A Healthier Retail and Better Industrial

Brandon HardinResearch EconomistNATIONAL ASSOCIATION OF REALTORS®

Retail Job RecoveryNeeds an additional 362,600 jobs to reach February 2020 prior peak

12000

12500

13000

13500

14000

14500

15000

15500

16000

Jan-

19

Mar

-19

May

-19

Jul-1

9

Sep-

19

Nov

-19

Jan-

20

Mar

-20

May

-20

Jul-2

0

Sep-

20

Nov

-20

Jan-

21

in th

ousa

nds

Source: U.S. Census Bureau

-362.6

-92.4

-35.2

-54.7

-43.8

-20.9

-294.4

-95.5

-41.0

-64.8

14.8

103.8

88.5

132.0

Total Retail Trade

Retail Motor Vehicle & Parts Dealers

Furniture & Home Furnishings Stores

Electronics & Appliance Stores

Health & Personal Care Stores

Gasoline Stations

Clothing & Clothing Accessories Stores

Sporting Goods, Hobby, Book & Music Stores

Department stores

Miscellaneous Store Retailers

Nonstore Retailers

General Merchandise Stores

Food & Beverage Stores

Building Material & Garden Supply Stores

Change in Net Employment in Feb 2021 vs Feb 2020 ('000)

Retail & Food Service Sales RecoveryExceeds April 2020 sales by $155.4 billion and prior peak by $39.3 billion

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

in m

illio

ns $

Source: U.S. Census Bureau

E-Commerce GrowthE-Commerce sales total $791.7 billion, an increase of 32.4% from 2019

-

50,000

100,000

150,000

200,000

250,000

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020

Q3

2020

Q4

2020

Mill

ions

of D

olla

rs

Source: U.S. Census Bureau

E-Commerce Retail Sales, Quarterly, SA

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020

Q3

2020

Q4

2020

% o

f Ret

ail S

ales

from

E-C

omm

erce

Source: U.S. Census

E-Commerce Retail Sales as a % of Total Sales, Quarterly, SA

Retail Shopping Center Space by MarketOhio Cities led positive net absorption of shopping center space

(2,764,357)

(2,339,729)

(2,259,621)

(1,425,996)

(1,248,925)

Boise, ID

Dallas/Ft. Worth, TX

Denver, CO

Philadelphia, PA

NYC Metro

Source: Cushman Wakefield

Negative Net Absorption of Shopping Center Space in 2020 (Million Sq. Ft.)

4,098,347

4,849,121

5,982,954

6,027,559

12,521,448

Buffalo, NY

Jacksonville, FL

Grand Rapids, MI

Cincinnati, OH

Akron, OH

Positive Net Absorption of Shopping Center Space in 2020 (Million Sq. Ft.)

Share of Retail Property TransactionsCenters fall while shops rise in both 6MM and NMM

51%

0%

20%

40%

60%

80%

100%

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

6MM Centers

49%

0%10%20%30%40%50%60%70%80%

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Source: Real Capital Analytics

6MM Shops

57%

0%

20%

40%

60%

80%

100%

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

NMM Centers

43%

0%

10%

20%

30%

40%

50%

60%

70%

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

NMM Shops

Shopping Center Vacancy RatesStimulus lessened the rise in vacancy

6.4% 6.5%6.7%

7.1% 7.2%

5.9%6.1%

6.3%

6.9%7.2%7.3% 7.4%

7.6%7.8%

8.0%

6.1%6.3%

6.5%6.9% 7.0%

6.3% 6.4%6.6%

6.9% 7.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020

Source: Cushman and Wakefield

United States Northeast Midwest South West

Retail Acquisitions Retail sales transactions of $2.5M or more continue downward trend

$25.0$29.7

$18.5

$62.2

$36.0

$19.1

2018 2019 2020

In B

illio

ns $

Source: Real Capital AnalyticsShops Centers

Retail Outlook Healthier retail than 2020

- Vaccinations- Retailers: Stronger financial fundamentals- More consumers shift to e-commerce- Downtown retail/food improvement in second half of

