Nearly three years after nationwide shutdowns devastated many retail businesses, the sector has rebounded and then some. New research from Cushman & Wakefield found that in the fourth quarter of 2022, overall vacancies dropped to 5.7 percent, the lowest figure reported since 2007, the year before the Great Recession. The brokerage firm’s report also showed that asking rents for retail shopping centers increased in the fourth quarter by 0.8 percent to an average of $22.99 per square foot. The numbers come amid low levels of new retail development and the market absorbing 10.9 million square feet of space, marking the seventh quarter in a row that the retail sector experienced positive absorption.
In its research, Cushman & Wakefield tracked 81 retail markets across the country. Chicago was the top market for positive net absorption, with 1 million square feet absorbed in the fourth quarter. Additionally, 66 of the 81 markets tracked had positive net absorption during the quarter. Phoenix, Atlanta, Denver, Washington, DC, Dallas/Fort Worth, and New York City also ranked high in terms of leasing activity. Despite predictions of a pullback in holiday spending by Americans this past season, credit card data from Mastercard showed that retail sales increased 7.6 percent between Nov. 1 and Dec. 24 in 2022, fueled by spending on clothes and at restaurants. It’s more proof that rising inflation rates may not impact retail spending as much as people think it might.