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From a leasing perspective, this means activity will also increase. There continues to be a great deal of activity among national retail tenants, who have been aggressive for the past 12 to 24 months in seeking new locations. Vacancy rates continue to decline, which will begin to drive rents, especially in class-A retail space.

This increase in leasing activity is evident in other markets as well. For example, in Orange County, leasing volumes have been steadily increasing since 2009 and will continue to do so as strong job-creation numbers continue to increase. GlobeSt.com reported on the positive indicators being displayed in the Orange County retail market here.

That said, in Northern California, the separation between class A and B product versus C product is still evident. Strip centers continue to struggle, and will likely do so until the elusive mom-and-pop tenant, which virtually disappeared in 2008, returns to the market. For this to happen, we will need to see an increase in SBA lending, or a swing in home equity. While home prices are now starting to rise, this has not yet contributed to increased equity for homeowners. Once it does, we will likely see mom-and-pop retail tenants re-enter the market.

On the investment side, there is no shortage of value-add buyers. However, the list of value-add for-sale properties is getting smaller, as most banks have already moved through the majority of their troubled retail assets.

To illustrate this point—in 2012, Voit represented sellers or buyers in 26 retail sales transactions, 22 of which were financially troubled assets, i.e. short sales or REOs. In 2013, we anticipate that less than half of the deals we facilitate will fall in that category. Instead, we are returning to the “traditional” real estate deals we all prefer, made up of a traditional owner and buyer.

The growing normalcy in the market is very good news.

Investor interest is very strong, and cap rates are extremely low. Single tenant triple-net deals are the most attractive options in the Sacramento retail market, and there is a great deal of money competing for these assets.

For example, we just completed the $7 million sale of a 120,000-square-foot single tenant retail property in Lodi, CA at a 5.4% cap rate.

From our perspective, real estate professionals have a great deal to gain from buying, selling or leasing retail product right now. We are in a time of transition, where there are still value-add deals to be found, and the ability to generate a profit on a sale has returned.

Jason Gallelli is an EVP in Voit Real Estate Services' Sacramento office. Contact him at [email protected].Gary Gallelli is an EVP in Voit Real Estate Services' Sacramento office. Contact him at [email protected]. The views expressed in this column are the author's own.