WHAT FALLING CONSUMER SAVINGS MEANS FOR CRE SPACE DEMAND?
Savings Burn-Off Begins to Weigh on Retail Sales
- After surging during the pandemic, total savings realign with pre-pandemic trend
- Inflation-adjusted core retail sales were down 0.1% year-over-year in June
Impact on Space Demand Varies By Asset
- Retail and Industrial Absorption has slowed from 2022 levels, but still positive in the first half of 2023
- Burn-Off of savings could constrain home sales, benefiting apartment demand
Fed Rate Hikes Remain The Major Question Mark
- Despite decreasing inflation in June, the Fed previously stated the chances of a July rate hike are high
- Flattening retail sales and a return to pre-pandemic savings levels are signs that a soft-landing is within reach if the Fed avoids over-correcting
*Through June
Inflation Adjusted Using May 2023 Core PCE
Sources: Marcus & Millichap Research Services, U.S. Census Bureau, Board of Governors of the Federal Reserve System
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