The Forces Driving Retail and Industrial CRE

Retail Sector Stays Tight, Industrial Adjusting to Supply Surge

Retail Market Exhibits Long-Term Stability ​

• Retail property performance has undergone minimal changes since the pandemic, with overall vacancy holding steady and asking rent growth remaining positive, but slow ​

• The 2024 U.S. retail pipeline is limited, minimizing future supply-side risk ​

• Retail demand momentum is strongest across the sun belt; but several other metros — like Indianapolis, Salt Lake City and Northern New Jersey — are also exhibiting strong performance ​

Industrial Supply-Side Pressures Are Gradually Easing​

• Record-level industrial construction has coincided with slowing demand over the last two years, lifting the national vacancy rate and flattening rent growth ​

• The pace of construction is slowing, pairing with increased consumption and eCommerce sales to provide the runway for the industrial supply overhang to be absorbed over time ​

• Development is concentrated across several metros, hinting at bifurcating performance metrics between heavily- and lightly-supplied markets ​

Construction Trends Are Key To Sector Performance​

• Meager retail construction and the slowing pace of industrial development will underpin performance trends in each sector moving forward ​

• Other variables, such as retail sales, interest rates, job creation, wage growth and consumer sentiment will also influence space demand from tenants

*Through 3Q​
Sources: Marcus & Millichap Research Services, CoStar Group, Inc. ​

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