U.S. retail sales increased in August by a modest 0.1% over July, tempered by short-term economic concerns.
Retail sales, excluding automobiles, gas stations and restaurants, are up annually by 3.9%, according to the National Retail Federation.
Advanced monthly sales data show retail sales remained relatively flat across the board.
Electronics and appliance stores experienced the largest monthly sales gain over July, by 0.3%, but were up 3.1% unadjusted year-over-year. Sales at furniture and home furnishing stores were up 0.8% over July and up 4.9% from last year’s sales. And sales at clothing and clothing accessory stores decreased 0.8% in August, mostly due to the increase in sales the prior month during the back-to-school season. Year-over-year, sales were up 4.6% unadjusted.
Consumers continued to enjoy the convenience and competitive pricing options offered by online retailers, as evidenced by increasing e-commerce sales. Year-over-year, sales for online retailers increased 8.8%.
Demand, despite flat monthly retail sales, is steadily increasing. The Orange County retail market generated 214,418 square feet of positive net absorption, the highest demand for retail space since the second quarter of 2008.
Hobby Lobby was responsible for the majority of the absorption, signing two leases of more than 77,000 square feet in the South County and North County submarkets. The absorption increase helped knock down the vacancy rate from 5.8% in the second quarter to 5.5%.
The housing market is improving, and complementary retailers such as Japan based Aki-Home expanding. Aki-Homes opened its first U.S. stores in Fullerton and Tustin this quarter.
Secondary retail markets are looking more favorable to retailers and investors, with consumers starting to spend money again on big-ticket items such as furniture and appliances. Retail development remained sparse, though. Construction continues on a nearly 481,000-square-foot regional center in Buena Park named The Source, which will include shopping, dining and entertainment and is due to be completed in October 2014.
The retail market continues to benefit from the lack of development, as tenant demand absorbs availability. It has a long way to go before its market fundamentals reach prerecession levels, but the overall outlook remains positive as demand stays steady.
Analysis provided by CBRE Research
