March 13, 2017 (STLRealEstate.News) The U.S. retail market seems to be making headlines lately, as realtors are fascinated with the online shopping trend that is resulting in the closing of millions of retail locations. The market is changing rapidly, and there appears to be a greater demand than supply today. According to the Washington, D.C.-based National Retail Federation, retail sales during November and December 2016 increased by 4 percent over 2015 to $658.3 billion, which greatly exceeded the forecasts. What does that mean for future retail forecasts? Here are a few trends to watch in upcoming months.
1. Lagging Construction
New-construction on retail spaces has been historically low ever since the housing bubble in 2008. The new inventory is far below historical (30-year) annual averages of growth in many U.S. metro areas.
Consumers are actually outpacing a lot of established retail stores today. The problem is that the concentration is a little lopsided, forcing stores like Macy’s and Kohl’s to close thousands of locations nationwide while stores like Forever 21 can’t seem to keep up with demand.
3. Health Conscious
For whatever reason, people are health conscious today, and industry related to health, fitness, and organic-based products is doing incredibly well. These expanding sectors are the ones scooping up any vacancies available today.
4. Declining Department Stores
Department stores and big-box retails, like Sport Chalet and Sports Authority, all filed bankruptcy in 2016. Macy’s is closing 68 of its 750 department stores in 2017. Kmart and Sears plan to close 150 stores in the near term as select storefronts undergo the real estate liquidation process. It’s not looking good for the traditional shopping centers.
5. Online Shopping
Why spend the money going out to the mall when you can buy everything on Amazon.com today? The online shopping trend is making it incredibly hard for construction workers and realtors to understand what kind of buying trend is coming in the future.
Stay tuned for more updates on commercial real estate and the U.S. retail sector.