New retail concepts gain traction, improving sector fundamentals

Although several bank­ruptcies involving high-profile retailers have captured headlines, the sector’s perfor­mance continues to improve as physical retailers explore omnichannel concepts to combat e-commerce, according to Marcus & Millichap’s midyear 2018 report.

With vacancy continuing to recede, 10 basis points to 5 percent, landlords are exploring new ways to fill the space. Today’s mix may include off-price retailers, health clubs and several other relatively e-commerce-resistant con­cepts.

This year’s retail construction activity will remain restricted a by still-tight retail lending environment. Additionally, space vacated by big-box retailers has been cut to smaller footprints suitable for expanding retailers.

Online retailers are entering the brick-and-mortar space to broaden their reach, like Amazon, which de­cided to forge a physical footprint through last year’s Whole Foods acquisition. In ad­dition, Amazon Books continues to expand