Retailers looking for space are likely to face a crunch in finding what they need this year. Little new construction and limited available locations are the culprits.
The retail sector is entering 2024 with the tightest conditions on record, according to CoStar's January real estate data outlook. The year 2023 ended with just 4.6% of retail space available nationwide – "the lowest level recorded since CoStar began tracking all metropolitan statistical areas in 2007."
Retail construction starts nosedived in 2023 to 46 million SF – well below the 82 million SF started in 2022 and even lower than the 15-year average of 108 million SF. CoStar blamed the slump on increased financing costs, less available capital and high input costs for labor, land and materials.
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