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Brick-and-mortar retail is back. More than two years after the first COVID-induced lockdowns, occupancy of new retail assets is now at an all-time highs. Storefronts made up the bulk of new retail inventory added in Q2 2022, and cities with growing populations are seeing a particularly marked retail resurgence.
The increase in residents is driving certain similar real estate patterns across the six cities featured in this report. But as each region has its own unique character, their growth is also creating commercial opportunities specific to each locale. Certain cities are seeing movie theaters visits surge, while other areas are seeing a strong office recovery – and some districts are simply seeing grocery visits skyrocket.
This white paper draws on Crexi’s commercial real estate data insights and Placer.ai’s foot traffic intelligence to show how recent migration trends and overall population growth are uniquely impacting the local retail space in six growing cities. Keep reading to find out which up-and-coming markets made the cut, what is driving retail recovery in each area, and unique ways CRE players can capitalize on these changes.
Population growth is driving similar retail real estate and dining foot traffic patterns in the six cities featured in this report.
Each city selected for this report is located in a county that has experienced a substantial population increase over the past three years. Though some gained more residents than others, all counties saw growth rates significantly above than the average nationwide rate of 1.4%. And, as this report shows, all six cities featured are seeing different facets of their retail space impacted by the recent migration.
Denver County, CO, Maricopa County (Phoenix), AZ, and Clark County (Las Vegas), NV, saw their populations increase between 2.3% and 2.9% from July 2019 to July 2022. During the same period, the population of Travis County (Austin), TX grew by 4.5% and the populations of Lee County (Fort Myers), FL and Ada County (Boise), ID, climbed a whopping 8.3% and 10.3%, respectively.
All six cities featured here have more in common than just their growing population – according to Crexi data, the median asking price per square foot for retail real estate in all six markets exceeded the national median in Q2 2022. Austin tops the list at $456 per square foot, followed by Denver at $390 and Las Vegas at $371. And in Boise, Phoenix, and Fort Myers, retail real estate was sold at a median price of $234, $201, and $186 per square foot in Q2 2022 – well above the nationwide median price of $152 per retail square foot during the same period. Phoenix and Denver also have some of the highest demand for industrial real estate, which includes warehouses and distribution centers that cater to e-commerce shoppers – indicating a high demand for both offline and online retail in the area.
As brick-and-mortar retail continues its comeback, the retail real estate markets in most of these fast-growing regions are becoming even more competitive. With the exception of Phoenix, AZ, all cities saw a year-over-year (YoY) increase in the price of commercial real estate per square foot.
Prices for retail real estate in Austin increased by 40.7% between Q2 2021 and Q2 2022. Retail real estate in Fort Myers and Las Vegas jumped by 37.8% and 31.6%, respectively, and Denver and Boise’s retail real estate prices increased around 24% – significantly more than the nationwide 16% YoY increase.
In Phoenix, on the other hand, retail real estate prices have dropped 10.7% YoY – which may entail an interesting opportunity, since the positive migration into Maricopa County indicates that demand for retail in the city is likely to rise. This means that the drop in Phoenix retail estate may well be a short term phenomenon, potentially making this a good time for investment in the city’s retail real estate market.
While the retail and migration patterns in the six cities featured in this report share certain characteristics, foot traffic data also reveals some important differences.
Fort Myers, on Florida’s Gulf Coast, is the most populated city in Lee County. The city is one of the nation’s best places to retire per U.S. News and World Report, and Florida’s lack of income tax may be attracting remote workers looking to stretch their paycheck.
The U.S. Census Bureau named Fort Myers the sixth fastest-growing area in the United States between July 2020 and July 2021, and as the population increased, so has the median household income. So not only are there more people looking to shop in the area – the current population also has more disposable income to spend.
Fort Myers’ population has increased consistently in recent years – and diving into the monthly figures reveals that migration to Fort Myers follows a typical “snowbird” pattern. The city receives an influx of residents between October and May every year, with some of the YoY growth likely due to “snowbirds” settling in.
Between March 2021 and July 2022, Yo3Y monthly grocery foot traffic in Fort Myers has consistently exceeded nationwide grocery average – likely due to the overall increase in population in the area.
But while Yo3Y grocery visits in Fort Myers have exceeded the statewide and nationwide trends almost every month since March 2021, comparing the baseline change in grocery visits highlights the impact of seasonal migration on the local retail space. Analyzing the change in monthly grocery visits since July 2019 in Fort Myers and nationwide shows that Fort Myers overperforms the nationwide grocery visit average much more substantially in the winter.
While daily retail services in Fort Myers are performing well year-round, the data indicates that the winter population boost is driving a seasonal increase in demand – which may be valuable information for shops deciding how to stock their shelves or allocate their workforce. And as these snowbirds decide to remain in Fort Myers, the growing population will likely need more grocery and other retail institutions catering to their needs, presenting a window of opportunity for real estate investors.
