Retail Sector provides Opportunities for CRE Investors
Retail Sector Recovery Well Underway
- March core retail sales exceeded $468B; up 6.2% from last year and 24% from pre-pandemic
- Even when adjusted for inflation, sales are up 1.1% Y-O-Y and 16% from pre-pandemic
- Although retail job loss was significant, there are already 278K more retail workers than before the pandemic
Retail Performance Stronger than Many Believe
- Despite the ongoing recovery, just 20% of investors said it’s a good time to buy Retail, compared to 19% for Office
- Office vacancies are still over 300 bps higher than before the pandemic while Retail vacancy is only up 40 bps
- Retail foot traffic and rents are higher than pre-pandemic
Investors Aren’t Fully Capitalizing on Existing Opportunities
- Total CRE transactions were 28% higher in 2021 than 2019, but Retail transactions were up only 9.4%
- Retail cap rates haven’t compressed like other properties
- Average MT-Retail cap rates hover around 6.7%, compared to 4.8% for Apartments
*Adjusted for inflation using core PCE
Core retail sales exclude auto and gasoline sales
Sources: Marcus & Millichap Research Services, U.S. Census Bureau, BEA
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