The retail industry has been through a lot in the past few years. Store closures and bankruptcies were making headlines, and many experts proclaimed brick-and-mortar retail’s death. But despite the challenges, retail is far from dead – and savvy investors can find attractive opportunities in the retail sector if they know where to look.
If you’re considering getting involved in retail investing or development, here are the top 10 U.S. cities to keep your eye on in 2023, according to Emerging Trends in Real Estate 2023 by the Urban Land Institute and PwC. This report contains the views of 1,450 who completed surveys and 617 individuals interviewed during the research process, including investors, fund managers, developers, property companies, lenders, brokers, and advisers
10 Top Cities for Investing in Retail Property in 2023
We identified the following ten cities below based on several factors: population growth, job growth, tourist attractions, and existing retail density. If you’re looking to invest in retail development in any of these markets, now is the time to start scouting properties and making offers – before the competition comes rushing in.
Commercial real estate statistics are from the Q3 2022 U.S. Shopping Center MarketBeat report from Cushman & Wakefield and Crexi’s internal database. Demographic information for each metropolitan area is from CensusReporter.org and DataUSA.io.
Miami is a major city with strong inbound migration, a booming economy, and friendly government policies toward business. With over 2.7 million residents in Miami-Dade County, it ranks as the seventh most populous city in America. In addition to being a top tourist destination (with 13 million visitors annually), Miami also serves as a hub for commerce, finance, and trade. The Port of Miami is the largest cruise ship port globally.
As of Q3 2022, Miami’s retail real estate market was strong, with an overall vacancy rate of only 3.1%. On Crexi, average asking prices for Miami retail jumped by over 20% annually compared to 2021. The retail inventory totaled 52,391,954 square feet, and asking rents averaged $37.35 per square foot per year full-service gross. Additionally, absorption was 86,892 square feet through Q3 2022 and 34,412 SF new construction deliveries YTD. There are 407,936 square feet of new construction underway as well.
Nashville is a booming city – the population has been growing rapidly at 1.72% annually, primarily driven by a strong job market. Employment has been increasing at 1.81%. The construction, manufacturing, professional and business services, and education and health sectors are some of the fastest-growing job sectors that help maintain a stable demand for retail products.
Commercial real estate investors looking to buy shopping centers in Nashville will find a healthy market with an overall vacancy rate of only 3.3%. Year-to-date, the median closed value of retail transactions on Crexi was $386 per square foot, up from $346 in 2021. So far this year, 237,594 square feet of retail space has been absorbed by new businesses, and there is currently 105,523 square feet of new construction underway. With an average asking rent of $25.81 per square foot, Nashville is a great place to invest in shopping center property.
3. West Palm Beach
West Palm Beach, located in southern Florida, is a popular destination for shoppers and tourists. The city’s retail inventory comprises 38,307,626 square feet of space, with an overall vacancy rate of 4.6% and $261M close so far this year, per Crexi data. Retailers in West Palm Beach can expect to pay an average asking rent of $30.85 per square foot per year. So far this year, 136,001 square feet of new construction has been delivered to the West Palm Beach market. Currently, 96,334 square feet of new construction is underway.
West Palm Beach’s population is 1,497,987 and growing at a rate of 1.13%. The city’s employment growth rate is 2.07%, with 740,726 employed residents. The retail market is growing, making it an ideal location for commercial real estate investors interested in purchasing retail stores and storefronts in West Palm Beach.
Charleston is a historic city located in the southeastern United States. Charleston is the largest city in the state of South Carolina, with a population of over 800,000 people. The city is a popular tourist destination due to its many historical landmarks and attractions. Charleston is also a major center for commerce and industry, with many major employers, including The Boeing Company, Trident Health System, Walmart Inc., and Robert Bosch LLC.
The retail market in Charleston is strong, with an overall vacancy rate of 5.5% and $477M transacted in 2022. Absorption for 2022’s third quarter was 115,570 square feet while asking rents are averaging $20.21 per square foot at full-service gross. There are currently 168,188 square feet of new construction underway. Charleston is a city with a lot to offer commercial real estate investors. With a robust retail market and a growing population, Charleston is an ideal place to consider investing in shopping centers.
Austin is the capital of Texas and is the 11th most populous city in the United States. The metro area houses a population of 2,352,426 with a growth rate of 2.81%. The city’s strong economy features an unemployment rate of 2.8%, strengthened by a job growth rate of over 3.0%.
