Market Forecast 2024 Retail

Retail market fundamentals will remain resilient.

While 2023 was filled with economic challenges, the retail sector showed resiliency and promise with low vacancy rates and slightly expanding lease rates. However, leasing activity across the West Coast was down 11% compared to last year and down 25% compared to pre-covid averages. There also continued to be a noticeable performance gap between urban cores and the suburbs — with the former posting vacancy rates between 6% and 10% and the latter generally falling between 3% and 5%. The economy is projected to experience slow growth in 2024, promoting a strengthening of both consumer confidence and retail sales. Furthermore, the recent reduction in retail development will encourage short-term growth activity in the retail sector as overall fundamentals are forecasted to remain solid.

Surging retail sales provide optimism for 2024

Retail sales figures across the U.S. experienced a slow and steady climb since April 2023, providing optimism for 2024. As a whole, retail sales grew by 0.6% in December, representing a 4.6% increase year-over-year. This recent growth has been encouraging for the economy, especially when coupled with relatively strong employment and wage gains in December as well as a recent uptick in consumer prices. Additionally, e-commerce penetration is projected to continue between 5% and 10% as consumer confidence rebounds and retail spending continues to expand. All of these factors are expected to help bolster the retail segment in the near term.

Retail Sales Growth Provides Optimism

West Coast markets see nuanced fundamentals

Although the retail market has shown amazing resiliency post-pandemic, markets across the West Coast are experiencing nuanced fundamentals. Many larger markets such as San Francisco and Seattle, known to have historically vibrant and active downtown areas, have either seen a greater rise in vacancy rates, a decrease in activity levels, or both. This is especially true within their urban cores, with a weakening of market fundamentals and a continued decrease in downtown foot traffic. Conversely, more suburban-centric cities like Phoenix, Reno, and Sacramento have flourished compared to West Coast averages as they have been well-equipped to take advantage of evolving consumer preferences.

Retail Vacancy & Leasing Activity by Market

Subdued activity is expected to persist during the first half of the year

Retail market activity across the West Coast is projected to be relatively subdued during the first half of the year, with various pockets of activity across most markets and retail segments. West Coast retail fundamentals are expected to remain resilient throughout 2024, with a slight uptick in vacancy rates and a nominal decline in overall leasing activity. Rent growth is forecasted to grow between 2.5% and 3.0%, slightly behind the growth rate in 2023. By the end of 2024, retail market activity will gain velocity, setting up future growth in both 2025 and 2026.

West Coast Retail Market Trends




Vice President, Research

Share This Post




Stay in the know and subscribe to our monthly West Coast Market Trends report and our quarterly market research.