U.S. Real Estate Market Outlook 2024: Insights for Retail Businesses
Overview
CBRE's 2024 U.S. Real Estate Market Outlook provides a comprehensive analysis of the retail sector's performance and expectations for the coming year. The report highlights key insights into consumer behavior, retail trends, and market dynamics shaped by the COVID-19 pandemic.
Consumer Behavior and Retail Trends
Moderation in Retail Spending: Retail spending is expected to moderate to 2.6% in 2024, down from 4.4% in 20231. This indicates a more cautious approach by consumers amidst economic uncertainties.
Demand and Supply Dynamics: The retail real estate market remains tight, with demand consistently outpacing new construction deliveries over the past decade2. This scarcity of new space has bolstered fundamentals and maintained strong occupancy rates.
Shift in Consumer Preferences: There is a noticeable shift towards experiential retail as consumers seek unique in-store experiences. This trend emphasizes the importance of integrating digital and physical shopping experiences.
Market Changes Post-COVID-19
The COVID-19 pandemic has left a lasting impact on the retail landscape:
E-commerce Influence: The accelerated growth of e-commerce during the pandemic continues to influence brick-and-mortar retail strategies. Retailers are increasingly adopting omnichannel approaches to meet evolving consumer demands.
Operational Challenges: Retailers face higher food costs, labor shortages, and logistical challenges3, requiring strategic adjustments in day-to-day operations and future planning.
Challenges and Opportunities
Economic Slowdown: While economic growth is expected to decelerate, this slowdown presents both challenges and opportunities. Retail businesses need to adapt to changing consumer spending patterns and manage operational efficiencies.
Capital Market Activity: Investment activity in commercial real estate is anticipated to pick up in the latter half of 20244. Retailers should prepare for potential opportunities in capital markets that could arise from this stabilization.
Resilience and Innovation: Strong fundamentals in the retail real estate market offer a resilient foundation. Retailers can capitalize on this by innovating and adapting to new consumer behaviors and preferences.
Significant Conclusions and Recommendations
Focus on Omnichannel Strategies: Retailers should continue to invest in omnichannel capabilities to enhance customer experience and drive engagement.
Prepare for Economic Adjustments: Anticipate shifts in consumer spending and align business strategies accordingly.
Leverage Market Stability: Utilize the stable real estate market to explore growth opportunities and strengthen market positioning.
In conclusion, while the retail real estate market faces certain challenges in 2024, a proactive approach focusing on innovation, customer experience, and strategic investments can position retailers for success in the evolving landscape.