While Kent Williams, managing director and acting regional manager of the Ontario office of Marcus & Millichap, says the retail market will remain soft as vacant shopping centers drag on market-wide performance, he admits that the outlook is improving. "The downturn in the local retail market was somewhat delayed as builders followed new home developments and retailers signed lengthy leases only to see many of the new residents fall into foreclosure or short sale," he says. "Consequently, the trough of the market was not until the first half of 2010, when vacancy peaked at 11.9%."

With less recovery time and continued expiration of leases signed during the boom, "vacancy levels will remain 100 basis points above the five-year average through 2012," he predicts.

Williams does point out, though, that retail sales have gained momentum, warranting an increase in absorption. In addition, he says, "low debt costs and early signs of improvement will encourage more investors to take advantage of discounted properties across the Inland Empire."

More conservative buyers with long-termhold strategies, he explains, will target affordable assets in areas such as Rancho Cucamonga, and parts of Ontario "where single-tenant properties typically yield in the high-6% to low-7% range."