"Retailers’ balance sheets are healthier
than they were pre-pandemic.”
CHICAGO, IL – Consumer
spending on retail has rebounded, eclipsing pre-COVID levels. Now, investor
confidence – and demand – is following, evidenced by a bounce-back in retail
real estate transaction volumes.
 |
| Danny Finkle |
For
retail, that means capturing an 11 percent share of transaction volume year-to-date
in 2021, approximately where it was prior to the 2020 lockdowns.
“Consumer shopping patterns have bounced back
due to pent-up demand over the past 12 months. People are spending money across
the spectrum of retail locations,” said Senior Managing Director Danny
Finkle, JLL’s retail co-leader in capital markets.
 |
| Chris Angelone |
“This increased spending goes hand-in-hand with investor sentiment, so, as consumers spend more on food and beverage, apparel and other non-essentials and spend time in malls, departments stores and lifestyle centers, capital will follow.”
While grocery-anchored retail continues to
dominate investment sales with the lowest levels of vacancy, the total U.S.
retail transaction volume has topped $10.7 billion for assets over $5 million year-to-date
through May, and community and neighborhood centers have the highest trade
volume of that total.
Even with the popularity and insultation of the sub-sector, all retail segments, including malls and power centers, stand to benefit from investor demand returning to retail.
 |
| Barry Brown |
“Other
categories of retail are performing well, as retailers’ balance sheets are
healthier than they were pre-pandemic.”
Along with the release of unprecedented pent-up demand, sooner-than-anticipated re-openings have eased investor concerns over the long-term health of both retail tenants and the retail property sector at-large.
This increased confidence is also demonstrated in the uptick in
investor demand occurring in most markets across the country.
“We have seen increased investor demand in not
only major markets but also secondary markets for quality essential assets, as
well as value-add offerings,” said Senior Managing Director Barry Brown,
JLL’s retail co-leader in capital markets.
 |
| Naveen Jaggi |
Recently, the U.S. Census Bureau released its
advanced monthly retail trade report, and with economic growth strong and
retail foot traffic seeing steady gains, May 2021 saw a 28.1 percent increase
year-over-year.
Additionally,
the apparel category saw its sales jump 200.3 percent from May 2020, while the
food and beverage segment saw a 70.6 percent increase from last year. Overall,
the year-over-year comparison shows a robust rebound in May.
“Retailers are beginning to feel a sense of
relief just in time for summer activities,” said Naveen Jaggi, President
of Americas Retail at JLL. “We can expect consumer confidence to continue to
make gains as more people return to the office, socialize, shop and eat at
their favorite local restaurants.”
The National Retail Federation predicts retail
sales will grow between 10.5 and 13.5 percent in 2021, which will continue to
positively impact commercial real estate and that includes that U.S. retail
debt market, which remains liquid.
 |
| Chris Drew |
“As the fundamentals in the retail space have improved, lender demand for high-quality assets has also returned,” said Senior Managing Director Chris Drew, retail financing specialist and co-head of JLL’s Capital Markets’ Miami office.
“We are witnessing a material increase in the
number of institutional-quality lenders that are competing to make loans for
this asset class and believe that this trend will only continue as the economy
continues its historic rebound.”
JLL’s Capital Markets group is a full-service
global provider of capital solutions for real estate investors and occupiers.
 |
| "...Community and neighborhood centers have the highest trade volume..." |
The
firm's in-depth local market and global investor knowledge delivers the
best-in-class solutions for clients — whether investment sales advisory, debt
placement, equity placement or a recapitalization.
The
firm has more than 3,700 Capital Markets specialists worldwide with offices in
nearly 50 countries.
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JLL
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