The addition of three Meijer grocery stores and two Menards home-improvement stores gave a boost to the retail sector in the Cleveland and Akron areas. But despite these high-profile additions, the retail sector here – as it does across the country – faces challenges.
According to the latest research from Colliers International, then, the Cleveland and Akron areas are little different from most retail markets across the United States. Yes, some retailers here are struggling. Others, though, are growing.
This isn’t unusual. As Colliers notes in hits second quarter Cleveland retail report, citing data from Coresight Research, retailers had closed 7,062 stores across the country by the middle of this year. That is already far ahead of the 5,864 stores that closed all of last year.
There are positives, too. As Colliers reports, retailers as of the middle of this year say they will open 3,022 new brick-and-mortar stores. At this pace, retailers will open more physical stores this year than the 3,258 they opened in 2018.
And in other good news for this sector, core retail sales, a figure that doesn’t include cars, gasoline, building materials or restaurants, hit $527.7 billion during the last 12 months, according to the U.S. Census Bureau. The National Retail Federation also reported that consumer spending increased during the second quarter. The federation is predicting that sales growth in the U.S. retail sector will increase from 3.8 percent to 4.4 percent in 2019.
Then there are online sales. Colliers says that online retail sales are expected to grow 11.4 percent this year when compared to 2018. This figure, though, isn’t necessarily bad news for brick-and-mortar retail. As Colliers notes, nearly all of the top nation’s top-50 online retailers operate their own physical stores.
That is the recipe for success today. Retailers that have both a strong physical and online presence tend to do well. Many will use their physical locations to entice consumers to later buy products online.
Colliers, in its research report, says, then, that reports of a retail apocalypse are overblown. Colliers instead says that the United States is seeing a retail revolution in which smart retailers rely on both online and physical stores to grow their sales and customer bases.
The Cleveland/Akron area, then, offers a good example of how retail is evolving. Colliers says that the retail market in this area posted net absorption of 932,249 square feet during the second quarter, thanks primarily to those new Meijer and Menards stores. The overall retail vacancy rate here remained steady at 8.1 percent, a percentage point lower than where it stood at the beginning of 2018.
The average retail asking rent in the Cleveland and Akron markets stood at $11.48 a square foot as of the end of the second quarter. That is up 1.2 percent from the second quarter of 2018. Neighborhood retail centers here posted an increase of 1.3 percent, seeing their average asking rent jump to $10.08 a square foot in the second quarter.
