The availability rate for neighborhood, community and strip centers (NC&S) across CBRE EA’s Retail Sum of Markets was at 9.03% in Q2 2020 – an increase of 38 basis points (bps) from the previous quarter of 8.65%. That rate is 28 bps above the year-earlier figure and 397 bps below the post-recession peak of 13%.
The availability rate increased from the previous quarter in 54 of EA’s 63 tracked markets (including the sum of markets). Bakersfield, Birmingham, Dallas, Denver, Houston, Miami, Nashville, Orlando, Sacramento, and Tucson were among the markets where that increase was 80 bps or more. Cincinnati experienced the largest quarter-over-quarter decrease, with a decline of at least 50 bps. Year-over-year rate declines were recorded in 21 markets; some of the largest were in Trenton, Cincinnati, Seattle, Tulsa, and Raleigh.
Retail sales grew 17.7% from April to May, exceeding economists’ expectations. This is a sharp rebound from the March and April sales figures, as more states started reopening and easing restrictions. However, May’s figure is still 6% lower than the sales figure last year.
It remains unclear whether retail sales will continue to have a strong bounce back in the following quarters once the federal stimulus checks and unemployment benefits disappear. The resurgence in COVID-19 cases that hit states like Florida, South Carolina, Texas, and Arizona also negatively impacted retail consumption as consumers exercise more caution going out to public places and retailers face potential shutdowns due to safety concerns. On the retail front, we are continuing to see high-profile bankruptcies, which will likely continue as retailers run out of liquidity, face limited capacity restrictions, higher PPE and labor costs coupled with potentially weak consumer demand.
The current Q2 availability rate is subject to change as EA receives more data in the coming weeks, but there will still be lags due to the data collection cycle and that many leasing activities have been frozen.