The recent April 2009 edition of Franchise Times reports that landlord concessions are on the rise nationwide.

"Shopping center owners are offering concessions such as free rent, tenant improvement dollars, and delayed rent increases to attract tenants as retail occupancies continue to slip."

Vacancies at neighborhood and community shopping centers climbed to 8.9% at years end according to Reis, Inc a real estate information and analysis firm.

The article in FT indicated that major brands like Gap or Banana Republic are going to get the highest rent reductions perhaps in the 15 to 25 percent on an existing lease according to one retailer real estate executive in NYC.

While this may be good news for retailers it's very bad new for shopping center owners.

Rental concessions are only a quick path to serious property "devaluation" as these properties, as a class, are purchased on the income approach to value. The lower the income the less the asset is worth.

On the other hand if the owners don't make a rental concession they may end up with another vacancy.

One industry executive stated that the retail sector is nearing the bottom of this downturn. That means there may be a small window of opportunity to take advantage of rent concessions.

" There are deal concessions being made that were not available 12 months ago and won't be available 12 months from now." said one Chicago retail professional.

While this may prove to be true in prime, top-shelf markets, I think it's going to take a much longer time to see a marked increased retail activity in many sub makets of northeastern Masachusetts and southern NH.

BIll McInerney, Realtor

BUYING OR SELLING? CALL BILL MCINERNEY 617 816 3933