U.S. retail sector: The worst is likely over

After a challenging 2020, retail market conditions improved in the first quarter of 2021, according to Cushman & Wakefield.

As the quarter unfolded, government stimulus payments were distributed, and vaccinations accelerated, shoppers became more active and the retail sector began to improve. Net absorption registered at -740,000 square feet — by far the smallest negative absorption recorded since the pandemic first began — and leasing activity, while down slightly at 25 million square feet (msf), was above the second quarter 2020 low. Retail vacancy rose just 10 basis points from the prior quarter to 7.3 percent.

Cushman & Wakefield believes a strong rebound scenario for the retail sector is starting to form. In fact, the e-commerce surge that occurred during the lockdowns last year is already starting to backtrack to reflect more normalcy. Online sales as a percentage of core retail sales jumped from 17 percent in 2019 to nearly 25 percent at the peak of