In the third quarter of 2024, reports on the U.S. retail market all echoed a similar theme: flat or declining absorption, limited new construction, and higher asking rents. Lee & Associates’ Q3 Retail Overview stated that due to increasing demand and fewer tenant bankruptcies and closures, the retail real estate market was in one of its tightest positions on record.
Lee & Associates reported an absorption rate of 6.6 million square feet in their analysis. However, Cushman & Wakefield’s Q3 Shopping Center Report showed negative absorption at -257,817 square feet for the quarter due to factors such as Hurricane Helene.
All reports noted a decrease in construction starts and deliveries over the past two years due to rising costs. Colliers’ U.S Retail Market Statistics analysis for Q3 2024 pointed out historically low levels of new development across the country.
With limited space available and high demand from tenants continuing into next year according to CBRE’s US Retail Figures report for Q3 2024 , rents are expected to continue rising as competition intensifies for quality locations.
JLL’s United States Retail Outlook also highlighted this trend towards fierce competition among retailers vying for prime locations with little space coming online in near future projections . Additionally,Cushman & Wakefield analysts predict that prospective tenants will have limited options when it comes to securing desirable spaces moving into early-mid-2025 .
However,the upcoming holiday season is forecasted by JLL analysts as being strong with shoppers planning on spending more money than last year while also utilizing curbside pickup services twice as much compared previous years .
Looking ahead into early-mid-2025 ,Cushman&Wakefield predicts small batchesofnewretailspacewillbecomeavailablewhichcouldpotentiallycreateopportunitiesforbackfillandexpansionasmorestoreclosuresoccurfromcompanieslikeWalgreens,CVS,andBigLots.Additionally,JLL analysts suggest that these closures could also lead to more cautious real estate expansion plans from retailers. Overall, the retail market in Q3 2024 is characterized by low absorption rates, limited space availability, and rising rents.
