Commercial Real Estate News
U.S. Retail Foot Traffic to Surpass Pre-Pandemic Levels by 2025
According to a new report from CBRE, the majority of street retail districts appear to be thriving with foot traffic in prime trade areas expected to fully recover to pre-pandemic levels by Q3 2024 and surpass those levels by 2025.
By Q4 2023, foot traffic in 10 prime trade areas tracked by Placer.ai had reached 81% of 2019's levels, demonstrating a strong recovery.
During the pandemic, retailers took advantage of low rents to lease more space. Now, investors are benefiting from rising rents in prime trade areas, with an increase of 9% in the Americas and 5.8% globally since 2021.
"Retailers face numerous obstacles to finding the prime space they desire, including record-low availability and rising rents," said Laura Barr, Americas Retail Leader for CBRE. "These market conditions are already inspiring forward-thinking retailers and investors to creatively solve for retailer growth targets despite a lack of space."
Retailers that can't find space in the ideal location may opt to establish multiple locations in alternative street-retail districts with lower rents and fewer build-out restrictions and hurdles to secure space. A clustering location strategy can create synergies, brand expansion and convenience for customers, especially for digital pickups and returns.
Retailers understand the importance in today's omnichannel environment of having a physical store alongside their online presence, as almost 70% of retail sales are digitally influenced. According to Forrester, in-store sales accounted for 78% of sales growth in 2022, a significant increase from 46% in 2019. The shopping center industry association ICSC estimates that opening a store can boost a retailer's digital sales by nearly 7%. Conversely, closing a store can suppress digital sales by 11.5%, according to ICSC.
Although e-commerce was once believed to eventually eclipse brick-and-mortar shopping in popularity, e-commerce and in-store sales have become so interconnected that they lead to demand for more physical space.
