United States Retail Outlook Q2 2021
Demand for retail space surges to pre-pandemic levels
With over half of the population vaccinated and heading back out to stores and restaurants, retail saw a boom in the second quarter. While concerns over the Delta variant and supply issues pose challenges for continued growth at the current pace through the end of the year, 2021 should still tally serious economic and retail recovery from the doldrums of 2020.
- Net absorption—or actual move-ins during the second quarter—totaled 20.1 million square feet, the highest level since the third quarter of 2018. Gains in net absorption were driven by strong demand for general/freestanding retail and neighborhood centers.
- Projected consumer spending growth of 8.8% for all of 2021 will be the strongest since World War II.
- Consumers are switching from large durable goods investment to services. Sales at restaurants and bars rose for the fifth straight month, by 1.5% in July, and are up 71.8% year-over-year during the second quarter.
- The U.S. is on pace to see 87 million square feet of retail space impacted by closures—which would be the least amount of space impacted by closures since 2016 and nearly half the totals seen in 2020.
- As of the first half of 2021, roughly 41,000 leases have been signed, representing 121 million square feet.
- Despite shaky fundamentals, malls are seeing increased traffic. July was the first month where mall visits exceeded 2019 levels.1Outdoor malls in particular show higher traffic gains, with a 2.1% increase over the same period in 2019.
- Demand for neighborhood centers and stand-alone retail properties accounts for 90.0% of the net absorption seen since the beginning of the year.