Commercial Real Estate, Capital, Insurance, Leasing & Management

Retail Forecast: Key Trends Driving Retail Growth in 2021

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By Alex Wright, Senior Director, and Jonathan Holubik, Senior Associate

Evaluating retail market trends is critical to forecasting economic growth and areas of opportunity in commercial real estate — especially after a tumultuous 2020.

With increased net migration and a strong reliance on essential businesses, in addition to pent-up demand from pandemic restrictions, the retail sector is in a strong position to generate profitable metrics for the remainder of the year. In many markets, customer foot traffic has returned to, and even exceeded, pre-pandemic levels.

Understanding consumer trends, regional demographics and industry supply can help investors execute a fool-proof strategy in an evolving retail market. Halfway into 2021, we are taking a closer look at key trends all owners, developers and users of retail real estate should be watching:

1. A national increase in disposable income exceeding 33% provides significant confidence in retail growth for the remainder of 2021.

2. Construction costs continue to rise as supply for primary materials (steel, plywood, etc.) has been low. This has translated to an increase in asking rent to recoup some of those costs, as well as an overall delay of projects.

3. The southeastern U.S. has seen a dramatic influx of new residents from New York and California, which has exploded the retail demand for major markets.

4. Expect high activity trends from pent-up-demand to continue until at least 2023, with consumers eager to revisit brick and mortar vendors. Florida will be a hotspot for retail with vaccine rollout lifting business restrictions.

Franklin Street’s retail experts provide full-service solutions for buyers, sellers, developers and occupiers of retail space. Learn more about our capabilities here.

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