US Retail sales increase 1% in June despite inflation
Despite inflation reaching a new 40-year record, consumers still made purchases in June, bumping up retail sales by 1%
- Ebere Anokute
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Happy July! It’s a bit of a bittersweet month, as it means summer is almost halfway over. And if you’re anything like me, you might find yourself wondering, “Where has the time gone? What have I been doing?”
And if you’re anything like me and, apparently, the rest of the country, I know the answer – spending money on things!
Gateway markets like San Francisco and New York start to see vacancy compress
US Retail sales rose 1% in June despite inflation
Just a few days after inflation hit a 40-year high of 9.1%, the Commerce Department released retail spending numbers for June, which were slightly rosier than expected. Overall retail sales reached $680.6 billion in June, which represents a 1% increase from month-to-month and an 8.4% increase from June 2021. This positive news is especially welcome after sales declined by 0.1% in May, and the 1% increase observed in June was greater than the Dow Jones forecasted increase of 0.9%.
Retail spending rises
June saw sales of gasoline rise by 3.6%, while sales at bars and restaurants increased by 1% and online sales grew 2.2%.
Take these numbers with a small grain of salt though – given the steep inflation, some analysts believe that the rise in retail sales in June is a reflection of the nominal increase in pricing observed across sectors. However, the growth over June 2021’s total still ultimately reflects an upward trajectory post-COVID and speaks to the resiliency of the American consumer.
New York City leasing fundamentals hold strong heading into the summer months
With retail sales showing positive year-over-year growth, we can expect leasing activity to follow a similar trend, as consumers across the country return to in-person shopping experiences, and retailers translate these gains into store expansion. Nowhere else is this made more evident than in our favorite bellwether market, New York City! The dynamics of this market are of national importance, as the trends observed here are often seen replicated later on in other major markets across the country.
New York City quarterly retail deal volume
Leasing velocity in the city continues to remain strong post-COVID, showing a 37.5% increase year-over-year, despite still being down roughly 45.0%, according to a new report from JLL Research. Leasing activity was driven by many new deals in the Midtown submarket, as the corridors of Midtown East, Midtown West, and the Plaza District combined to account for 31.3% of all new leases in Q2.
Dealmakers were encouraged by increased foot traffic from office workers and tourists, as the Times Square Alliance reported in May that foot traffic to the Bowtie reached 300,000 visitors for the first time since February 2020.
Notable new entrants to Midtown include Capital Grille at 200 Madison Avenue, City Winery at 89 East 42nd Street, and ITSUGAR, which signed a 20,000 square foot deal in Times Square.
New York City prime corridor yearly asking rent change, Q2 2022
Asking rents decreased in the second quarter by an average of 12.0% across all the prime corridors tracked by JLL Research, a 1.0 percentage point increase over Q1 of this year, but still down considerably from the 13.5% yearly decrease observed in Q4 2021, which was the largest in five years. Times Square continues to see the sharpest decline in asking rents at 33.0% year-over-year despite multiple tenants in the market, as increased foot traffic spurs deal activity, revealing true market value and encouraging landlords to reprice available spaces.