New Haven-Fairfield County Retail Investment Forecast
Slowing Construction Stimulates Fundamentals;
Buyers Gain Some Clarity on Signs of Recovery
Retail sector benefits from uptick in physical shopping and restrained pipeline. Consumers came out in force during 2021 to spend money saved during the previous year's lockdowns, pushing retail sales volume past 2019 levels. Flourishing in-store retail activity should generate demand for square footage, though the ongoing labor shortage may create headwinds for companies looking to expand operations. Hiring velocity is projected to continue at a rate above the historical metro average, but employment will end this year 13,000 positions under pre-health crisis levels. This year's delivery volume will tick up from the previous span's record low of 77,000 square feet, though 2022's construction pipeline remains conservative when compared to post-2008 norms. Preleasing rates approaching 70 percent on space under construction will further restrain upward pressure on vacancy and mitigate competition for existing inventory. Despite headwinds presented by emerging COVID-19 variants, fundamentals are normalizing, and the market offers upside potential as the current health crisis improves.