IRR-Sacramento Mid-Year Viewpoint 2015 Local Market Report - Retail
The Sacramento retail market has generally remained stable over the past year, following a significant recovery after the Great Recession. The retail market remains highly bifurcated, with modern (Class A/B+) performing well, while many older (Class B-/C) have yet to show any meaningful signs of recovery. Overall, signs remain encouraging as the retail market continues to show positive net absorption and stable vacancy.
The initial stabilization in the market during 2010-2011 was driven by the backfilling of vacant big box stores by expanding off-price retailers and discount chains. As the regional economy has continued to improve, demand is now being driven by a more widespread variety of tenant types. The recent completion of the 120,000 square foot Lifetime Fitness facility in Roseville and backfilling of several former Fresh & Easy locations were positive signs for the market. Offsetting indicators include the closure of several Tuesday Morning stores and the start of phased closures of multiple Radio Shack locations throughout the region. Overall, the retail market remains in the recovery phase of the market cycle.
Improving fundamentals resulted in a return of new development in 2013-2014. The most prominent new projects include the 544,000 SF Rocklin Crossing (anchored by Wal-Mart and Bass Pro Shops) and the nearby 388,000 SF Rocklin Commons (Target anchored), both of which have been well received by the market. A few smaller projects are presently underway throughout the region and much anticipated retail component of the Delta Shores project (south Sacramento) is expected to break ground in 2015 (anchored by Wal-Mart Supercenter). The partially-built Elk Grove mall (dormant since 2007) was recently approved for a 454,000 SF upscale outlet center, which could get underway in 2015.
Downtown, the Sacramento Entertainment and Sports Center (ESC) is well underway and scheduled to be completed in 2016. The ESC will be a multi-use facility that will accommodate various sporting and entertainment events. The project is expected to generate 3.1 million new visitors to the area and is already spurring renewed interest from retailers in the downtown area.
The near term outlook for the retail market for continued positive absorption, resulting in declining vacancy and moderate rental growth as new projects are delivered.
Download the full version PDF of this Local Market Report below. It includes graphs and tables.
IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.