Retail National Report

Potential headwinds could be negated. The retail sector entered the second half of 2024 as the only major commercial real estate property type with a vacancy rate below its year-end 2019 recording. Consumer resiliency empowered standout tenant demand across the segment. Core retail sales reached a record mark in August, with spending up in real terms even after factoring in core CPI inflation. While household budget tightening and labor market softness remain potential headwinds that could impact the sector, the Federal Open Market Committee’s overnight lending rate cut in September likely launched a lowering cycle that will extend through next year and possibly offset the impacts of these factors. As these reductions take place, downward pressure on mortgage rates, auto loans and credit card fees will be applied. This will give households an opportunity to save an impactful amount of money, potentially aiding discretionary spending, retail foot traffic and ultimately tenant demand for space.