Mid-Atlantic Research Reflections 2021 - Retail

Although the Delta variant surge dampened the recovery of brick-and-mortar retail in the summer, the subsequent drop in COVID cases has reintroduced a sense of optimism, with consumer sentiments edging higher heading into the holiday season. CBRE’s 2021 Holiday Shopping Trends report expects brick-and-mortar retail sales to rise 8% from last year and make up 80% of total holiday sales, while e-commerce is anticipated to grow 10%-15% and constitute 20% of holiday sales. With rising consumer disposable income and household debt at an all-time low, strong holiday sales will help pave the way for further improving retail fundamentals in 2022.

Across the Washington region, foot traffic in key retail corridors as well as OpenTable reservations have both rebounded to more than 70% of pre-pandemic levels, as more consumers return to restaurants and shops. Driven by the gradual return-to-work, many residents who left the region earlier in the pandemic have since returned. More than 25,000 apartment units in the Mid-Atlantic have been absorbed in the past 12 months—a record high—which bodes well for the retail sector as more jobs and shoppers are back in the region.

As evidence for the unfolding recovery, 127 new retail establishments have opened across the region so far this year, with an additional 233 tenants actively seeking space—many in the restaurant category. This is a marked improvement from 2020 which saw 148 closures and only 77 openings. In suburban neighborhoods, shopping centers anchored by grocery, home goods and automobile stores continue to outperform others, as remote work and the homebody lifestyle redistributes some of the consumer demand.