A Geographic Breakdown of Retail Performance
The biggest winners were almost four times better than the national average.
Moody’s associate director, and economist, Nick Villa has analyzed mid-year retail property performance by five geographic regions and 80 primary retail markets. The metric is effective revenue, which means occupancy as a percentage times rent in dollars per square foot. In other words, presuming equal rent throughout a property, effective revenue is the average revenue per square foot. It also reflects how much of the building is generating rent.
The effective revenue in the fourth quarter of 2023 serves as the baseline. For the U.S. in general, that was $16.97 per square foot. That category in 2024 Q2 was $17.05, an increase of 48 basis points.
The five best-performing metros in terms of increase between 2023 Q4 and 2024 Q2 were Hartford, CT (+172 basis point growth from $14.35 to $14.60); Colorado Springs (+166 basis point growth from $11.74 to $11.93); Cleveland, OH (+166 basis point growth from $11.93 to $12.18); Greensboro/Winston-Salem, NC (+1.63 basis point growth from $12.16 to $12.36); and Las Vegas, NV (+141 basis point growth from $17.37 to $17.61).
The top five metros had the following contributions from rent and occupancy: Cleveland (50.6%, 49.4%); Hartford (60.7%, 39.3%); Las Vegas (77.4%, 22.6%); Greensboro/Winston-Salem (95.9%, 4.1%); and Colorado Springs (97.3%, 2.7%).
The five worst-performing metros were Providence, RI (-76 basis points from $16.44 to $16.32); Louisville, KY (-81 basis points from $13.93 to $13.81); Tulsa, OK (-89 basis points from $9.07 to $8.99); Indianapolis, IN (-153 basis points from $11.37 to $11.20); and Albuquerque, NM (-326 basis points from $11.54 to $11.16).
Interestingly, among the top and bottom five, only Las Vegas had an effective rent above the U.S. average figures. There were differences in how different metros saw changes in effective retail revenue. Cleveland’s effective rent increases were due more to changes in occupancy rather than rent growth. Concessions were important in Cleveland, given a 14.6% discount between asking and effective rents.
The top regions were close to the national average. The Northeastern Region, which was top, saw growth of 57 basis points, while the next highest, the Southwestern Region, was 56 basis points. The other three were the Southern Atlantic Region (44 basis points); Western Region (32 basis points); and Midwestern Region (15 basis points). All saw increases in effective revenues.
The Northeast saw a 20-basis point declining vacancy rate. The other regions had flat or increasing vacancy rates, but no higher than a 10-basis point spike. Effective rent growth was positive for all the regions.