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Retail - Neighborhood Centers <br /> • Vacancy Flat at 8.5% <br /> • Absorption Turned negative <br /> • Rental Rates Increased to $16.25 <br /> Highlights <br /> • "Battle of the grocers" continues as more concepts compete in a very crowded market. <br /> Newer arrivals Hy-Vee and Fresh Thyme Farmers Market have entered a market that <br /> traditionally has been dominated by Cub Foods, Target and Walmart. They also face <br /> competition from warehouse clubs Sam's Club and Costco. <br /> • Aldi, Jerry's Foods, Whole Foods Market, Lunds & Byerly's, and Kowalski's Markets are <br /> actively seeking sites. In addition, Niwot, Colo.-based Lucky's Market—owned by Kroger <br /> Co.—and 365 by Whole Foods are scouting neighborhood locations. <br /> • Rents for newer, small-shop space at class "A" centers in high-demand trade markets <br /> increased to an unprecedented $60-psf range in some instances, up from approximately <br /> $40 psf in 2015. There is not a very deep cast of retailers that can pay these escalated <br /> rates,which is forcing retailers to think outside the box and consider a secondary location <br /> or one that needs more tenant improvements. <br /> • Approximately 300,000 sf of positive absorption is projected for the second half of 2016. <br /> 42 1 Page <br />