Limon Net Lease Group

Retail

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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Eviction Moratorium Report | August 2021

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Eviction Pressures Abating as Economy, Labor Market Continue to Improve

  • Rising infections prompt moratorium extension. On Aug. 3 the Centers for Disease Control and Prevention enacted a new order halting residential evictions in counties with substantial or high levels of COVID-19 community transmission.
  • Federal aid and job growth lower eviction pressure. Contrary to initial expectations, rent collections have held up fairly well during the health crisis.
  • Multifamily sector performing well. Rental demand has already recovered substantially from last year, with a record number of apartments absorbed in the second quarter.

Additional Factors:

  • Court backlog may provide time for aid to arrive. Congress has allocated close to $47 billion in rental assistance, with $25 billion released so far, but the rollout has been slow.
  • Estimates of renter hardship likely skewed by statistical issues. Some higher-end estimates of rent delinquency have come from the Household Pulse Survey, a recent experimental dataset.

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Is the Economic Recovery Still on Track? CRE Outlook Remains Strong in Q2

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CRE Outlook Remains Strong Despite GDP Growth Shortfall

U.S. Economic Recovery Underway, Varies by Sector

  • GDP grew by an annualized rate of 6.5% in 2Q, a bit below expectations but higher than pre-pandemic levels
  • In the first half of 2021, new job creation and core retail sales exceeded any other first half period
  • Air travel and consumer confidence near pre-pandemic levels; home sales elevated, but supply constrains linger

Economic Recovery Strengthening CRE Demand

  • Economic recovery driving demand for Apartments, Industrial, Retail, Hotels, Seniors Housing and Self-Storage
  • Office space demand still lagging, but absorption turned positive in 2Q; first time since the pandemic began
  • Strong growth taking investors off the sidelines, bolstering market liquidity and reviving transaction activity

Will the Real Estate Market Maintain its Momentum?

  • Rising debt availability for most asset types and expectations of low interest rates should sustain liquidity
  • New COVID-19 variants and possible tax changes could emerge as headwinds, but outlook remains sanguine

* Through 2Q
Sources: Marcus & Millichap Research Services, BEA

Watch the Video Below

Client Webcast REPLAY: Retail Trends 2021 | What’s Next as We Navigate the Impacts of COVID and Macro-Economic Factors?

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2021 Retail Real Estate Outlook:
What’s Next as We Navigate the Impacts of COVID and Macro-Economic Factors?

Original Broadcast: May 24, 2021

The replay of Retail Trends 2021 is now available. Daniel Taub hosted a panel of industry leaders to discuss the emerging trends and investment outlook for retail real estate. Hessam Nadji delivered a market update special presentation.

Featuring:

  • Beth Azor, Founder and Owner, Azor Advisory Services
  • Conor Flynn, Chief Executive Officer, Kimco Realty Corp.
  • Joe Zidle, Managing Director, Blackstone

Hosted By:

  • Daniel M. Taub, Senior Vice President, Retail Division, Marcus & Millichap

Special Presentation By:

  • Hessam Nadji, President and CEO, Marcus & Millichap

CLICK HERE TO WATCH REPLAY >>>

CLICK HERE FOR PRESENTATION SLIDES >>>

What’s Driving Interest Rates Higher?

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By Marcus & Millichap’s Research Services

Economic Outlook Placing Pressure on Interest Rates

  • The Georgia Senatorial run-off results reduced political uncertainty and raised the chance of additional stimulus
  • This has strengthened the 2021 economic outlook
  • As a result, the 10-Year Treasury is back up to 1.1% from 0.5% back in August, but still far from 1.8% a year ago

Rising Rates Already Impacting Commercial Real Estate

  • Apartment loans have seen rates rise 30-40 basis points over the last few weeks to the upper 2% to mid-3% range
  • Quality Office & Industrial rates run in the low 3% range; Retail Centers & Self-Storage can fall in mid-to-upper 3%
  • Hotels financing remains challenging, but available

Upward Momentum Likely to Continue

  • Advancements in the economic and health care fronts are signals that interest are likely to continue rising
  • Diminishing uncertainty is also taking more investors off the sidelines, increasing competition in the market
  • For inventors who plan to buy this year, locking in these favorable rates may prove beneficial in the long-ter
* Average cap rate through December 2020; 10-year treasury through January 13, 2021
Includes apartment, retail, office, and industrial sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, Federal Reserve

 

RETAIL SALES RESEARCH BRIEF: DECEMBER 2020

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Spike in Positive Cases Results in Tighter Lockdowns, Pares Spending 

By Marcus & Millichap Research Services 12/2020

Dwindling income and renewed closures push retail sales lower. The last of the supports from the CARES Act are winding down, including an extension of state-level unemployment benefits that will expire at the end of this year. Furthermore, several major cities have ordered businesses to temporarily shutter or reduce capacity.

As a result, core retail sales declined 0.8 percent in November, marking the second consecutive monthly decline. Year over year, core retail sales have climbed 5.9 percent, largely due to a lack of alternative spending options. Only a handful of sectors that have already thrived through the health crisis posted a monthly gain.

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