1. Mile High City’s Retail Driven by High Income Growth: A highly-educated, high-income population will drive the retail sector’s continued growth in Denver. Its economic fundamentals are strong – higher than the national average – and its high rent growth and moderate construction are anticipated to keep the retail real estate market in check. Lower oil prices will likely have a net positive impact on Denver’s economy, since it is considerably diversified and not so dependent on energy. Lower fuel costs will push down input costs for other industries and may boost the market’s GDP by as much as 0.5 percentage points.
2. The Valley of the Sun is Bright for Retail: Phoenix is emerging from the ashes of the recession as a primary target market for up and coming retailers looking to expand and/or roll out new concepts. This red-hot market continues to be fueled by a number of factors, not limited to; the resurgence of the residential market and an influx of quality employers created by a blossoming tech scene. Economists shall continue to stay high on Phoenix as continued robust job and population growth drive down vacancies and push up rents.
3. Emerald City Eyed by Retailers: Seattle’s position as a significant tech mecca bodes well for future retail performance, with the market boasting such companies as Starbucks, Costco, Microsoft, Google and Amazon. Several other major tech firms expanding in the area include Apple, HBO, Alibaba and Facebook. Its biggest strength lies in its burgeoning population: characterized by high income and job gains, and prime spending ages. Seattle-based retailers that have seen solid growth recently include Zulily, Nordstrom, Uniqlo and Tommy Bahama. This metro should continue to see robust rent increases and solid vacancy compression through the next few years.
4. The City Beautiful: Tourism continues to be the principal driver for the Orlando economy, but local population growth is helping fuel demand for retail. Last year, Orlando was the most visited city in the country, with visitor volume reaching record levels and has consequently pushed up retail sales. Fundamentals are growing, although forecasted household income growth is slightly below the national average. Expansion in this market will be solid in coming years, thanks to strong employment growth and a young, vibrant, well-educated population.
5. Development in the Big-D Increases Retailer Expansions: Limited development has boosted the recovery of the Dallas retail sector, but by mid-2016 new construction will push vacancy rates up slightly, drawing in new retailers to the metroplex. As one of the fastest growing job markets in the U.S., consumer spending has increased in the city, reassuring retailers’ expansion plans. As long as developers don’t overbuild quickly, the Dallas market will remain a top city for new retail and restaurant concepts.
By: Mike Longmore, Director of Retail Business Development, JLL