2021- Opportunities in repurposing existing assets

Industrial Job RecoveryWarehousing and storage jobs exceeds February 2020 by 72,400 jobs

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0Ja

n-19

Feb-

19

Mar

-19

Apr-

19

May

-19

Jun-

19

Jul-1

9

Aug-

19

Sep-

19

Oct

-19

Nov

-19

Dec-

19

Jan-

20

Feb-

20

Mar

-20

Apr-

20

May

-20

Jun-

20

Jul-2

0

Aug-

20

Sep-

20

Oct

-20

Nov

-20

Dec-

20

Jan-

21

Feb-

21

in th

ousa

nds

Source: U.S. Census Bureau

Industrial SpaceSupply outpaces demand

5.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

(80)

(60)

(40)

(20)

-

20

40

60

80

100

120

1995

Q1

1995

Q3

1996

Q1

1996

Q3

1997

Q1

1997

Q3

1998

Q1

1998

Q3

1999

Q1

1999

Q3

2000

Q1

2000

Q3

2001

Q1

2001

Q3

2002

Q1

2002

Q3

2003

Q1

2003

Q3

2004

Q1

2004

Q3

2005

Q1

2005

Q3

2006

Q1

2006

Q3

2007

Q1

2007

Q3

2008

Q1

2008

Q3

2009

Q1

2009

Q3

2010

Q1

2010

Q3

2011

Q1

2011

Q3

2012

Q1

2012

Q3

2013

Q1

2013

Q3

2014

Q1

2014

Q3

2015

Q1

2015

Q3

2016

Q1

2016

Q3

2017

Q1

2017

Q3

2018

Q1

2018

Q3

2019

Q1

2019

Q3

2020

Q1

2020

Q3

in M

illio

ns S

q. F

t.

Source: Cushman WakefieldNet Absorption New Supply (MSF) Vacancy Rate

Industrial Space by RegionThe Northeast record a 68.5% y/y increase

46

51

119

52

- 20 40 60 80 100 120 140

Northeast

Midwest

South

West

Source: Cushman Wakefield

in Millions Sq. Ft.

Net Absorption of Industrial Space by Region in 2020

11.42%

68.53%

-9.71%

20.01%

-9.99%-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

United States Northeast Midwest South West

Y/Y % Change in Industrial Net Absorption by Region

Industrial Space by MarketOccupancy gains for 80% of markets covered

(1,074,958)

(1,272,253)

(1,966,045)

(2,696,736)

(3,055,109)

San Francisco Peninsula, CA

Los Angeles, CA

Detroit, MI

Greenville, SC**

Seattle, WA

Source: Cushman Wakefield

Negative Net Absoption of Industrial Space in 2020

15,507,452

21,057,359

23,498,524

24,287,982

26,382,258

Chicago, IL

Inland Empire CA

PA I-81/I-78 Dist.Corridor

Dallas/Ft. Worth, TX

Atlanta, GA

Positive Net Absorption of Industrial Space in 2020

Industrial Asking RentsPositive rent growth continues for industrial

49.4%

39.7%

32.5%

23.5%

22.9%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Buffalo, NY

Southern New Hampshire

Reno, NV

Nashville, TN

Long Island, NY

Top 5 Markets Y/Y % Change in Industrial Rents as of Q4 2020

4.6%

8.8%

3.0%

2.9%

5.5%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

United States

Northeast

Midwest

South

West

Source: Cushman and Wakefield

Y/Y % Change in Industrial Asking Rents as of Q4 2020

Industrial AcquisitionsIndustrial sales transactions of $2.5M or more still strong

$21.1 $22.8 $18.6

$77.2

$94.6

$80.1

2018 2019 2020

in B

illio

ns $

Source: Real Capital Analytics

Flex Warehouse

Industrial Outlook Better industrial

- Strong demand to continue- More supply- Rent growth- Higher vacancy