Marcus & Millichap Releases Net Lease Report


Single-tenant retailers’ expansion plans continue as new households form amid an improving economic outlook despite the industry uncertainty surrounding minimum-wage legislation. Upticks in household formation and retail sales have encouraged retailers to open new locations and use e-commerce strategies to engage their customers more often. The continued rise of Internet shopping has also pushed more traditional retailers such as Wal-Mart to off er quicker shipping times and in-store fulfi llment, which shoppers have cheered. Retail sales will continue to climb through next year. Plummeting oil prices have provided consumers more spending power, although the current trend is to shore up savings rather than increase consumption. Yet, recent retail sales reports suggest this behavior is reversing; retail sales at restaurants and bars accelerated well above the national average. However, some retailers have expressed caution about expanding quickly as many states and municipalities have already taken steps to raise the minimum wage, leading several employers to follow suit. How this might impact their bottom line is still unknown. Viewed holistically, retailer demand will remain well ahead of expected supply increases this year as net absorption nearly doubles planned completions. As a result, asking rents are expected to climb in the low single digits.

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