Hey, Business Bankers! Are You Looking For Commercial Lending Opportunities?

If you want blow through your CRE loan production goals in 2024, you need to be strategic and deliberate in your prospecting efforts! If you hunt where the demand for CRE is strong, you will find plenty of CRE loan opportunities! The folks at CoStar recently published an article on the state of retail space! Only 4.8% of all retail space was available at the end of 2023! Find businesses that need to lease or purchase retail space, and you’ll find the CRE loans you are looking for! Below is what the folks at CoStar had to stay about retail space!

The U.S. retail market has entered a historically tight position, with just 4.8% of all retail space available for lease at the end of November. Multiple years of steady retail demand gains combined with minimal construction has resulted in retail tenants having less space available to choose from as they look to expand or grow their business. The above chart shows the change in retail availability by market over two timeframes — since the third quarter of 2022 and a longer-term option showing the change in retail availability since the rst quarter of 2020.

Of the 44 markets across the U.S. with at least 100 million square feet of retail inventory, Seattle, Washington; Boston, Massachusetts; Nashville, Tennessee; Charlotte, North Carolina; Tampa, Florida; and Atlanta, Georgia, have the lowest amount of available retail space, with each reporting availability rates of 3.5% or lower as of the end of the third quarter. In total, 13 major retail markets had availability rates of under 4%, while 23 markets reported availability below 5%.

On the other end of the spectrum, just four U.S. markets, Detroit, Michigan; Sacramento and the Inland Empire in California; and Chicago, Illinois, had retail availability rates exceeding 6% at the end of the third quarter. This is the fewest number of markets reporting more than 6% in retail space availability in multiple decades. For further context, 18 of the 44 major U.S. retail markets reported availability rates above 6% just before the onset of the pandemic in early 2020.

Nearly all major markets across the U.S. have reported declining retail availability since then, with just four West Coast markets — San Francisco, Los Angeles and the East Bay in California; and Portland, Oregon — seeing availability rates rise since early 2020.

The average decline in availability over that time across the largest 44 markets was negative 1.1%, with the largest decline recorded in Phoenix, at negative 3.7%. The other four markets rounding out the top five with the most significant declines in availability since early 2020 are all in the Midwest, with Cincinnati and Cleveland, Ohio; St. Louis, Missouri; and Indianapolis, Indiana, each recording declines of 2.5% or greater.

Strong demand continued to drive retail availability rates lower in two-thirds of major U.S. markets over the past year. Leading the way in year-over-year declines in availability are St. Louis, at negative 1.1%, and the high-growth Sun Belt markets of Phoenix, Arizona; Charlotte, North Carolina; and Orlando and Tampa, Florida.

Conversely, the five markets seeing the largest expansion in retail availability over the past year are on the West Coast, with Sacramento, San Francisco, Portland, the Inland Empire and East Bay each recording increasing availability of 0.3% or more.

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