Raleigh retail market will outperform others nationally in 2021, new study says
The greater Raleigh area retail market has been hurt by the pandemic, but much less than other retail markets, and it should outperform them next year, according to a new study.
Nationally, over 40 major retailers declared bankruptcy this year, and 11,000 store closings were announced, emptying nearly 150 million square feet of retail space.
But major retail markets in the South like Raleigh’s have been growing, says CoStar Group, a commercial real estate analytics firm.
The Raleigh-Cary metro as well the Charlotte metro retail markets have seen foot traffic drop by roughly 25%, much less much less than West and East Coast markets in New York and Washington, D.C., where losses range between 40% and 60%.
Raleigh’s smaller losses coupled with the region’s high buying power predict it will outperform others nationally, according to CoStar’s study.
“In short, Raleigh’s strong demographics, including healthy job, population and income growth, will help support the retail market in the long term,” Victoria Lim, a CoStar market analyst, told The News & Observer.
“The area was one of the fastest-growing cities in the country pre-pandemic, aided by strong job growth, affordable cost of living, and quality of life,” she said. “And with an economy steeped (with) high-paying jobs in technology and life sciences, Raleigh residents are also high earners relative to the rest of the country.”
Census data shows the median income for households in Raleigh is just over $80,000 a year, compared to the U.S. median of $65,700, Lim noted.
Raleigh’s retail performance
Brick-and-mortar stores in the Raleigh area will still suffer from COVID-19 and increased e-commerce, like everywhere else, Lim said.
“However, many are still bullish on Raleigh’s retail prospects given its strong demographics, and a number of developers are still moving forward with large mixed-use projects around Raleigh amid the pandemic,” she said.
Kane Realty is set to expand its North Hills shopping center, and other retail-centered developments are in the works, such as the redevelopment of the Cary Towne Center mall.
Leased retail space in 2020 so far has been about half of the 2.3 million square feet leased in the Raleigh market last year, according to CoStar. But according to real estate firm Avison Young, retail tenants around the nation are taking advantage of the opportunities created by newly vacant spaces in Raleigh and Durham.
