The current survey extends the recent stretch of pessimism about future retail markets—panelists indicate that occupancy rates are expected to continue to deteriorate through 2021. This has occurred in spite of good job growth, rising incomes, and more than three percent GDP growth. While new retail for housing, office, and hospitality projects provides niche opportunities in this space, there is just too much capital in brick-and-mortar retail. Overall retail sales in the U.S. have increased at a 5.3 percent annual rate over the past year, but net store closings and traditional shopping mall stress remain prevalent due to the shift from brick-and-mortar to online shopping, resulting in too much aggregate space in retail markets. Between the last two surveys, internet sales have grown at a 10.7 percent rate, twice that of total retail sales growth. As such, a net 2,900 store closings nationwide occurred in 2018. This is a phenomenon likely to continue for at least the next three years.

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