A recent study of the top retail markets in the US shows us that the Sunshine State has more to offer than just fun in the sun.Online real estate marketplace Ten-X recently unveiled its “Retail Market Outlook,” a report that takes a long-term perspective and points us to the top five markets for investors on both the ‘buy’ side and the ‘sell’ side. Topping the list on the buy side were the Florida markets of Miami and Fort Lauderdale, which took down the number one and two position respectively.
Both markets have benefitted from strong employment numbers fueled by a steady economy, which Ten-X projects will continue for the next several years. The Miami and Fort Lauderdale markets should see an increase in effective rents through 2019, which will be nicely complemented by a forecasted decline in vacancies over the same time frame.
Rounding out the top five markets on the buy side are Austin, TX, Northern Virginia, and Los Angeles, CA. The economy in Austin is booming, as the city has seen a surge in population in recent years. With more residents comes more demand for retail space, and the demand in Austin is strong and projected to remain that way for the next several years.
The Northern Virginia market is largely fueled by government and defense contracts, two areas that have seen some improvement since the economic downturn of years past, and is projected to remain strong as it continues to be a hotbed for new development. As for Los Angeles, residents are enjoying an increase in discretionary spending power, which is always fantastic news for retailers.
On the sell side, the East Coast market of Central Jersey does not have the brightest outlook. While the economy in the region is in a relatively decent spot, that has not translated into a strong outlook. Rent growth is expected to be negligible over the next few years, and vacancies are expected to remain in the 10% range. Add it all up, and Central Jersey takes down the number one spot on the sell side.
Rounding out the top five ‘sell’ markets are Detroit, MI, Baltimore, MD, Cleveland, OH and Memphis, TN. Detroit is a market that was absolutely hammered during the recession, and the prospects for a full recovery remain on the dim side. The remaining three markets have varying reasons for a negative outlook over the next few years. The economy in Baltimore is sending a series of mixed signals, while Cleveland has been hit by a declining manufacturing industry. Memphis is another area that is still trying to claw its way back from the impacts of the recession.
For the US retail market as a whole, the report shows us that the market is slowly improving throughout the country and that absorption continues to have a leg up on the new supply of retail space.