CBRE: Urban Retail on the Road to Recovery

(Image courtesy of CBRE)

CBRE, Dallas, released a new report showing that, despite some current perceptions, the overall landscape for urban retail is making a solid recovery.

Average monthly foot traffic in 2023 in 10 prime retail districts had recovered to 81% of pre-pandemic 2019 levels. CBRE predicted that traffic will have fully recovered by the end of the third quarter, and could surpass previous levels by year-end 2025.

Additionally, retailers are reporting that sales are passing pre-pandemic levels.

Tourism may be providing some of the results, particularly in densely populated, high-income metro areas. As of February, tourism from Europe was at 92% of pre-pandemic levels, with tourism from Asia at 72% of those levels.

Another factor may be the relationship between physical and digital sales. CBRE noted that shopping center industry association ICSC reported opening a physical store increases a retailer’s digital sales by 6.9%, and closing a store can decrease sales by 11.5%.

CBRE further noted that 70% of retail sales are “digitally influenced,” meaning consumers research a product online before going to a store to purchase it.

Retail sales per square foot have increased 6% since 2019.

Per CBRE’s separate Global Live-Work-Shop survey, 56% of survey respondents globally said they like to physically see items in stores before purchasing them online. For U.S. respondents, 54% of online shoppers said they prefer to return items in-store, and 37% said they like to pick up their online orders in-store.

Rents for prime retail space saw dips in 2020 and 2021, but those are now improving, too.

Since 2021, rents for prime retail space have increased by more than 9% in the Americas.