MSCI’s series on capital trends in various CRE sectors took retail out for a trial run and brought it back to the store.
“Deal volume for the retail sector continued the slide that began in August 2022 with only one month of respite since then,” they wrote. “There was a bit of an improvement from recent months, but one-off events mask the severity of the decline.”
Over the previous five months, the average year-over-year fall had been 63%. But a merger between Regency Centers and Urstadt Biddle kicked up numbers in August by $1.4 billion, but that was a one-time event causing some data jitters. And even with it, year-over-year activity in August fell by 45%.
The — well, maybe a somewhat padded pothole — kept from dipping as far as immediately previous months because, according to MCSI, the deal was centered on shopping centers, not so much on shop space. “With that focus, deal volume for shopping centers fell only 40% from a year earlier in August versus a 54% YOY decline for sales involving shop space,” the firm said.
“Looking past portfolio and entity-level deals to individual asset sales though, shop space is on a slightly better path. Sales of shop space fell only 56% from a year earlier in August versus a 64% YOY decline for shopping centers.”
One reason for the drop in dollar-value transactions is the fall of property prices. The RCA CPPI for retail dropped 7.4% year over year in August, “front-loaded, however, with the steepest monthly declines seen in Q4 2022 and Q1 2023,” MSCI wrote.
Looking at the tabular data on different retail types — centers, shops, single asset, and portfolio and entity — the year-over-year results in August varied significantly. Centers were down 40%, as mentioned above, while shops fell 54%. But single asset dropped by 61%
Then there were the year-to-date performance figures: shops down only 10%, portfolio and entity off by 29%, and then single asset for -53% and centers in dead last at -64%.
Source: “Retail Continues a Long Slide“
