Research and Statistics - Updated Quarterly

Retail Trend Report

Sales of significant retail properties in May were the highest to date this year, with over $3.6 billion in closings.  However, volume was still well below the record levels of a year ago. In the first five months of 2006, a total of $14.7 billion change hands compared with $22.1 Billion in the same period of 2005, a 33 % decline. Sales of individual assets are off 14% while portfolio transactions were down 65%.

New offerings were up 10% in May compared to a year before. Twice as many retail mall properties are listed than have sold.

Despite increased offerings, falling volume and rising interest rates, cap rates have yet to change significantly. Buyers and sellers are playing a “who will blink first” Cap Rate game. Asking cap rates are up slightly reflecting a belief among sellers that the hoards of cash out of the stock market must find some place to go. California strips impacted national averages resulting in lower national average cap rates.

Net acquisitions reflect changes occurring from institutional buying and are on track to acquire several billions in retail properties this year. Private buyers and opportunity funds have dramatically slowed their dispositions and are shifting to net buyers. Corporate dispositions, mostly sale lease backs, are up significantly and have exceeded last years levels. Tenant In Common  and Public REIT acquisitions are down. (Source-Atherton Trust Research Dept.)