Retail sales have generally been on the rise since the recession ended in 2009, but the stubbornly high unemployment rate and speculation about a double-dip recession continue to get headlines and chip away at consumer confidence.
Retail sales have recently reflected increasing consumer uncertainty. Total retail sales finished the third quarter 7.2% ahead of 2010 on a year-to-date basis, but they showed an increase of only 0.2% in August, according to the U.S. Commerce Department.
Sales at health and personal care stores have remained consistent, with modest in-creases.
Back-to-School Helped
The back-to-school shopping season helped improve sales during August at electronic and appliance stores in the third quarter, with sales up 0.5% from a year earlier on a seasonally adjusted basis, and 2.5% on an unadjusted basis.
Sporting goods, hobby, book and music stores’ sales saw a 2.4% seasonally adjusted increase over July and a 9.3% unadjusted rise year-over-year.
Clothing and clothing accessories stores went the other way, posting a 0.5% decline in August from the month prior by 0.7%. They remain 5.6% above sales of a year earlier, though.
Consumers continue to boost sales at building material and garden equipment stores with a reported monthly increase of 0.2% seasonally adjusted, and 9% unadjusted year-over-year.
Index Down
The Conference Board Consumer Confi-dence Index, which had declined sharply in August, was relatively unchanged in Septem-ber. The index moved up slightly from 45.2 to 45.4.
Consumers’ concerns about future earnings and employment conditions have affected their assessment of current conditions, which has declined for the fifth consecutive month.
The commercial retail market continues to feel the effects of the uncertainty, and closures by major chains have created new vacancies in Orange County.
The third quarter saw the overall retail vacancy rate here increase to 5% as lower demand led to 429,566 square feet of negative net absorption.
The soft market has led to lower rents: The average asking lease rate countywide dropped to $2.39 per square foot in the third quarter, down seven cents from the prior period.
Construction of new retail space in Orange County is minimal. Development has begun on some retail centers of less than 50,000 square feet. Construction of larger centers will likely not begin until more momentum on retail sales is seen.
No new major retail centers have opened in Orange County since the fourth quarter of 2008, and all formerly active development projects have been frozen indefinitely.
The Central Coast submarket had the lowest vacancy rate in the third quarter, at 3.2%.
The vacancy level in North Orange County also remains below the overall average at 4.7%.
Central Orange County and South OC had above-average vacancy rates at 5.6% and 5.5%, respectively.
West Orange County’s vacancy rate finished the third quarter at 5.4%.
The rugged third quarter pushed the retail market into negative net absorption for the year so far, at 379,309 square feet.
The bulk of the third quarter’s negative absorption was seen in the Central Orange County submarket with 176,836 square feet.
North Orange County followed with 152,291 square feet of negative net absorption.
South OC also experienced a significant amount of negative absorption, with 121,324 square feet.
West Orange County had 18,196 square feet of negative net absorption.
The Central Coast submarket was the only area to post positive absorption, with 39,081 square feet.
The decline in average asking lease rates in the third quarter put the benchmark at 3% below the prior period and nearly 5% under levels seen in the third quarter of last year.
The Central Coast had the widest range of lease rates, from a low $1.50 per square foot to a high $6 per square foot. That resulted in one of the highest average asking rates, at $3.47 per square foot.
Analysis provided by CBRE Research.
