Retail real estate outperforms as shoppers return to stores

Retail properties passed an important milestone at the midpoint of the year, as the national vacancy rate returned to levels recorded in 2019, according to a report by Marcus & Millichap.

Operations at physical retailers are being aided by the labor recovery. The addition of 841,000 jobs in July and August pushed the employment base beyond the previous pre-pandemic high. That, paired with additional savings accumulation earlier in the health crisis, are supporting post-lockdown shopping. Spending as of July was up 19 percent from February 2020 on an inflation-adjusted basis, supporting leasing activity. Multi-tenant space, in particular, has seen an acceleration in absorption so far this year relative to 2021. While multi-tenant vacancy still trailed the 2019 rate by 30 basis points as of June, returning shoppers are bolstering fundamentals, especially in the suburbs.

To read the full report,