Is The US Over Retailed?

May 22, 2017

Retail employment losses and sales statistics were highlighted this past March in almost every media outlet. The story on losses is not as bad as it seems. The retail vacancy rate for community shopping centers and neighborhoods was flat in the first quarter at 9.9 percent, the same as Q1 in 2016.

According to Reis, a real estate research company, the poor retail store performance has yet to translate into actual closings, but we can expect to see more vacancies in the next three or four quarters. Other factors are responsible for poor retail store performance.

Reis reports that many of the stores closing are in more rural areas and outside of the 80 primary metros they are currently tracking. Furthermore, only 14 of the 82 primary metros tracked by Reis show a year-over-year loss in retail jobs.

The simplest way to find out which markets may be over saturated with retail centers is to compare retail employment to population. While the numbers show that the retail industry could be over saturated in the 80 metros Reis covers, the impact on the real estate industry may not be as negative as perceived. Many non-traditional businesses are expanding into empty retail space. This increase in non-traditional retail center tenants provides hope to the over saturated retail markets as more traditional retail stores move toward e-commerce.

Is The US Over Retailed?