O'Neil: The primary reasons we are seeing vacancy decline is that retail sales are pushing higher and consumer sentiment is improving. Restaurants are a good example of this. Restaurants are not really impacted by e-commerce, but they are impacted by meals eaten at home. As the economy improves, consumers are more likely to splurge on a night out rather than staying in. Retailers are expanding in response to the heightened consumer demand already present in the marketplace as well as an expectation that growth will continue to accelerate as the economy recovers and the housing market slowly returns to form. In addition, we are beginning to see some leasing of the large boxes that were vacated over the past several years. Some of these spaces are being leased to other retailers, while others are being repositioned as alternative uses, including multifamily, office or medical office.

GlobeSt.com: Sales of shopping centers have slowed, yet prices are pushing. What is the reason for that?

O'Neil: More than anything else, the slowdown in sales activity and the rise in pricing are because there are fewer distressed properties being sold. If we looked only at transactions involving stabilized assets, sales activity has picked up considerably from year-earlier levels, while sales of distressed properties have been cut by more than half. Since there are fewer troubled properties changing hands, these deeply discounted buildings are accounting for a smaller share of transaction activity. In addition, the outlook for local retail is improving, supporting pricing. The median price for stabilized buildings in the first half of 2014 is up approximately 15% compared to the first half 2013.

GlobeSt.com: What do you see on the horizon for retail for the rest of the year in these categories?

O'Neil: Tenant demand for retail real estate is typically strongest in the fourth quarter as merchants ramp up to meet the demand of the holiday shopping season. We anticipate shopping center vacancy will continue to tighten in the coming months, as it has in each of the past two years. After expanding at double-digit annual growth rates in each of the past four years, e-commerce will continue to accelerate in the years ahead. It is worth noting however, that online purchases still account for a small percentage of all retail sales activity. Further, this activity is concentrated in a handful of segments—books and music to name a few—but is not taking the place of traditional brick and mortar retailers.