Limon Net Lease Group

economy

Retail Sales Research Report | August 2021

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Annual Retail Sales Remain Strong; Property Fundamentals Resilient

  • Consumers tapped brakes on spending last month. Core retail sales dipped 0.7 percent on a monthly basis in July.
  • Restaurants a bright spot for sales. Diners showed little hesitation in July, pushing spending at eating and drinking places up 1.7 percent for the month, and 38.4 percent annually.
  • Inflation weighs on several sectors. Rising energy prices continued to fuel an increase in sales at gasoline stations last month, where spending increased 2.4 percent, the second largest advance.

New Factors Emerge

  • Vaccine passports gain momentum. Two of the nation’s largest cities, New York and San Francisco, have implemented vaccine mandates that will limit access to most retailers for those who are not vaccinated.
  • Health crisis emergency measures ending. Without an extension, the federal unemployment benefits expire nationwide on Sept. 6, which will remove income from millions of people out of work.

Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; Conference Board; CoStar Group, Inc.; U.S. Census Bureau

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The Winners and Losers of the Fragmented CRE Recovery: A Tale of Two Cities

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National Recovery is Just One Piece of the Story

  • The move towards a full national reopening will bode well for the economy and commercial real estate
  • But the pandemic has impacted every market differently, with some seeing rapid recoveries and others lagging

Fragmentation Occurring in Commercial Real Estate

  • Nationwide, Apartment and Retail rents are down slightly, Office is down moderately, and Industrial rents rose
  • However, Inland Empire and Sacramento Apartment rents rose 11% and 7%, while San Jose rents dropped 16%
  • This bifurcation is found across all property types and metros, creating drastic variance in the local level

Investors Must Pay Attention to Local Nuances

  • The situation can differ greatly from market to market, even within the same state
  • Investors should understand national trends, but also be aware of the variance between individual markets
  • Leveraging experts on particular property types and markets will be crucial for crafting an investment strategy
* As of 1Q 2021
Sources: Marcus & Millichap Research Services, RealPage, Inc., CoStar Group, Inc.,

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One Year Into COVID: The Light at the End of the Tunnel is Getting Brighter

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Numbers of March 10, 2021
Trailing 7-day average for daily Coronavirus cases

As we pass the one-year mark of the pandemic, the light at the end of the tunnel is getting brighter. The recently passed $1.9T stimulus combined with the ongoing vaccine rollout is boosting the 2021 outlook.

  • The hard-hit Hotel & Retail sectors will benefit as reduced restrictions encourage travel and shopping.
  • Apartment demand may strengthen as household formation re-invigorates amid rising job growth.
  • Strong momentum will likely continue for Industrial, though rising supply does pose some risk.
  • Vaccinated workers may accelerate the return to the Office, though the future of working remains unclear.

Economic Forecasts for 2021 Increasingly Optimistic

  • The recently passed third round of stimulus and the rising rate of vaccinations have bolstered the 2021 outlook
  • Economists are forecasting 2021 GDP growth from 5% up to 8.1%, which would be the highest growth since 1950
  • The pace of job recovery is expected to accelerate as vaccinations allow more states to loosen restrictions

Economic Recovery Will Bolster Hardest Hit Property Types

  • Vaccinations could encourage summer travel, raising Hotel occupancies and restoring some hospitality jobs
  • Reduced restrictions could help stabilize Retail, which had negative absorption of 26M sq. ft. last year

Stronger Outlook Provides New Tailwinds for CRE

  • Apartments could get a demand boost later in the year as job creation invigorates new household formation
  • Industrial is expected to maintain its strong momentum, but risk of elevated supply remains
  • While vaccinated workers can return to the Office; uncertainty remains on how quick that recovery will be

Sources: Marcus & Millichap Research Services, The New York Times, Bloomberg L.P.

$900 Billion Stimulus Package to Support  Economy, Bolster Real Estate Outlook

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COVID-19 STIMULUS PACKAGE SPECIAL REPORT
1/15/2021 by Marcus & Millichap Research Services

After significant delay, Congress passed a stimulus bill that will serve to limit the threat of a double-dip recession after economic growth faltered in December. The bill includes additional support for the unemployed, rental assistance, and direct cash payments to individuals. Small businesses, cultural institutions, and other hard-hit industries will also receive help.

Key Features Include:

  • How the stimulus package will support commercial real estate revenues
  • Impact of legislation on economic growth prospects in 2021
  • Specific industries targeted by bill for additional support

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