Marketplaces Industry Report
Q1-2022
The marketplaces industry started off 2022 on a strong note, with gains in several key areas. Q1-2022 saw higher rent collection percentages than the first quarter of 2021 that led to retail delinquency rates falling further, and sales continued to show annual growth, especially for food services and clothing. Q1 ended with higher rents per square foot than a year ago and occupancy rates above where they were at the same time in 2021. With over a quarter million jobs added during Q1 , the retail sector has fully rehired all workers lost at the start of the pandemic and then some. Though inflation is a concern for the industry, the growth experienced in Q1 underlines the industry’s recovery and consumers’ readiness to move beyond the pandemic.
Scroll through ICSC’s Q1-2022 Report in full, or click to the individual sections using the navigation below.
Rent Collection and Delinquency
Rent collections and CMBS delinquency rates for retail properties have continued to improve over the past two years after pandemic-related decline in 2020 across the marketplaces industry. After hovering around 91% at the beginning of 2020, rent collections plummeted to 57% in April, gradually improving to 89% a year later and ending Q1-2022 at 92%. Throughout Q1-2022, the collection percentage among national tenants averaged 94%, while it was 88% for non-nationals. Following the drop in rent collections, retail delinquency rates soared to 18% in June 2020, but immediately began to fall (as rent collections rose), dropping to 11% a year later and currently residing at just under 8%. Until recently, only lodging properties had higher delinquency rates than retail for most of the past two years. Industrial properties have maintained the lowest delinquency, which has been below 1% for 15 consecutive months, a clear indication of increasing demand for these properties as e-commerce retailers seek spaces to store goods.
Retail and Food Services Sales Performance
Retail and Food Services Sales* Performance and Overview**
Non-Store Retailers
Food-and-Beverage Stores
General Merchandise Stores
Food Services and Drinking Places
* Seasonally adjusted ** Excluding motor vehicles, auto parts and gasoline
U.S. Dollars (Millions)
Sales
Month-to-Month Growth
January
March
Q1-2022
Overall Sales
$1.42
Trillion
+2.0%
Q-o-Q
Health and Personal Care Stores
Source: U.S. Census Bureau
U.S. Employment Situation
In Q1-2022, the retail sector added 257,200 jobs, gaining 253,600 jobs at store-based retailers and 3,600 jobs at non-store retailers. This is the most jobs added in a quarter since Q3-2020 that followed the extensive loss of jobs in Q2-2020 as the pandemic hit. The average number of retail jobs in Q1-2022 was 134,230 above Q1-2019 and up 510,630 compared to Q1-2021. So far this year, the food services sector gained 234,800 jobs. Though the average number of food services jobs for the quarter is down 568,100 from Q1-2019, it is 1.4 million jobs more than the same period a year ago. As a positive sign of the recovery that has taken place over the course of the past two years, retail employment is now 254,800 above its February 2020 level, while the food services sector now has fewer than one million lost jobs to reclaim.
U.S. Employment (in Thousands)*
U.S. Shopping Center Performance Benchmark
* Seasonally adjusted
Source: Bureau of Labor Statistics
Store-Based Retail
Non-Store Retail
Food Services and
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Store-Based Retail
Non-Store Retail
Food Services and Drinking Places
January
February
March
January
February
March
Source: NCREIF and ICSC Research
Consumer Engagement
Source: Surveys of Consumers, University of Michigan: Consumer Sentiment
Shares of Monthly Expenditures by Channel – Q1-2022
Shares of Total Monthly Expenditures at Physical Establishments (Open-Air + Freestanding + Malls)
Source: ICSC Research
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VA
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SC
OK
NC
MS
MD
LA
KY
GA
FL
DE
AR
AL
TX
WI
SD
OH
ND
NE
MN
MI
IN
IA
IL
MO
KS
VT
NY
NH
ME
RI
NJ
MA
CT
PA
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CONTENTS
Consumers continued to spend money in Q1-2022 despite ongoing challenges related to COVID-19 and record-high inflation. Retail and food services sales (excluding motor vehicles, auto parts and gasoline) rose to $1.42 trillion, up 2% from the previous quarter and an 11.1% increase over Q1-2021. Following strong gains in January from December (the most in seven months), the month-to-month growth gradually waned throughout the quarter. After experiencing double-digit year-over-year growth in January and February of 2022, sales growth slowed significantly in March to the lowest rate since December 2020. The higher prices of goods, particularly necessities such as groceries and gasoline likely contributed to decreased demand for some discretionary purchases.
Q1-2022 was once again strong for food service establishments and clothing stores, with each sector showing significant gains over Q1-2021, driven by more people feeling comfortable going out again, the lifting of restrictions and the increase of workers returning to their offices. The first quarter was also good for non-store retailers; however, the year-over-year rise in non-store sales was the lowest of the pandemic era—perhaps a sign that people are making more in-store purchases.
Sources: Datex Property Solutions, Trepp
On a rolling four-quarter basis (Q2-2021 to Q1-2022), base rent in the U.S. marketplaces industry increased 1.9% compared with the four quarters before that. All regions across the U.S. saw increases, with the West and Midwest experiencing the biggest gains. Q1-2022 had the largest year-over-year growth (+4.0%) in nearly three years. Percentage rent also continued to climb, surging 128% during the past four-quarters. With four consecutive quarters of double-digit year-over-year gains, net operating income grew 14.9% over the past four quarters. The occupancy rate for the marketplaces industry was 90.5% in Q1-2022, 0.8 percentage points higher than a year ago. Among open-air centers, occupancy was 91.9% and it was 84.5% for malls.
