Retail Market, Q1 2018

Retail Market: Prices per Square Foot by Region

The retail sales prices per square foot for the first quarter of 2018 showed considerable quarter-to-quarter volatility, so we smoothed the data by taking rolling averages. When looking at the below chart, first focus on the black line that reflects the U.S top 50 metros average. At $206 per square foot in the first quarter of 2018, the average sales price had no change in the quarter, but declined 3% from the first quarter of 2017 and is down 10% from the first quarter of 2013.

RETAIL SALES PER SQUARE FOOT BY REGION - Graph

The average sales price per square foot for the rest of the Northeast (not including NYC) has increased over the last year after falling in 2015 and 2016. The increase in the first quarter of 2018 was due to a few sales in Boston and Fairfield County that sold for north of $500 per square foot, depicted by the upward slope of the dotted purple line.
On the contrary, sales per square foot have declined in the West, falling from a high of approximately $300 per square foot in late 2016 to $224 in the first quarter.
The average sales price per square foot in the Southwest region has been especially bumpy, but the net change since the first quarter of 2016 is close to zero. The average peaked in early 2015 due to the sale of two high-end shopping centers: one in Dallas and one in Austin.
There has been very little net change in average prices in the Midwest, as well. Although the average price declined in the first quarter, it was only 4% lower than the first quarter of 2017.
Finally, in the South Atlantic, the average price trend line displays a distinct downward sloping[CC1] starting in 2015. At $176 per square foot, the price is 14% higher than it was in early 2013.

 

Retail Market: Sales Volume by Region

To shed further light on retail property sales, we graph the rolling average of sales volume by region in the chart below. These values show that other than the blue line, which represents the South Atlantic, the volume of retail property sales has changed very little over the last five years. Each region shows a noticeable drop in volume in the first quarter. The black line shows the cumulative decline over time of the aggregate total. In most regions, the first quarter of 2018 volume is lower than the first quarter of 2017. We suspect that retail sales volume will continue to trend lower, but the average sales price will likely hold steady as most of the properties that trade are, generally, in the upper tier. When lower-tiered retail properties sell, they usually sell as development sites.