That’s according to JLL’s Retail Outlook for the rest of 2021, which predicted net absorption of retail real estate, or actual move-ins, will total 20 million sq. ft. in the second quarter of this year.
For all of 2021, consumer spending is expected to grow 8.8%––the biggest rate of growth since World War II, according to JLL.
Clothing and accessories are the top retail categories during the second quarter, surging 163% compared to the same period last year. Electronics and appliances were the second-highest category for the quarter, with 78% growth, followed by food and beverage (up 72%), and furniture and home furnishings (up 70%).
Despite the huge demand, supply chain disruptions and the Delta variant are posing challenges for the rest of 2021. Fortunately, rising vaccination rates have led more shoppers to return to stores with renewed confidence.
In addition, store closures and bankruptcies have slowed down compared to the past few years. However, malls still faced challenges, with a net absorption decline in the second quarter, by more than half a million sq. ft. Neighborhood centers and strip malls saw higher net absorption. Discount stores have been a clear winner of the pandemic, with 1,800 stores opening this year.
As demand for retail space has risen, so have rents in certain cities. Rents were up 6.5% in Raleigh, North Carolina, 5.5% in Nashville, and 4.3% in Seattle and Atlanta in the second quarter compared to 2020, while rents dropped in Boston, San Francisco, Los Angeles, Denver and New York, Chain Store Age reported. As mall vacancies increase, rents are likely to fall, JLL noted.