The vacancy rate moved lower in Q2, shedding 20 basis points to settle at 5.2%. In the past year, a 40-basis point decline in the vacancy rate has been realized. As reported last quarter, vacancy is sharply higher in secondary locations and nearing 0% in prime submarkets. General retail (freestanding, general purpose properties) posted the lowest vacancy of all retail property types at 3.3%, down 40 basis points in the quarter, followed closely by Power Centers at 4.5%, unchanged in Q2. Shopping Center (neighborhood, community and strip centers combined) rates are still highest at 8.3% despite a 40 basis point decline in the period. Excess supply in this category is concentrated in suburban submarkets that have fallen out of favor with expanding retailers.

Urban areas continue to account for a greater share of net absorption performance as more retailers look to younger consumers for sales growth. These younger consumers, who seem to prefer multifamily housing near public transportation, hip restaurants, cool bars and entertainment venues, are attracted more to the amenities and less about owning single family homes that increase commute times.