Not Much Upside Left in Retail Sector

While retail properties posted a return of 16.19 percent in the 12 months ended Oct. 31, it had the lowest return of all five core sectors, according to NCREIF. The hotel sector was the strongest with a return of 22.63 percent. The office sector, the largest class of commercial property, followed with a return of 17.27 percent.

Recent surveys by the Real Estate Research Corp. and CCIM confirm that retail has lost its allure. On a scale of 1 to 10 (with 1 being the lowest), industrial warehouse and apartment sectors received the best ranking, at an average of 6.3. Of all the core sectors, retail earned the lowest ratings — neighborhood/community centers: 5.6; power centers ranking: 5; and regional malls: 4.6 (the lowest of all property types).

Source: Retail Traffic, Dec 1, 2007