Retail property owners looking for tenants are in a favorable position, with widespread demand for space driven by low vacancy and limited construction.

The retail sector is performing strongly as consumer resiliency and a strong labor market fuel increases in foot traffic while inflation begins to ease, according to Marcus & Millichap's second-quarter Retail National Report. In fact, retail was the only major commercial real estate property type to record vacancy compression for the year ending in March as restaurants, supermarkets, discount stores and fitness centers all noted 5% to 9% year-over-year growth in foot traffic.

Multitenant vacancy reached a record low in March, with single-tenant vacancy just 10 basis points above its all-time bottom. Among the 50 major retail markets, 34 ended March with a single-tenant vacancy rate at least 100 basis points below their long-term mean, said the report.