Limited supply in retail sector drags leasing activity

Despite concerns over inflation and high-interest rates, retail sales continue to grow, according to JLL.

However, leasing activity is constrained by the limited availability of desirable retail space, higher operating costs, labor shortage and increased interest rates. Retail real estate is experiencing a significant shortage of available space, with the availability rate below historical averages. M&A transactions buoyed retail capital markets activity, while power center deliveries remained low, leading to low vacancy rates and steady rent gains. Overall, there is a shift in consumer spending toward experiences and the need for retailers to adapt to changing consumer behavior.

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