The first six months of this year have been very good to the brick-and-mortar retail sector, according to new data from CoStar Group.
Demand for retail space increased by 21 million square feet in the first half of 2023. Despite a lethargic economy, CoStar found retail tenant move-ins (openings) eclipsed move-outs (closings) by 21 million square feet during the first half of the year.
CoStar also pointed out that demand for retail space has increased for 10 consecutive quarters, and Q2 2023 marked the fourth consecutive quarter when demand for space increased in single-tenant properties as well as strip, power, and neighborhood centers. However, malls continued to struggle to attract new tenants.
The Southern and Western markets saw the most activity, which CoStar attributed to demographic growth. Phoenix saw the largest gain in demand over the past four quarters at 4.6 million square feet – this was roughly 2% of the total retail space in the market. San Antonio, Austin, Fort Lauderdale and Kansas City rounded out the top five retail markets.
At the other end of the spectrum, five markets – New York, Los Angeles, Seattle, Sacramento, and East Bay – have seen demand losses over the past four quarters, with all but Sacramento losing ground due to high rents and shifting consumption patterns.