The retail sector has shown resounding strength throughout the first half of the year. The easing of COVID restrictions, coupled with U.S. fiscal support which provided trillions of extra dollars to consumers, has led to strong retail sales growth.
While the focus in 2020 was on store closings and rent deferment, many retailers are now expanding. Leading the way are grocery, home décor, beauty, and discount sectors. Retail leasing and demand rose to multi-year highs in the second quarter in both urban business districts and suburban markets. In June, urban business districts saw a significant increase in the amount of square feet leased, outpacing a 5-year average by 175%.
Second-quarter retail investment activity hit its highest recorded level since the third quarter of 2018, eclipsing $25 billion. Investors have primarily targeted assets that have minimal vacancy, as evidenced by the nearly 96% average occupancy of retail properties sold during the second quarter.