Retail Top & Bottom Markets, Q2 2019

Retail Top & Bottom Markets: Effective Revenue Growth

The national aggregate YoY effective revenue growth for the retail sector came in at 1.8% this quarter. Last quarter, the aggregate growth rate was 1.4%. The top five markets had a fairly wide range of performance, similar to last quarter. Tacoma was the top market again at 5.2% year over year effective revenue growth; Chattanooga was the lowest performing top market at 3.8% growth. Last quarter the lowest top five market was Dayton, at 3.6%. The bottom five markets were not as negative this quarter, and Fairfield County, frequently in the bottom five of this chart, had a growth rate of -1.8%.

 

Effective Revenue Per SqFt, Percent Change 2018Q2 – 2019Q2

Source: Reis, Real Estate Solutions by Moody’s Analytics

The chart above ranks markets by their year-over-year effective revenue growth, which is calculated as the annual change of effective rent multiplied by the occupancy rate. On the left side of the chart, we have the five markets with the highest effective revenue growth, and on the right side, we have the five markets with the lowest effective revenue growth. The navy blue bars represent the metro-level growth rates, and the gray and teal bars represent the submarkets with the highest and lowest growth rates in the metro. The underlying shapes, which can be interpreted the same way as a histogram, represent the growth rate distribution for all properties in the metro. To remove outliers and create a useful visualization, we use data from the 10th to the 90th percentile for the property level distribution.

 

As we have come to expect, the retail sector has a wider range of property performance compared to say, the apartment sector. This quarter particularly, Syracuse stood out as a metro with a strong majority of properties having negative performance. In the sample used, about three-quarters of the properties had negative performance, and even the ones with positive performance were not up to par with other metros. This may be a little bit concerning, but it is possible that this “lumpy” distribution is the result of Syracuse’s low inventory, relative to larger metros.

 


Analysis by Shan Ahmed. Ahmed is an Associate in the Economics Department at Reis. He is responsible for the firm’s custom client projects and real estate portfolio analytics services. Shan holds a bachelors degree in Economics from The University of Texas at Austin

Copyright © 2019 Reis, Inc.

 

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