Consumers’ priorities reinforce positive outlook. One of the nation’s least-vacant commercial real estate segments, the retail sector entered the second half in a favorable position. Labor market resiliency, wage growth and easing inflationary pressures are aiding consumers’ purchasing power, with households concentrating more of their spending on groceries, personal care items, dining and experiential retail. These consumption trends are motivating a collection of retailers to broaden their footprints and product offerings to capture market share. By executing expansion initiatives, these companies will generate demand for vacant and sublet space of various sizes. The positive leasing momentum that results will preserve historically limited single-tenant vacancy and enable multi-tenant availability to remain on par with immediate pre-pandemic levels.

Key Features Include:

  • Consumers’ priorities reinforce positive outlook
  • Store closures provide an avenue for expansion
  • Boost in seasonal travel on the horizon
  • Retail marketplace proves more resilient
  • Above-average vacancy distracts from strong performance
  • Retail hiring a reflection of leasing activity
  • Positive dining trends elicit investment
  • Grocery listings warrant buyers’ attention
  • Fed’s reactive stance aids retail investment landscape
  • Capital remains readily available, albeit at lower leverage

Marcus & Millichap’s Full Report:
Retail CRE Sustains Positive Momentum Amid Tightened Vacancy