Despite rising inflation, consumers spent 18% more in March 2022 than they did two years prior.
High inflation will remain a concern for retail spending, yet Green Street’s “Taking Stock of the Last Two Years” report** points to strong rent growth performance for neighborhood and grocery-anchored centers with stronger growth in the Sunbelt region due to growing in-migration and household incomes.
Retail availability hit a 10-year low and rents grew by 2.4% year-over-year, the highest increase in more than five years, according to CBRE. The same report by CBRE showed that net absorption remained positive despite muted new construction.
Retailers are also “rightsizing” their space at the end of their leases, letting go of any space that represents a drag on their profits. On top of rightsizing their existing space, retailers are also rightsizing their entire portfolios by closing down stores that are hindering revenue growth. With muted new construction, we expect to see more redevelopment of existing space, using that “leftover” square footage from renegotiated leases to create new retail locations.
* Retail Insights, Green Street, 2022
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