Retail Real Estate Industry Report
Q3-2020
ICSC’s third quarter industry report finds retail and food services sales increasing, with supermarkets remaining strong anchor tenants for shopping centers. The effects of the pandemic can still be seen in the decreased base rents for property owners compared to the previous year; however, there are many hopeful signs of an economy on the mend. ICSC’s latest research on consumer economic sentiment are positive and projects growth for the coming year.
Scroll through ICSC’s Q3-2020 Report in full, or click to the individual sections using the navigation below.
Inventory | Retail and Food Services Sales Performance | U.S. Employment Situation
U.S. Shopping Center Perform n |
Inventory
As of Q3-2020, there were 41,371 neighborhood and community centers (36% of the total number of shopping centers in the U.S.) containing over 4.2 billion square feet of GLA (56% of total shopping center leasable space) that were potentially providing vital consumer services. Since the beginning of the pandemic, these shopping centers have served a critical role in consumers' ability to stock up on essential goods. A key element for many of these properties is being anchored by supermarkets (food-and-beverage stores) where sales surged 11.8% year-over-year during Q2 and Q3 2020. In addition to physically visiting supermarkets, consumers are also fulfilling online grocery orders to get merchandise delivered quickly or for curbside pickup. Food-and-beverage e-commerce sales have surged 220.5% in Q2 alone.
Number of Neighborhood and Community Centers
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 vehicle and gasoline
U.S. Dollars (Millions)
Sales
Month-to-Month Growth
July
August
September
Q3-2020
Overall Sales
$1.2
Trillion
+11.4%
Q-o-Q
Health and Personal Care Stores
Source: U.S. Census Bureau
U.S. Employment Situation
Through Q3, the retail sector gained 1.8 million jobs following a loss of approximately 2.4 million jobs in March and April. In Q3-2020, retail collectively added 538,300 jobs, including 519,400 at store-based retailers and 18,900 at non-store retailers. These total job gains in Q3, however, are just under half of what the sector added in May and June. The third quarter also saw the food services sector gain 856,400 jobs — slightly more than one-quarter of the jobs added in May and June. While these jobs gains are significant, there are 2.3 million industry related jobs yet to be recovered from the pandemic.
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
click on each category to learn more
July 14,245.20
August 14,500.30
September 14,517.60
Store-Based Retail
Non-Store Retail
July 540.20
August 546.10
September 552.20
Food Services and Drinking Places
July 9,680.50
August 9,780.10
September 10,012.60
July
August
September
Source: NCREIF
Consumer Engagement
Source: ICSC Research
Shares of Monthly Expenditures by Channel – Q3-2020
Share of Total Monthly Expenditures at Physical Establishments
(Open-Air + Freestanding + Malls)
Source: ICSC Research
click to compare
click to learn more
Northeast
Midwest
South
West
WY
WA
UT
OR
NM
NV
MT
ID
HI
CO
CA
AZ
AK
WV
VA
TN
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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West
Million
78
WY
WA
UT
OR
NM
NV
MT
ID
HI
CO
CA
AZ
AK
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South
Million
125
WV
VA
TN
SC
OK
NC
MS
MD
LA
KY
GA
FL
DE
AR
AL
TX
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Midwest
Million
68
WI
SD
OH
ND
NE
MN
MI
IN
IA
IL
MO
KS
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Northeast
Million
56
RI
VT
PA
NY
NJ
NH
ME
MA
CT
click on a region for more information
CONTENTS
Inventory
In the third quarter of 2020, retail and food services sales (excluding motor vehicles, parts and gasoline) rose 11.4% higher than Q2. Compared to a year prior, these sales sectors grew 4.6%. September was the strongest month of Q3, with a 1.5% increase from August and a 5.9% jump over the previous year.
Source: CoStar Realty Inc.
On a rolling four-quarter basis, base rents at shopping centers across the nation decreased 3.3% during Q4 2019-Q3 2020, compared with the four quarters before that, primarily due to 7.6% and 8.9% declines in Q2 and Q3 of 2020, respectively. NOI at shopping centers across the nation decreased 9.8% during the past four quarters, largely impacted by 23.0% and 19.0% drops in Q2 and Q3. These NOI declines are also due to expenses incurred as properties implement health and safety precautions.
