The resiliency of the retail industry continued into the third quarter of 2021 as consumers pushed retail sales to record levels and retailers focused on expansion plans. Total retail sales reached $1.9 trillion in the third quarter as consumers continued their retail spending spree, up 14.8% from 2020 and 19.2% in 2019. In addition, shopper foot traffic has returned to pre-pandemic levels and the easing of restrictions has also helped to slow the pace of store closure announcements and U.S. corporate bankruptcies, which is at a record-low since 2014.
The national vacancy rate for all retail space stood at 4.7% in the third quarter, a decrease of 40 basis points quarter-over-quarter. A combination of pent-up demand and new store openings drove leasing activity in the third quarter, with more than 20,000 leases signed. As a result, over 60 million square feet of retail space was leased, with an average footprint of just over 3,000 square feet. The most active industries were led by discounters, grocers, beauty supply and apparel retailers .
Over 30 million square feet of retail space was absorbed throughout the third quarter, double the amount of space absorbed in the previous quarter and the highest figure recorded since 2017. Retailers continue to target metros with rapidly increasing populations such as Orlando, Las Vegas, Houston, Austin and Charlotte. Additionally, metros in the Southern and Western regions are seeing the strongest absorption gains as these regions continue to outperform the nation as a whole in population growth.
Positive momentum in leasing and absorption drove overall retail rents to grow by 1.2% over the quarter and stand at $22.28 per square foot. While rent collections rose for national tenants, collections dropped for non-nationals at the end of the third quarter. Alignable reported that 35% of small business retailers in the U.S. cannot currently afford their rent.
More than 3 million square feet of new retail supply was delivered throughout the third quarter, while over 50 million square feet remain under construction. In addition, nearly 75% of new construction underway already has a tenant in place.
Download the U.S. Retail Market Statistics infographic here.