Q3 2016 U.S. Retail MarketView Snapshot

December 8, 2016

  • Despite the highest GDP growth recorded in two years, consumer sentiment showed a slight decline in Q3. This drop, though small, is partly attributed to uncertainty during the run-up to November’s presidential election.
  • Total retail and food service sales increased by 2.5% year-over-year in Q3 2016. Core sales, which exclude gasoline stations and motor vehicle & parts dealers, grew at a higher 3.5%. However, both indices showed a slight deceleration from the growth seen in Q2.
  • Demand for retail space throughout the nation remained steady in Q3, with 16.9 million sq. ft. of positive net absorption. Year-to-date, absorption totals 55.7 million sq. ft. —8% higher than the same period in 2015. 
  • Retail completions remain subdued since the recession nearly eight years ago. However, the rolling 12-month total had been on a continuous upward trend between Q1 2011 and Q1 2016.
  • The overall U.S. retail market has seen availability either drop or stay the same for 23 consecutive quarters. The last time overall availability increased was in Q1 2011 when it was near the peak of 10.1%.
  • The U.S. has now experienced 11 consecutive quarters of positive year-over-year rent growth. Net asking retail rent averaged $16.44 per sq. ft. nationally in Q3—up 4.1% from Q3 2015 and 7.3% from the cycle low of $15.32 per sq. ft. in Q4 2013.
  • Acquisitions of U.S. retail properties remained very active in Q3, but at slightly lower levels compared with last year and earlier in 2016.
  • The healthy labor market and increased traction in wage and income growth are boosting consumer confidence, which bodes well for continued improvement in U.S. retail market fundamentals.

 
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