Drivers Lift The Market Segment

The 2017 US Retail Investment Forecast has recently been released by Marcus & Millichap. The reported segment seems to be soaring, and the good news continues to show up for real estate investors. As consumer spending increases and new redevelopment opportunities arise the future for the retail market seems healthy for the remainder of the year.

There has been some surprising insight into the e-commerce space as online businesses are following consumer trends. It appears that traditional brick and mortar stores are realizing the enormous necessity of online shopping, while e-commerce giants like Amazon are seeing the value of having some physical storefront property.

The report goes on to show that increased job and wage growth should continue through 2017 which will aid in the growth of retail sales and expansion.

Opportunities arise as retail spaces seem to be transitioning their business models. Large retail anchor stores appear to be on the decline. The need for tenant revenue has forced landlords to redesign spaces to increase yield. As traffic increases, owners can then raise rents.

Simultaneously, Marcus & Millichap shows a locational dynamic, this between core markets and secondary and tertiary locales. First, pricing and cap rates have bolted above pre-recession peaks in primary markets. At the same time, the secondary and tertiary are below the previous peaks.

This trend would make it appear that with the positive upticks in the employment numbers, and as incomes continue to rise in these markets, retailers will be attracted, boost retail vacancy and grow their profitability.