Consumers are spending, retailers are offering, and low supply is keeping demand for store space high, especially in the most desirable locations, according to a Newmark 3Q 2024 report on retail trends and conditions.
Retail space availability was at a multi-decade low of 5%. Only 5.9 million square feet was delivered in the quarter, keeping conditions tight. And although the 29.3 million square feet leased in the quarter was 33% below the 10-year average, that was due to its scarcity, especially for prime retail assets, the report said. “Retail demand for new space outpaces other CRE sectors,” it noted.
The trend is helped by strong consumer demand, exceeding expectations in September. “The 0.4% sequential increase in total retail and food services sales signals ongoing economic growth, fueled by steady consumer spending,” the report predicted. “Miscellaneous stores led all categories in month-over-month and year-over-year growth, with health and personal care stores also showing strong performance. Food services and drinking places—now representing about 18% of all retail spending when excluding auto, auto parts, and gas—grew just over 1.0% from August, sustaining a year-over-year growth rate of 3.7%.”
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