Just three years ago, retail commercial real estate was in serious trouble due to COVID-19-mandated shutdowns and stay-at-home orders. Grocery stores and other essential services were the exceptions, doing well despite the circumstances. Fast forwarding to Q1 2023, however, retail is now in a resilient period with lower supply and increasing demand continuing to support properties according to U.S market reports.
The JLL United States Retail Outlook for Q1 2023 indicated that while fundamentals are starting slow due persistent inflation shifting money away from discretionary goods purchases towards groceries and necessities; discounted retailers as well as online ones have benefited from this trend. On the other hand CBRE’s U.S Report showed that total absorption was more than twice of what new supply had been delivered during this quarter; making it fifth consecutive quarter where demand has surpassed new supply . Cushman & Wakefield’s MarketBeat report also noted lowered absorption rates but pointed out eight consecutive quarters of positive net absorption which caused vacancy rates decline too .
Looking ahead at future prospects , CBRE analysts forecasted continued muted development activity impacting both absorption levels as well vacancies whereas Cushman & Wakefield expects any downturn or recession not be nearly so dire compared Great Financial Crisis since household debt burdens are much lower than 2008 levels ; retailers being financially healthier too . Vacancy rate could either level out or move modestly higher by end of year but present an opportunity for brands/retail uses expand aggressively on other side 2024 onwards according their analysts’ predictions .
