by Dan Rafter
You might think that all brick-and-mortar retailers are struggling today, what with Amazon and online sales a constant threat.
But the truth is more complicated, as the latest national retail forecast from Marcus & Millichap highlights.
Yes, several big-name retailers are struggling. J.C. Penney recently announced that it would close 138 stores. Gander Mountain says that it is closing 32 stores. Other top retailers such as Macy’s and Target are working through challenges of their own.
However, in its retail report, Marcus & Millichap says that the retail sector is actually flourishing despite the continued expansion of online retailing. This is largely because of the strength of service retail — such as entertainment and dining retailers — and value retailers, mostly dollar stores. Marcus & Millichap said that fueled by these segment types, the retail sector will generate 81 million square feet of net absorption this year, while the national retail vacancy rate should fall to 5.1 percent by the end of 2017.
This doesn’t mean that the retail sector doesn’t face challenges. Marcus & Millichap predicts that in 2017 new retail developments will total just 49 million square feet. That’s a drop from 2016.
And Midwest cities aren’t exactly retail hotspots right now. Marcus & Millichap ranks major cities according to such factors as retail vacancy rates, rents and development. Marcus ranks the Seattle-Tacoma market as the top retail market for 2017. Nashville is the first Midwest city on the list, ranking a strong fifth in the country.
After that, it’s a long way down to 25th, where the Minneapolis-St. Paul market ranks. Chicago is the next highest-ranked Midwest city at 27, while Columbus comes in at 30 and Louisville at 35.