Retail Owners Poised to Gain from High Occupancy & Rent Growth

Article originally posted on HERE on October 2, 2023

Due to the high levels of occupancy in the retail sector and its undersupply of new development, current owners and investors are poised to capitalize upon the sector’s strong fundamentals and long-term rent growth, JLL says.

Net absorption increased 12.6% quarter-over-quarter up to 10.8 million square feet, and deliveries decreased 5.1% from the previous quarter, driving the current year-over-year rent growth to 3.6% across all retail asset categories, according to JLL’s U.S. Q2 2023 Retail Outlook. This sets the overall average occupancy for retail centers across the country at 95.4% and development at less than 0.3% of total inventory.

While the Sunbelt markets are experiencing significant rent growth, the secondary and tertiary markets in many cases are leading the pack in terms of rent growth with Jacksonville up 12.6%, Phoenix up 9.8% and Omaha up 9.0% year-over-year.

“The impressive rent growth seen in secondary and tertiary markets, in addition to the primary markets, really indicates the strength of the retail sector as a whole, across varying geographies,” said senior managing director Danny Finkle, co-lead for JLL Retail Capital Markets.