Open-air marketplaces continued to capture the largest share of consumers’ total monthly expenditures in Q1-2022. Though that share decreased slightly from the previous year, it generally remains higher than the pre-pandemic period. Freestanding retail and service establishments captured the second largest share of consumers’ monthly expenditures on goods and services, and the share of dollars allocated to these businesses jumped in Q1-2022 compared to both the previous quarter and the same quarter a year ago. Despite quarter-to-quarter fluctuations, the overall average share allotted to these establishments over the past two years is still close to pre-pandemic numbers. While the share of dollars consumers allocated to online retail has risen over the past two years, brick-and-mortar retailers consistently capture the larger percentage of expenditures online versus internet-focused retailers, reaffirming that pandemic-driven innovations only served to strengthen this sector.
4.3%
Online via
brick-and-mortar
retailer
3.6%
Online via
Internet-focused
retailer
13.6%
Malls
34.7%
Freestanding
Establishments
43.9%
Open-Air
Centers
Thematic Survey: Post-COVID-19 Trends
Consumer sentiment fell month-to-month throughout Q1-2022, declining to levels not seen since late 2011. Following an uptick in December from November, sentiment dropped from each preceding month for January, February and March. This was the first time consumer sentiment declined month-to-month for three consecutive months since the end of 2017. On a year-over-year basis, consumer sentiment has now fallen for eight consecutive months. Year-over-year, sentiment fell by an average 21.1% throughout Q1-2022, with March seeing the largest drop from 2021 (-30.0%); the biggest year-over year drop in consumer sentiment since mid-2008.
Though COVID-19 remains a factor in these sentiment trends, economic variables are also having a significant negative impact. Top concerns for consumers are inflation and falling real incomes as they assess their personal finances and current buying conditions. As the inflation issue has grown, the personal savings rate has declined to the lowest levels since late 2013, according to data from the U.S. Bureau of Economic Analysis. Furthermore, rising interest rates, a negative outlook for the economy and the Russia-Ukraine conflict have all contributed to this decline in consumer sentiment.
Consumer Economic Sentiments
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Q1 Sales by Tenant Category
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Rent Collection and Delinquency
Retail and Food Services Sales Performance
U.S. Employment Situation
U.S. Shopping Center Performance Benchmark
Consumer Engagement
Thematic Survey: Post-COVID-19 Trends
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Shares of U.S. consumers
Percent Change
Building Materials and Garden Equipment/Supplies Dealers
Index
Index of Consumer Sentiment
Year-Over-Year % Change in Consumer Sentiment
4.3%
Online via
brick-and-mortar
retailer
3.1%
Online via
Internet-focused
retailer
12.2%
Malls
38.2%
Freestanding
Establishments
42.2%
Open-Air
Centers
Shares of Monthly Expenditures by Channel – Q1-2021
Following a rise in the share of total monthly expenditures allocated to goods in Q4-2021 due to holiday shopping, the share dropped slightly in Q1-2022. Compared to the same period in 2020, which saw panic buying at the start of the pandemic, the share of dollars allotted to goods in Q1-2022 was three percentage points lower. However, the share of dollars going toward goods in Q1-2022 was roughly three percentage points higher than Q1-2021, which can be attributed in part to consumers buying items they may have put off for nearly two years and refreshing their wardrobes. Additionally, the increased cost of many items as a result of inflation likely contributed to the amount going toward goods. Dining expenditures in Q1-2022 rose from Q4-2021, but dropped slightly from a year ago. This minor year-over-year decline may also be a result of the impacts of inflation. According to an ICSC consumer survey conducted in February, the largest share of consumers would cut back on dining out if economic conditions worsened.
Source: ICSC Research
Drinking Places
Year-Over-Year Growth
+11.1%
Y-o-Y
CMBS Delinquency Rate
$466,972
$472,835
$476,180
Tenant Rent Collection
Rent Collection Rate
77%
Plan on making a major, big dollar purchase in 2022
60%
Are more aware of company/brand values and try to buy more from those businesses that are socially and/or environmentally responsible
76%
Believe marketplaces, the places to shop, dine and go for entertainment are valuable assets to local communities
58%
Visiting brick-and-mortar stores the same
amount or more than before the pandemic
71%
Feel more comfortable and prefer seeing enhanced health/safety precautions at businesses despite progress in the COVID-19 pandemic
50%
Claim inflation is having an impact on household financial situation, making it the most consequential economic event over the past 24 months
61%
Plan to support their local marketplaces industry
more in 2022 than before
41%
Would increase spending on dining out if
their personal financial situation improves
The member organization for industry advancement, ICSC promotes and elevates the marketplaces and spaces where people shop, dine, work, play and gather as foundational and vital ingredients of communities and economies. ICSC produces experiences that create connections and catalyze deals; aggressively advocates to shape public policy; develops high-impact marketing and public relations that influence opinion; provides an enduring platform for professional success; and creates forward-thinking content with actionable insights – all of which drive industry innovation and growth. For more information, please visit www.ICSC.com.
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11,385.10
11,463.70
11,523.00
January
February
March
652.80
653.30
655.00
January
February
March
15,063.70
15,174.50
15,197.30
Retail CMBS Delinquency Rate
February
Source: ICSC Research
% Change
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