Retailers Prove Resilient and are Poised for a Strong Second Half of 2021
Consumer spending is being pushed by pent up demand and record household savings. While e-commerce is still a dominant force, many Americans are finding solace in eased pandemic-related restrictions. Retailers that were able to weather the pandemic storm are finally able to breathe easy.
Locally, despite a negative absorption of -223,570, significant leases were executed. In the West Pittsburgh submarket, Planet Fitness signed a lease for 16,000 SF at University Square. Oil & Gas Safety Supply signed a 14,000 SF lease for a store at Northgate Plaza in Washington County. In addition to these executed leases, electric car manufacturer, Tesla, is weighing the possibility of opening a second regional store at Newbury Market in the South Pittsburgh submarket. Newbury Market is already home to unique retailers such as TopGolf and Carvana.
Restaurants are actively looking for second generation spaces. BIBIBOP Asian Grill, Popeyes and Starbucks are a few looking to expand in the region and Las Palmas is opening a new taco eatery in Coraopolis in The West Pittsburgh submarket.
Nationally, even tech companies are showing faith in brick-and-mortar concepts. Google just launched its first interactive store in New York City and Apple reopened over 500 stores worldwide. Ecommerce giant, Amazon, continues to open additional grocery stores with its latest in Bellevue, WA. Discount retailers and big box merchandisers have flourished. Dollar General experienced a tremendous increase in business over the past year with nearly one third of all stores opened in 2020 being Dollar General’s. They are poised to open more than 1,000 stores by the end of 2021.
Finding employees is a major problem, particularly in the restaurant industry. While the national unemployment rate was a healthy 5.5% at the end of May, the leisure and hospitality industry had the largest unemployment rate at 10.1%. Going forward, as unemployment regulations change, staffing issues should gradually be alleviated, but this will take time and continue to be a lag in restaurant revenues.
With lessened pandemic-related constraints, such as mask policies and occupancy restrictions, most retailers are operating at full capacity. Nearly two thirds of all American adults are vaccinated, and the onset of pleasant weather is allowing many establishments, particularly restaurants, to expand outdoor seating. The path is open for increased travel and consumer spending. The next quarter will be telling as many people head back to school and the workplace.