The cost of living in Austin is higher than the national average, but the city’s high median income offsets this. Austin is home to many large companies, including Apple, Amazon, Facebook, Google, IBM, and Dell. The city also has a thriving startup scene and is known for its live music and nightlife.
The Austin retail market is solid, with a vacancy rate of only 4.6% and average asking prices up 11.3% in 2022 year-over-year. Retail rents in Austin are currently averaging $28.69 per square foot per year, and 604,482 square feet of new construction is underway. Austin’s retail inventory is 50,900,361 square feet, with an absorption of 383,118 square feet of space in 2022 so far. Deliveries of new shopping centers totaled 76,691 square feet.
Greenville, South Carolina, is a charming city located in the heart of the upstate region. The city is home to a population that grew by 1.42% in 2022 and boasts a thriving economy. Greenville’s cost of living is 10% below the national average, and the unemployment rate is just 2.7%, according to the U.S. Bureau of Labor Statistics (BLS).
Greenville’s retail inventory is 24,785,713 square feet, with $290M reported closed on Crexi so far in 2022. Greenville’s average yearly asking rent is $15.92 per square foot for full-service gross space. The city has a vacancy rate of 6%, with 1,750 SF YTD (year-to-date) in construction deliveries and 37,993 SF currently under construction.
7. San Antonio
San Antonio is a culturally-rich city with a population of 2.51 million people. Its population grew by 1.7% last year, while its employment rate increased by 1.82%, with 1.16 million people currently employed. San Antonio is an excellent city for commercial real estate investors interested in buying shopping centers. Many San Antonio retail property listings are available, and the city is expanding.
The average asking rent for retail space in San Antonio is $20.43 per square foot, and the vacancy rate is 5.8%. Through the third quarter of 2022, there has been an absorption of 412,029 square feet of retail space and over $815M in retail property sold. YTD, there have been 168,665 square feet of new retail construction delivered, and 150,515 square feet of new retail building is currently underway.
8. Des Moines
Des Moines is the capital of Iowa and the most populous city in the state. As the county seat of Polk County, Des Moines is a major center for the insurance industry and boasts a diverse economy. The city’s estimated population is 719,146, which grew 1.49% last year. The employment rate is high, with 366,010 people employed in the city. The employment growth rate is 0.916%.
Des Moines retail space inventory numbers currently sit at 11,013,827 square feet and $116M of total transactions in 2022 so far. With an average asking rent of $13.58 per square foot annually, full-service gross, and a vacancy rate of 5.8%, there have been 29,025 square feet of absorption (through Q3 2022). So far this year, there have been 16,958 new additions in YTD deliveries, with 27,500 more SF under construction for future retail development projects.
9. Fort Lauderdale
Fort Lauderdale is a city in Broward County, Florida, United States, 25 miles (40 km) north of Miami, with a population of 311,287. The city’s job growth has been strong recently, and the unemployment rate is low. The city has a diverse economy focusing on tourism, maritime industries, and manufacturing. Fort Lauderdale is an attractive location for commercial real estate investors due to its strong economy, diverse population, and tourist attractions.
There is currently a total of 53,894,010 square feet of retail space in Fort Lauderdale, with an overall average asking rent of $28.80 per square foot per year. The absorption rate is positive, with 199,983 square feet of space leased so far this year. There are also 32,740 new square feet of retail space under construction in Fort Lauderdale. The retail vacancy rate is also low at 4.6%, making Fort Lauderdale an attractive market for shopping center investors – as proven by the $562M transacted so far in 2022.
10. Tampa/St. Petersburg
Tampa is a major city in Florida and the largest city in the Tampa Bay Area. The bay area is home to nearly 4 million people, and Tampa itself houses a population of over 3 million. The Tampa Bay Area is growing rapidly, with a population growth of 1.78% and an employment growth of 2.39%.
The Tampa/St. Petersburg retail market is strong, with an overall vacancy rate of only 4.3%. Retailers are attracted to the Tampa market due to its growing population and employment opportunities. Tampa also has a sizable retail inventory, with over 70 million square feet of retail space.
Investors looking for shopping centers for sale in Tampa will find plenty of options from which to choose. The average asking rent for retail space in Tampa is $22.28 per square foot, full-service gross. Tampa has seen 390,904 square feet of absorption through the third quarter of 2022 and new construction totaling 143,550 square feet. So far in 2022, Crexi comps data reports $631M in closed retail transactions in Tampa.
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