TUCSON-At first glance, CBRE’s first quarter market report tells a sad story for the Tucson retail sector. The numbers indicate negative net absorption and an unchanged vacancy rate compared to the same period last year.
During the first quarter of 2011, the market recorded 79,418 square feet of negative absorption, according to CBRE. For the same period, the vacancy rate was 12.2% – relatively unchanged from a year ago, when the retail vacancy was 12.3%.
Yet the data doesn’t tell the entire story, according to Nancy McClure, a retail specialist in CBRE’s Tucson office. Although the local market continues to lose bankrupt retailers including Ultimate Electronics, Borders and Blockbuster, demand from both national and local retailers is strong.
“Tucson is far healthier than other markets our size,” McClure tells GlobeSt.com. “Retailers are reporting strong sales in Tucson, which encourages them to expand here.”
McClure points to Costco: the big box retailer has two stores in Tucson, and those two stores are the strongest in Arizona. As a result, Costco is opening a third store in the city later this week.
Additionally, McClure notes that Wal-Mart soon will break ground its first store within the city limits, while Staples and Nordstrom Rack currently have stores under construction. Meanwhile, The Mattress Firm is evaluating dark Blockbuster stores for its local expansion.
“I find the activity very encouraging” McClure notes. “I expect we’ll see improved occupancy during the second quarter.”
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