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IPA Retail Investment Forecast
National Retail Index (NRI)
- Robust employment growth in the tech sector has brought new residents and higher salaries to markets with a large tech presence. As a result, the median household income in many of these areas is well above the U.S. level, generating more discretionary spending power that benefits retailers. The top two spots in the Index are held by Seattle-Tacoma and San Francisco, which each maintained last year’s standing.
- Orlando (#7), Phoenix (#20) and Columbus (#24) recorded the largest improvement in this year’s Index, each vaulting nine places. Orlando and Phoenix are expected to register the highest rate of employment growth in the U.S. during 2019, which they both had last year.
- Rising deliveries and higher vacancy combined with slower rent growth were dominant themes in this year’s markets with the largest declines. Los Angeles (#18) and San Antonio (#25) fell eight and seven notches, respectively, while Riverside-San Bernardino (#37) and Louisville (#42) each slipped six rungs.
- The U.S. economy enters the year on a high note following a stretch of tax-induced growth. A tight labor market will help carry momentum into 2019 as job creation is expected to reach 2 million for the ninth consecutive year.
- Several categories including food, fashion and entertainment will witness pronounced spending this year as retailers across these sectors have found ways to gain competitive advantages. Sales among fitness centers and home furnishings vendors should also log substantial growth.
- Though the horizon is relatively clear, some challenges still exist, including uncertainty regarding the longer-term effects of the government shutdown as well as ongoing trade tensions. In addition, the weakening international economy could hamper domestic growth. These matters may weigh on confidence as the year progresses, moderating economic expansion relative to last year and producing GDP growth in the low- to mid-2 percent range.