Much of the big-box retail space that was dumped on the San Diego market during the first six months of 2018 was due to Toys R Us declaring bankruptcy, according to a report from CBRE. The firm says nearly 100,000 square feet of big-box retail space was brought to the market during that time.
Several additional Toys R Us locations in the county are expected to come online as they go through the final phases of bankruptcy, the firm also says, but there has been movement on some of these spaces already, mitigating the fear that they would sit vacant.
Meanwhile, CBRE Research reports, filings from the companies, and eMarketer report that off-price or discount/value retailers, led by Dollar General and TJ Maxx, are experiencing growth and plan on expanding into more than 40 million square feet nationwide. “With such expansions targeting traditional big box vacancies, these players may ultimately lessen the e-commerce impact moving forward,” says CBRE in its report.
In addition, the firm says a surge in development of big-box spaces, specifically in lower- priced residential submarkets, challenges the assumption that ground-up retailers are a thing of the past, especially when it comes to discount retailers.
Despite the large amount of big-box retail space coming to the San Diego market, the region’s retail sector is doing well in terms of rental rates, as SoCal Real Estate recently reported. According to CBRE’s research, the San Diego retail market had the highest asking rate on record in Q2 2018. After a steep decline in Q1, the average asking rate increased significantly in Q2, up $0.13 to $2.39 triple net, which is the highest rate on record, the firm says.