supply of lower-quality spaces, often located mid-block and in areas that have little to no demand from retailers, has increased.
“Expanding retailers have been focused on the top-performing trade areas and centers with category leading anchor tenants,” McClure said. “Often, today’s retailers are seeking space of a size and quality that is unavailable in our market; because of this, Tucson has benefited from new ground-up construction with more to come in 2016 and beyond.
“Moreover, the high demand for core locations has spurred redevelopment of tired centers with antiquated layouts and floor plates—barriers to entry will always make these prime corner locations the target of developers who understand how to buy and reposition these sites for today’s retailer rent parameters.”
Looking at the year-over-year numbers, by year-end 2015 there were 49 spaces greater than 10,000 square feet available in the market, totaling 959,230 square feet of big box space. This compares to 54 spaces greater than 10,000 square feet and 745,856 square feet at year-end 2014.
“Many of the 49 vacant boxes that make up Tucson’s total of ±959,230 SF are smaller scale at ±10,000 to ±21,000 SF,” says McClure. “Arguably, most of the smaller footprints are not in the prime targeted areas and many are functionally obsolete.”
She continued, “Those obsolete properties may never get absorbed and the challenge moving forward is working to redevelop or construct new retail spaces that meet the current retail prototypes.”