Marcus & Millichap

Net-Leased Retail Research Report

National Report, First Half 2018

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Tight Labor Market, Enhanced Spending to Continue; Tenants Adapt by Combining Physical and Online Retail

Strengthening economy invigorating consumption. Retail sales will continue to grow this year as discretionary income ascends. Bolstered spending can be linked to advancing wages from a competitive employment market, along with increased take home pay from the revised tax plan. In 2017, retail sales posted a 4.3 percent increase, with home furnishings playing a primary role in the jump. The category’s strong showing can be attributed to the first hike in home ownership since 2009 for those under age 35. Roughly two-thirds of this cohort are first-time home buyers, leading to more purchases required to fill residences. Electronics and appliances also reported a robust gain as the subset supported the largest increase in holiday retail sales since 2011. This year, retail spending is forecast to post a 4.5 percent advance, buoyed by the continued acceleration of e-commerce growth. Although online stores consistently expand their footprint, the e-commerce sector is just a small part of a much larger retail setting.

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