Fort Myers’ migration retail patterns highlight the value local businesses and real estate investors can find in diving into monthly migration patterns to identify both seasonal and longer term spikes in demand.
Denver was a popular relocation destination even before the pandemic hit – and COVID only accelerated the trend, as people flocked to the city’s beautiful nature and thriving music and art scene. And although the median retail real estate price in the city exceeds the national benchmark, Crexi still named Denver (along with Phoenix and Las Vegas) one of the six cheapest places in the U.S. for overall commercial real estate investing in May 2022.
The increase in population is not just driving a retail recovery in the area – foot traffic to Denver’s office buildings is also outperforming the national benchmark. A comparison of the performance of the Placer.ai Denver Office Index, which analyzes visits to 50 office buildings throughout the city, to the Placer.ai Nationwide Office Index that analyzes foot traffic to over 700 office buildings throughout the country yielded interesting results. In July 2022, Denver office visits were down by 32.9% compared to July 2019, compared to a 38.6% decrease in Yo3Y nationwide office foot traffic. So while many of those who moved to Denver over the pandemic likely came for the lifestyle rather than the employment opportunities, it appears that at at least some of recent transplants have found local jobs – and are helping the city fill its office space.
And as the Denver office space slowly recovers, nearby retailers could see a significant uptick in visits. With more and more workers returning to the office, many are making quick stops at nearby stores as part of their office journey. The foot traffic data confirms that retailers and shopping centers located in the center of the city or near business districts are witnessing impressive growth in visits.
The 16th Street Mall, a 1.25-mile-long pedestrian and transit mall located in the heart of downtown Denver, and central business district, saw significant growth in visits over time, in comparison to a January 2021 baseline. August 2022 saw visits to the mall grow by 96.5%. The correlation between the recovering surrounding office buildings and the mall’s foot traffic is especially noticeable, with both seeing dips and peaks around the same time.
Denver is a perfect example of how a rising population, a recovering office space, and retail growth interact and contribute to a booming local retail real estate market.
Las Vegas is one of the most famous tourist destinations in the world – but over the past couple of years, the city has also seen an influx of new residents. Nevada, like Florida, does not have an income tax, so newcomers may find that paychecks from their remote jobs go further in the Silver State. And thanks to the city’s endless culinary and entertainment options, residents always have plenty of activities to choose from.
Most people who relocate tend to stay relatively nearby, so the top ten origin counties of relocation for any given region tend to be from the same state as the destination county. But migration data indicates that many people are moving to Las Vegas from all over the country. Between July 2019 and July 2022, 3.3% of new Las Vegas residents came from Honolulu, Hawaii, with relocation from Hawaii to Las Vegas becoming so common that some have taken to calling the city “Hawaii’s ninth island.” During the same period, 1.6% of new Las Vegans came from Cook County (Chicago), IL – not as far as Honolulu, but still a four-hour flight away. And an impressive 9.3% of new Las Vegas residents moved from Los Angeles, CA.
Las Vegas’ ability to offer something for everyone and attract residents from distant counties speaks to the city’s ongoing cultural and economic diversification – and is likely creating a wide array of business and real estate investment opportunities.
While international tourism to Las Vegas has yet to return to pre-pandemic levels, domestic tourism is strong, driven largely by local visitors (visitors who live within 51 and 150 miles of Las Vegas). Since April, the number of local tourists in the city has consistently exceeded pre-pandemic levels, perhaps driven by strong migration to Las Vegas’ suburbs. The nearby cities of Henderson and Spring Valley have also seen their populations increase recently, and at least some of these residents are likely to drive in regularly and enjoy the various retail and nightlife options Los Vegas has to offer.
The increase in local domestic tourism seems significant enough to power Vegas’ tourism industry ְ– according to the Las Vegas Convention and Visitors Authority, the city’s overall tourism (including both international and domestic) had already reached its pre-pandemic levels by the end of 2021.
As the current economic challenges subside, Las Vegas’ success in attracting both residents and tourists from near and far will likely continue boosting and diversifying the city’s retail sector in the coming years, providing ample opportunities for the savvy investor.
Phoenix's affordability makes the city particularly attractive for those looking to reduce their cost of living while remaining in a major metropolitan hub. And many millennials and Gen-Zers are moving to the cities, perhaps attracted by the growing tech scene and start-up friendly infrastructure. The recent drop in retail real estate prices along with the consistent population increase may make this an ideal time to invest in Arizona's state capitol.
Characterized by a seasonal trend that peaks in late winter and early spring months, Maricopa County saw a net population gain of 2.5% between July 2019 and July 2022. Las Vegas saw new residents relocating from all over the country, while many of Austin's new residents came from nearby counties in Texas. Migration patterns for Phoenix lie somewhere in-between, with a considerable share of individuals migrating to Arizona's state capital over the past three years coming from around the southwest region.
