The availability rate in U.S. downtown markets was 88 basis points higher than the suburban rate in Q3 2024, the largest spread since CBRE EA began collecting retail data in the early 2000s. The wide gap reflects the impact of remote work, which means that consumers are spending more of their income closer to home.

The big picture, however, can conceal a lot of nuances. We dove deeper into downtown retail performance by conducting a hexagon analysis across 19 cities. The graph below compares rent growth in each district type with its market-wide average.

The best-performing downtown districts were those where retail coexists with prime/trophy office buildings— the type that have maintained the highest occupancy levels in today’s market. These so-called “Prime Business” districts showed the strongest rent growth relative to their overall market. Prime Business district performance even topped so-called “Vibrant Mixed-Use” districts, which are characterized by a mix of urban residential, entertainment, street retail and prime office. This outperformance vis-a-vis Prime Business districts is mainly due to rent levels in Vibrant Mixed-Use districts already being so high, sporting a 74% premium to the Prime Business districts.

“Non-Prime Business” districts, which have no prime office space, also outperformed their market average, mainly because limited space availability supports higher rents. Many such districts are located adjacent to suburban office parks, which means they benefit from consumers’ newfound tendency to spend more money closer to home. For real estate investors, retail can sometimes be an afterthought, but retail that’s positioned proximate to prime offices may deserve a look, especially now that office fundamentals appear to be turning a corner.