Retail Real Estate's top trends in 2022.

The latest JLL Retail Outlook report shows that as consumers flood back to stores and social activities, demand for experience is on the rise. Malls had the highest net absorption since 2017 as demand for large spaces spiked and rent growth remains strongest in Sunbelt markets with robust population growth.

Sunbelt markets continue to shine

As the economy continues to recover from the worst effects of the pandemic in 2020, we’ve seen marked improvement in retail rents, which are tracking 3.4% higher than they were a year ago. For the last decade, retail growth has largely followed population and employment growth and with Sunbelt markets showing consistently strong population increases, this has translated to outsized rent gains in markets like Nashville, Miami, Tampa and Austin.

Strong correlation between retail rent growth and population growth persists

Big-box demand in malls pushed up average lease size

Malls saw tremendous improvement in demand during the first quarter. Net absorption, which had been negative for seven of the past eight quarters, surged to 2.5 million square feet. Much of this absorption came from super regional malls, which saw a spike in demand for large spaces. The average size of new mall leases signed in Q1 2022 rose 28.0% from the 2021 mall average to 9,070 square feet. This was largely a result of an increase in big-box leases during the first quarter from furniture stores, theaters, schools and grocery stores. Notable move-ins during the quarter came from craft stores like Hobby Lobby, entertainment venues like Belong Gaming, and F&B locales like Fogo de Chao.

Average lease size soars for super regional malls in Q1 2022

Experience makes a comeback

Consumers’ return to in-store shopping and social activities is well- entrenched. Eatertainment attractions like Dave & Busters and Main Event saw traffic surge 22% from April 2019 levels and more than 36% year-over-year. Visits to bar & pubs are also up from 2019 levels. While movie theater traffic remained almost 50% below its 2019 levels in April, the opening weekend for Top Gun: Maverick hit box office records, making an estimated $156 million domestically in it four-day opening weekend. This gives the Tom Cruise-fueled sequel the record for biggest opening over Memorial Day holiday weekend – surpassing “Pirates of the Caribbean: At World’s End,” which made $153 million in 2007. 

My husband and I watched Top Gun: Maverick at a 10:30 pm iPic showing on Sunday night because we simply could not get any ticket before then. Despite the late viewing, I was on the edge of my seat for much of the film. It was everything a summer blockbuster should be: exciting, grand and heartwarming. 

With more blockbusters slated for release this summer (looking at you, Jurassic World Dominion) we could see significant spikes in movie theater traffic. AMC Theatres is betting on box office recovery in the coming months and is exploring buying smaller cinema chains and has also taken over leases of the shuttered ArcLight Cinemas in San Diego and Washington, D.C.

Consumers once again move toward experience