Retail Real Estate Industry Report
Q4-2020
ICSC’s fourth quarter industry report shows some signs of improvement within the retail real estate industry through the end of 2020, though challenges remain. Despite the unprecedented year and the impact of the pandemic, total retail and food services sales grew year over year. At shopping centers, although key performance indicators reveal further declines, those decreases are less severe than they have been in the previous two quarters. Additionally, ICSC’s latest research on consumer economic sentiment indicates that U.S. adults see an improving economy in 2021.
Scroll through ICSC’s Q4-2020 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
The past 5 years saw a significant shift in shopping center GLA from retail to food and non-retail/non-food business. By the end of 2020, retail GLA decreased to about two-thirds of leasable space, while food service GLA rose 1.5 percentage points (pp.) and non-retail/non-food tenant space increased by 5.5 pp. Note, convenience and neighborhood centers have the largest shares of non-retail space, while power centers have the smallest share of non-retail GLA.
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 vehicles, auto parts and gasoline
U.S. Dollars (Millions)
Sales
Month-to-Month Growth
October
November
December
Q4-2020
Overall Sales
$1.2
Trillion
-0.4%
Q-o-Q
Health and Personal Care Stores
Source: U.S. Census Bureau
U.S. Employment Situation
In Q4, retail regained 239,300 jobs, adding 226,200 jobs at store-based retailers and 13,100 at non-store retailers. These job gains, however, were significantly less than in the May–June and July–September periods when 1.3 million and 522,500 jobs were added, respectively. The fourth quarter also saw the food services sector lose 227,300 jobs, a significant reversal from the 3.0 million jobs added in May–June and 876,200 gained in the third quarter.
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
October 14,525.60
November 14,526.30
December 14,656.40
Store-Based Retail
Non-Store Retail
October 606.20
November 603.40
December 608.20
Food Services and Drinking Places
October 10,386.80
November 10,362.00
December 9,959.80
October
November
December
Source: NCREIF and ICSC Research
Consumer Engagement
Source: ICSC Research
Shares of Monthly Expenditures by Channel – Q4-2020
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
Minus porttitor nesciunt officiis volutpat reiciendis. Temporibus sapien ullamco unde, magnis soluta aspernatur iste! Nostra sem eros nulla fugiat perspiciatis rem fugit.
Midwest
Million
68
WI
SD
OH
ND
NE
MN
MI
IN
IA
IL
MO
KS
Minus porttitor nesciunt officiis volutpat reiciendis. Temporibus sapien ullamco unde, magnis soluta aspernatur iste! Nostra sem eros nulla fugiat perspiciatis rem fugit.
Northeast
Million
56
RI
VT
PA
NY
NJ
NH
ME
MA
CT
click on a region for more information
CONTENTS
Inventory
Retail and food services sales (excluding motor vehicles, auto parts and gasoline) declined month to month throughout Q4-2020, and YoY gains weakened. Total sales also declined 0.4% from Q3. Compared to 2019, however, these Q4 sales grew 4.7%, with October showing a +6.3% YoY increase and only a 0.2% drop from September.
In 2020, retail and food services sales (excluding motor vehicles, auto parts and gasoline) increased 2.1% to $4.6 trillion, due to store categories such as building materials, food-and-beverage, sporting goods and non-store retailers—all of which saw months of double-digit growth. Notably, though, food services have experienced double-digit, year-over-year declines for 10 consecutive months.
Source: CoStar Realty Information Inc.
Base rents and NOI at U.S. shopping centers continued to fall in Q4-2020, compared to the same period in 2019. Base rents in the fourth quarter declined 7.5% from Q4-2019 and for all of 2020, they slid 5.1% from 2019. NOI in Q4-2020 fell 16.0% from Q4-2019, leading to an overall loss of 14.0% for 2020. This drop in NOI came as total operating revenue fell 6.7% in 2020, while expenses soared 8.5% due to properties implementing proper health and safety precautions. Occupancy rates for the shopping center industry as a whole ended 2020 at 90.7%, the lowest levels since Q2-2013.
Compared to Q4-2019, a slightly higher share of consumers’ total monthly expenditures in Q4-2020 went to open-air centers and freestanding establishments, while the share of spending at malls dropped. There was also a minor increase in the proportion of total dollars spent online. In comparison to Q3-2020, however, as the holiday shopping season came into play, consumers allotted a smaller share of their dollars to open-air centers and freestanding establishments and a greater percentage to malls in Q4-2020, with an uptick in the share of expenditures taking place online.
6.1%
Online via
brick-and-mortar
retailer
5.4%
Online via
Internet-focused
retailer
18.2%
Malls
33.6%
Freestanding
Establishments
36.7%
Open-Air
Centers
Thematic Survey: Post-COVID-19 Trends
Positive economic sentiments among U.S. adults began Q4 on a strong note relative to their previous opinions and were at the highest levels since early June. However, shares of consumers expressing positivity began to fade a bit in November and December as the COVID-19 pandemic worsened. Though the most recent survey conducted in early 2021 shows a drop in consumer sentiment about the month-to-month economy, there was an increase in the share of consumers who feel that the economic situation will improve over the next 12 months.
Consumer Economic Sentiments
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Q4 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
Percent of U.S. Adults
August 14-16
Survey
September 11-13
Survey
October 16-18
Survey
November 13-15
Survey
Economic situation will "IMPROVE" over the next 12 months
Current economic situation "BETTER" than a month before*
6.2%
Online via
brick-and-mortar
retailer
5.8%
Online via
Internet-focused
retailer
16.3%
Malls
34.5%
Freestanding
Establishments
37.2%
Open-Air
Centers
Shares of Monthly Expenditures by Channel – Q4-2019
As consumers prepared for the holiday season, a larger share of total dollars spent in Q4 went to goods, compared to Q3. A smaller percentage of expenditures went to dining and other services such as hair/nail salons, leisure/entertainment and laundromats. Compared to the same period one year earlier, a slightly smaller share of expenditures went to goods in Q4-2020, while the percentage of expenditures that went to other services, which includes health care, also increased.
Source: ICSC Research
Drinking Places
December 11-13
Survey
Year-Over-Year Growth
+4.7%
Y-o-Y
January 15-17
Survey
72%
Shopping trips to stores have become much more purposeful and I try to get in and out quickly, without doing much browsing
Still believe malls and other shopping centers are valuable assets to the local community, despite the COVID-19 pandemic
71%
Would most likely revert to
pre-pandemic behaviors
once it is safe to do so
54%
Happy with recent changes that retailers and shopping centers are making in light of the COVID-19 pandemic and hope most of the changes don’t go away
70%
Prefer returning online purchases to the retailers’ physical stores rather than sending back through the mail/delivery service
51%
Customer service in stores has greatly improved since the beginning of the COVID-19 pandemic
46%
*Reference period changed from "2 weeks before" to "a month before" in October 16-18 survey.
65.8%
8.3%
26.0%
Food Services
2020
72.7%
6.8%
20.5%
2015
Retail
Non-Retail/Non-Food*
*Category includes businesses such as urgent care clinics, tax preparation, salons, gyms, arcades, etc.
click to view shares of holiday shoppers
Shares of holiday shoppers
Felt safe/comfortable shopping in stores/shopping centers
due to health/safety precautions
55%
Made purchases in brick-and-mortar stores
79%
Made purchases using click-and-collect services
44%
Purchased significantly more from small businesses during the shopping season to help those retailers from the impact of the pandemic
42%