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Research Brief: Retail Sales May 2021 | Consumers Remain Active; Retail Sales Well Above Pre-Recession Levels

May 24, 2021 by Marcus & Millichap Research Services

RETAIL SALES RESEARCH BRIEF: MAY 2021

Consumers Remain Active;
Retail Sales Well Above Pre-Recession Levels

Retail spending levels off. As the stimulus dissipated, consumer spending dipped 0.8 percent in April as shoppers stepped back from record purchasing. Year over year, core retail sales jumped 37.6 percent, though the annual comparison comes against a backdrop of broad shutdowns in April 2020. Some of the slowdown can be attributed to a wide pause in reopening policy changes last month. Moving forward, however, several modifications are on the horizon that should propel consumer spending higher. Several states are terminating federal unemployment benefits sooner than the current Sept. 6 timeline, which should help retailers staff to today’s occupancy guidelines. Additionally, the CDC lifted mask restrictions for vaccinated individuals, which will relieve some uneasiness among those still taking extra precautions to avoid contracting the virus.

Retail real estate turning the corner. Although net absorption is expected to remain negative over the short term, the return of space to the market is largely aligned with terminating leases rather than newly shuttering stores. Retail establishments that have persevered through the health crisis have the potential to thrive due to pent-up demand. Competition is lower following the bankruptcy of some service-related firms, and additional traffic will boost sales in the coming months. Spending at bars and restaurants is only down 2.0 percent from February 2020, despite foot traffic being 15.6 percent lower. More visitors are expected as capacity ramps up.

Fundamentals hold up better than anticipated. Retail vacancy increased 70 basis points year over year to 5.7 percent in the first quarter despite the tremendous pressure placed on retailers during the pandemic. That figure is expected to rise, though the immense stimulus and support  provided to stores from the Fed and Treasury Department appears to have been more successful than projected. The health crisis may have “trimmed the fat” from bricks-and-mortar retailers rather than eliminating concepts that would have otherwise survived. However, local retailers without access to lines of credit have been disproportionately impacted despite federal intervention.

37.6%

0.8%

Annual Gain in Core Retail Sales in April 2021 Monthly Decrease in Core Retail Sales in April 2021

Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics, Federal Reserve; Placer.ai; Transportation Security Administration; U.S. Census, Bureau

 

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2020 Marcus & Millichap and Limon Net Lease Group

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