Phoenix is not just seeing a rise in residents. The city is also seeing an increase in domestic tourism - particularly from national tourists traveling more than 150 miles to visit the city. So unlike Las Vegas, which saw a rise in national migration coupled with an increase in domestic tourism, Phoenix is seeing increased regional migration along with larger numbers of national tourism.
But similar to Las Vegas, the rise in tourism in Phoenix creates even more retail opportunities for local business owners and real estate investors.
Austin is the state capital of Texas, and has been named one of the best places to live in the United States as well as a top relocation destination globally. And the city is fast cementing its role as a major tech hub – according to LinkedIn data, between May 2020 and April 2021 the city saw more tech-related migration than any other city in the US. At the same time, Austin remains a center of creative and cultural experimentation, as exemplified by Austinites’ unofficial motto of “keep Austin weird.”
Unlike Las Vegas, most domestic migration to Austin has come from Texans choosing to relocate within the state. Almost two thirds of individuals relocating to Travis County where Austin is located came from other counties in the Lone Star State. Around 10% of domestic migration to Austin between July 2019 and July 2022 came from Harris County (Houston), while 8.9% of new Austinites moved to Austin from the city’s northern suburb of Williamson. Whether people are choosing Austin for its growing job market, thriving arts scene, or beautiful weather, the city’s growing population is driving a sharp increase in retail real estate demand and commanding the highest price tag of the cities in this report.
Foot traffic to most theaters and music venues nationwide has remained well below pre-pandemic levels. But in Austin, likely due to the residents’ appetite for arts and culture, visits to these venues have skyrocketed in recent months. March 2022 was the first month during which theater and music venue foot traffic exceeded 2019 levels, driven in part by Austin’s SXSW Conference and Festival. And since May, Yo3Y foot traffic growth has remained positive, with July 2022 foot traffic to theaters and movie venues in Austin 25.1% higher than it was pre-pandemic – while nationwide visits to theaters and music venues was down 16.4% Yo3Y.
Some of this boost is likely coming from people who relocated to Austin in recent years and are now participating in the city’s cultural scene.
As new Austinites continue to find their bearings in their adopted hometown, expect the retail recovery in the city – particularly as it relates to arts and culture – to continue outperforming the nationwide average.
US News & World Report ranked Idaho’s state capital the 15th best place to live and the 14th safest city in America in 2022, so it’s no surprise that Boise has seen its population grow over the past three years. Residents appreciate the city’s mild weather, expansive nature, and family-friendly orientation.
Boise’s population was already on the rise before COVID shut down workplaces and forced people to rethink their living situations. But the pandemic accelerated the trend and drove a massive wave of domestic migration to Idaho’s capital that is creating major demographic shifts in the city. Between July 2019 and July 2022, the population of Ada County (where Boise is located) rose by more than 10% – slightly more than the Idaho statewide population increase of 9.0% in the same period. This population growth, especially in the diversification of demographic groups, is likely creating significant business and retail investment opportunities in Boise and its surrounding suburbs.
Population increase is also generating demand for retail services in Boise. As an example, electronics stores in the city and its metro area enjoyed higher foot traffic recovery rates compared to the national average between March 2022 and August 2022, surpassing Idaho’s Yo3Y foot traffic recovery levels in most months as well.
The increase in visits is likely driven, at least in part, by migration. This means that retailers who understand how the recent migration wave is impacting local consumer habits and cater to the preferences of new Boiseans may be able to gain a leg up over the competition.
Enhanced migration has also likely changed the demographic mix of the city. Zooming into the trade areas of eight shopping centers in Boise between January and July 2022 showed a decrease in trade area median age, in comparison to those same months in 2019. Some shopping centers like Hillcrest Shopping Center and Country Club Plaza experienced dramatic drops of 7.9% and 6.6% in trade area median age. The younger audience visiting Boise’s shopping malls may point to a wider shift in consumer habits and preferences in the city.
Boise is not necessarily the first place people associate with growing retail opportunities – but investors may well want to give the city a chance, as the area's significant in-migration over the past few years is creating significant CRE potential.
Domestic population shifts are creating new retail opportunities across the United States. Retailers, retail real estate investors, CPG companies, and other stakeholders can use migration data to identify regions where a rise in residents is likely to translate into an increase in potential consumers for their goods and services, improved retail valuations, and promising ROI.
Foot traffic based migration data can show much more than where people are moving from, and where they’re moving to. Using location analytics to segment population flows by age, household income, or even retail preferences can provide whole-picture, contextualized insights into changing markets and their budding opportunities. These analyses offer a clear look into not just these cities, but any city’s changing story, empowering relevant CRE stakeholders to make data-driven decisions that position their business and region for long-term success.
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