Consumers continue to allocate a considerably higher share of total monthly expenditures to open-air centers, while a smaller portion is being spent at malls. Additionally, as a result of the ongoing pandemic, consumers continue to spend more online compared to a year ago, with a slightly higher share still going to brick-and-mortar retailers' websites.
3.0%
Online via
brick-and-mortar
retailer
3.2%
Online via
Internet-focused
retailer
15.8%
Malls
38.4%
Freestanding
Establishments
39.7%
Open-Air
Centers
Will only shop in stores that are taking the necessary precautions to keep customers and employees safe from COVID-19, no matter how inconvenient
71%
Thematic Survey: Post-COVID-19 Trends
Economic sentiments in Q3 began on a downward trend after peaking toward the end of Q2 (June). Following this, however, there has been a general rise in positive economic sentiments, especially in August and October.
Consumer Economic Sentiments
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Q3 Sales by Tenant Category
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Inventory
Retail and Food Services Sales Performance
Retail and Food Services Sales Performance
U.S. Employment Situation
U.S. Employment Situation
U.S. Shopping Center Performance Benchmark
Consumer Engagement
Thematic Survey: Post-COVID-19 Trends
U.S. Shopping Center Performance Benchmark
Thematic Survey: Post-COVID-19 Trends
Consumer Engagement
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Shares of U.S. consumers
Percent Change
Building Materials and Garden Equipment/Supplies Dealers
Appreciate having the ability to shop in physical stores more than before the pandemic
67%
Confident in the precautions retailers and shopping centers/malls are taking to keep customers safe
57%
Tried shopping/making purchases in a way that they had not done before during the pandemic
50%
Engaging in a "normal" level of out-of-home activity
44%
Saving more money than before the pandemic
44%
Percent of U.S. Adults
Apr. 10-12
Survey
Apr. 24-26
Survey
May 8-10
Survey
May 22-24
Survey
Jun. 5-7
Survey
Jun .19-21
Survey
Jul. 3-5
Survey
Jul. 17-19
Survey
Economic situation will "IMPROVE" over the next 12 months
Current economic situation "BETTER" than a month before*
3.9%
Online via
brick-and-mortar
retailer
3.7%
Online via
Internet-focused
retailer
13.2%
Malls
36.1%
Freestanding
Establishments
43.1%
Open-Air
Centers
Shares of Monthly Expenditures by Channel – Q3-2019
Compared to three months earlier in June (Q2), consumers allocated slighlty fewer dollars in September (Q3) to goods and other services such as healthcare, hair/nail salons, leisure/entertainment and laundromats. A greater share of total monthly expenditures went to dining. Unsurprisingly, consumers in Q3 allotted fewer dollars to dining compared to the prior year and redirected that spending to the other services category.
Source: ICSC Research
Drinking Places
Aug. 14-16
Survey
Year-Over-Year Growth
+4.6%
Y-o-Y
Sept. 11-13
Survey
Oct. 16-18
Survey
72%
Will only shop in stores that are taking the necessary precautions to keep customers and employees safe from COVID-19, no matter how inconvenient
Appreciate having the ability to shop in physical stores more than before the pandemic
67%
Tried shopping/making purchases in a way that they had not done before during the pandemic
50%
Confident in the precautions retailers and shopping centers/malls are taking to keep customers safe
57%
Engaging in a "normal" level
of out-of-home activity
44%
Saving more money than before the pandemic
44%
1970
Share of Total Number of Shopping Centers
Number of Neighborhood and Community Centers
1980
1990
2000
2010
2020
Millions of Square Feet
1980
1970
1990
2000
2010
2020
Share of Total Shopping Center GLA
Neighborhood and Community Center GLA
Neighborhood and Community Center GLA
*Reference period changed from "2 weeks before" to "a month before" in October 16-18 survey.