After being cooped up for nearly two years because of the pandemic, Americans are shopping in person again, a reassuring indicator for the longevity of brick-and-mortar retail.
Rents are rising, vacancies in U.S. retail real estate are declining, and for the first time since 1995, more retailers opened than shuttered in the United States last year. While asking rents for U.S. shopping malls in the quarter were 16 percent higher than five years ago, U.S. retail vacancies plummeted to 6.1 percent in the second quarter, the lowest level in at least 15 years.
The reduction in new development is a major contributor to the improving indicators in the retail sector. Building began to decline ten years ago as mall demand decreased and well-known businesses filed for bankruptcy. The market’s surplus decreased as a result.
The pandemic prompted businesses to speed up the integration of their online and offline services. Customers can now pick up or return online purchases from more businesses than ever as more parking spaces are being set aside for curbside pickup by shopping center owners. In the next months, high inflation, quickly rising interest rates, and the possibility of a recession might reduce retail sales and increase vacancies. However, executives and analysts noted that retail’s improving performance throughout the pandemic shows the sector is better equipped than it has been in years to handle impending economic turbulence.