Marcus & Millichap Research Brief: Retail Sales
Annual Retail Sales Remain Strong; Property Fundamentals Resilient
August 2021 | Marcus & Millichap
Consumers tapped brakes on spending last month. Core retail sales dipped 0.7 percent on a monthly basis in July. Flattening consumer confidence likely indicates that the increase in coronavirus cases due to the delta variant is impacting shopping behavior. Clothing store sales, for instance, declined 2.6 percent last month, while department stores reported a 0.3 percent decline. The termination of federal unemployment benefits in roughly half of U.S. states may have also impacted retail sales in July. At least some of the 8.7 million unemployed Americans likely tightened their belts, contributing to last month’s pullback in consumer spending. Although July was a relatively soft month for consumers, core retail sales are up 13.8 percent annually and 16.6 percent from the pre-COVID-19 level, which largely mitigated the negative impact on retail asset performance through the health crisis.
Restaurants a bright spot for sales. Diners showed little hesitation in July, pushing spending at eating and drinking places up 1.7 percent for the month, and 38.4 percent annually. The renewed interest in dining out is paying partial dividends for single-tenant properties. National vacancy turned around during the second quarter, falling 10 basis points to 5.2 percent. Prior to the recession, the rate was 4.8 percent. The average asking rent jumped 1.3 percent in this year’s spring period to $20.75 per square foot.
