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Real Estate Market Outlook: Retail Space

Posted: July 2, 2014 6:35 p.m.
Updated: July 2, 2014 6:35 p.m.

John Cserkuti, senior vice president with NAI Capital. SCVBJ archive photo

 

There are a lot more tenants chasing a lot fewer deals in the Santa Clarita Valley retail space, according to John Cserkuti, senior vice president with NAI Capital.

“Second generation space for restaurants (where the former tenant operated a restaurant) is virtually non-existent,” Cserkuti said. “The recent closure of The Elephant Bar on McBean Parkway has already generated half-dozen unsolicited calls.”

Retail is usually the last real estate segment to recover, but now that there’s a big push to build homes again, retail’s coming back. Vacancy rates at the larger shopping centers are running between 5 and 5.5 percent. At the peak of the market, vacancy rates were in the 3.5 percent range, he said.

“The market is very healthy,” Cserkuti said. “You always want some turnover or there’s no room for tenants to expand or contract. You need options for those retailers.”

The good news is that the first retail development is on the horizon since 2008. West Hills Plaza on the corner of Copper Hill and Camino del Arte Drive is planned by a local developer, he said.

And while tenants are looking to expand and don’t mind paying higher rent for the right place – the best shopping centers with the best traffic – they’re still looking for deals but landlords are being more careful about finding the right tenants for their shopping centers post-recession. And those same landlords are also offering fewer concessions today.

“Landlords have been qualifying tenants,” Cserkuti said. “They don’t want tenants to come and go again like during recession. They want to make sure the right tenant occupies the space.”

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