Seattle-Tacoma retains top spot on National Retail Index

Seattle-Tacoma maintains the top spot on the National Retail Index (NRI), while San Francisco and Boston hold onto second and third place, respectively, according to Marcus & Millichap’s 2018 U.S. Retail Investment Forecast report.

In all three metros, robust job growth driven by technology companies provides higher-paying jobs, attracting additional residents and generating increased retail demand. Meanwhile, restrained deliveries funnel new retailers into existing space, keeping vacancy tight.

The largest jump in the Index was posted by Dallas/Fort Worth (#12). The metro vaulted seven places as a significant drop in deliveries amid rising demand tightens vacancy and drives rents higher. Sizable upward leaps were also posted by Denver (#11) and Atlanta (#22), each climbing six rungs as strong employment and population growth bolster retail sales this year.

Midwest metros with slower job and population growth are prominent in the lower portion of the Index. Milwaukee (#42), Cleveland (#44), Kansas City (#45) and St. Louis (#46) hold their positions from 2017 at the bottom of the NRI, interrupted by New Haven-Fairfield County (#43).

Rising consumer confidence levels and the potential for higher wages will carry retail momentum through 2018. Historically low completions and strong retail sales have buoyed space demand amid increased concerns about e-commerce and its impact on store closures. The emergence of online distribution combines with tighter construction lending and investor caution to restrain development.

Customers are changing the way they shop and turning to more experience-oriented establishments. Retailers are evolving with many enhancing online offerings and expanding through smaller-format stores.

The evolving landscape of multi-tenant assets has supported vacancy improvement in this property type through several tailwinds for eight consecutive years. Owners will continue to realign strategies moving forward to attract these unique retailers that draw consumers.

“Undoubtedly, new challenges will emerge in 2018, but a broad range of forward-looking metrics point to continued strength for retail investments,” predicts Marcus & Millichap.