Commercial Real Estate Update: Retail Shifts

September 23, 2021

Bill Poole

Brian Bailey

(Former) Commercial Real Estate Subject Matter Expert

What is CREMI?

The Commercial Real Estate Momentum Index  (CREMI) provides easy access to various metrics for individual markets by sector and facilitates comparisons of
conditions across markets. The index tracks movements in specific metrics (such as occupancy/vacancy rate, rent
growth, and the construction pipeline) and provides a targeted view of real estate conditions in the industrial,
multifamily, office, and retail sectors. Additional metrics, including employment and population growth, provide
information specific to each sector as appropriate. CREMI derives a momentum index value for each sector within a
market and gives an overall momentum index value for the entire market. Upward and downward momentum correspond with
aggregated trends in the market metrics, not necessarily indicating “good” or “bad.”

August 2021 Spotlight: Retail’s Promise and Challenges

Every month, we explore a different aspect of the Commercial Real Estate Momentum Index (CREMI) and how it can inform us about the commercial landscape. This month, we’ll focus on retail indicators and
how the sector has evolved during the pandemic. There are many, many variables that affect the retail momentum
index. A few of the more notable ones these days include excess retail space, labor shortages, and e-commerce
trends.

National retail sector overview

The US retail sector continues to experience mixed results because of a myriad of elements including shifting
population trends, too much space, changing consumer buying habits, and evolving technology. The national CREMI
results for retail indicate minimal change in activity as a whole between July 2020 and July 2021. This can be seen
by comparing the US map graphics (see below) for these periods.

While the overall national results are generally unchanged, effects at the local level are much more pronounced. In
some markets, such as those in the Southeast, mid-Atlantic, and southern West Coast, accelerating momentum indicates
a resurgence in activity. On the other hand, areas like the Northwest, Texas Gulf Coast, upstate New York, and the
Midwest…