Retail Availability Tightened In Q2 As The Sector Continues To Recover

Retail is on the mend, and the tightening of available leasing space indicates the sector is making a comeback. 

Though department stores have struggled to reinvent themselves in hopes of competing with e-commerce retailers, retail as a whole has been working to converge with technology, becoming more omnichannel to appeal to consumer demands.

Neighborhood and community strip retail centers’ latest availability rates were down by 230 bps from post-recession levels of 13.2%, according to a CBRE survey. And within the 62 markets surveyed, availability averaged 10.9% in Q2.

“Retail sales appear to have picked up in the second quarter,” CBRE Americas chief economist Jeffrey Havsy says. “We’re seeing the growth of omnichannel retailing continue to enhance the need for space in brick-and-mortar centers. Additionally, retailers are trying new concepts and continuing to experiment with different store formats, sizes and displays.”

The cities that showed the greatest tightening were Denver, Nashville and Salt Lake City. Consumer spending in the segment has also been on the rise, according to the US Commerce Department, with retail and food service sales up 2.4% from March through May. CBRE estimates lease rates will maintain their trajectory, increasing gradually as the year goes on.

“Successful centers continue to be able to raise rates at a pretty good clip,” Jeffrey says. “But those that are struggling can’t make much headway. Retail remains a bifurcated market.”