U.S. Single-Tenant Net-Leased Retail
Already on Solid Footing, Single-Tenant Demand
Poised to Exceed Near-Term Supply
Outlook aided by consumers’ focus on personal care and dining. Exhibiting historically low vacancy and a record asking rent in June, the single-tenant sector exemplifies the overall strength of the nation’s retail segment. A robust labor market that continues to outperform expectations is supporting consumer spending at brick-and-mortar stores and restaurants. Before 2023, monthly core retail sales, which exclude gas and auto purchases, had never exceeded $500 billion. Since January of this year, that threshold has been surpassed seven times. This achievement reflects consumers’ prioritization of necessities and dining out during the first nine months of 2023. Over this interval, spending at health and personal care stores, and restaurants and bars, rose 7.9 and 11.9 percent, respectively, on a year-over-year basis. Should these trends continue amid a pullback in construction, a multi-year span of positive net absorption should extend.