by Dan Rafter
How busy was the retail sector in the United States last year? Marcus & Millichap says that retailers absorbed nearly 75 million square feet in 2014. That easily eclipsed the nearly 40 million square feet of new retail space delivered during the year.
The end result? The average retail asking rent jumped 2.2 percent last year.
That’s the good news from Marcus & Millichap’s 2015 national retail report.
The retail market, of course, was hit hard during the economic downturn. But it has rebounded nicely in the last two years. Marcus & Millichap predicts, too, that the retail sector will enjoy a strong 2015. The company predicts that this sector will seen a net absorption of nearly 88 million square feet this year. This will cause vacancy rates in the retail sector to drop another 60 basis points, falling to 6 percent across the nation in 2015.
Here is more good news: Marcus & Millichap says that retail sales volume grew 33 percent to $83.5 billion in 2014, surpassing the sector’s peak in 2007. Values have recovered 27 percent from the sector’s law point.
This good news is tempered somewhat in the Midwest. Marcus & Millichap’s 2015 National Retail Index doesn’t rank many Midwest markets high when it comes to expected retail activity this year. San Francisco, New York City and San Jose rank first, second and third in this index. The first Midwest city doesn’t show up until spot number 22, which is where Chicago lands.
Minneapolis-St. Paul comes in at 25th place on the company’s retail rankings, while Columbus brings up the 31st spot. Cincinnati ranks 37th, Louisville 39th, Indianapolis 41st, Kansas City 42nd, Milwaukee 43rd, St. Louis 44th, Cleveland 45th and Detroit 46th. Yes, this is a trend: Midwest cities are bringing up the rear of Marcus’ Retail Index.