Survey: Retail leasing will expand, rents will stay flat

More than two-thirds of commercial real estate investors and experts surveyed by Transwestern Real Estate Services expect leasing velocity and tenant walkthroughs to increase in the retail sector, while rents will remain flat.

Despite the rigors retail real estate weathered during the pandemic, respondents to Transwestern’s Midyear 2021 Commercial Real Estate Market Survey are now optimistic about the sector’s near-term future. With their input, Transwestern advisors across the country assigned retail real estate a U.S. index average of 120.3, placing it well above the 100-point neutral zone for market conditions. At midyear 2020, Transwestern registered retail’s index average at just 50. 3. 

Nearly two-thirds of survey respondents expect investor interest in retail real estate to rise, and more than half anticipate higher pricing levels. Still, a majority of the sample said they expect rents to remain relatively flat due the high number of vacancies caused by the pandemic.

Most also expect those empty spaces to be filled by more a wider range of retail tenants that will include medical, self-storage, and event space.

“Demand is strong for retail space in quality, well-located properties,” said Mark Kampmeyer, a Transwester senior associate based in Minneapolis. “There were far fewer retailer bankruptcies than anticipated throughout the pandemic.”